Home Services Commercial Real Estate Common Area Expense Reconciliations for Commercial Real Estate

PostHeaderIcon Common Area Expense Reconciliations for Commercial Real Estate

It is that time again! You need to calculate the reimbursable expenses for each of your tenants based upon your operating expenses from the prior year. For many this is a onerous task, and usually must be done within the time limit set in each lease. This includes calculating the common area expenses that are chargeable to the tenants, applying the lease clauses to these expenses in order to bill each tenant based upon their percentage of occupancy. Some properties provide for reimbursements that are different for each tenant. Some leases provide that the tenants who are only billed for those expenses that exceed the base year operating expenses. There may be any combination of common area expense reconciliation or lack thereof, which can make a property difficult for the owner to accomplish. However, this can be a significant income source for this property, which should not be ignored. Since the net income of the property provides the ultimate capitalized value of the property, each income dollar can equate to $10 or more in capitalized value. This income stream can be a significant profit/value component of your investment.

We can help you get these reconciliations done accurately and on time. We can provide this service so that each year, when you provide us the final operating expense statement we can get this turned around and to your tenants. Our experience has shown when these statements and billings come from third-party there seems to be less objections or questions about their accuracy. We previously owned a commercial real estate brokerage and property management company for over 30 years. Let our experience make this less painful and more productive.   Give us a call today and we can get the ball rolling for you!

 

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