Streamlining Commercial Real Estate Capital and Operating Expenses
GP How-tos
Every Day, You and Your Team are Managing a Variety of Different Property Types — and Their Expenses
You might focus heavily on office space or industrial properties, or you might specialize in multifamily housing or retail centers — or any of the many alternative asset classes currently growing in popularity worldwide. For each of those properties, you have to manage a number of daily expenses and long-term investments to keep them running smoothly, meet tenant expectations, and ensure strong returns.
Here, we’ll break down these commercial real estate capital expenditures and operating expenses, but more importantly we’ll discuss how you can manage them more efficiently and even grow the funds in those accounts.
First, a Quick Refresher
- CapEx — Commercial real estate capital expenditures, or CapEx costs, are large expenses that aren’t related to everyday operations. These might include extensive renovations or remodels, replacement of structural assets such as HVAC systems, a new roof, and more. In general, these costs can be considered long-term investments in the property. Both the cost and value of the investment are recorded, and the cost is typically spread out over time.
- OpEx — Commercial real estate operating expenses, or OpEx costs, are tied to the daily running of the asset. These can include anything from paying property taxes, insurance premiums, and utility fees to repairs, salaries for property employees, property management expenses, and other vendor fees. Think of these costs and short-term expenses that are paid and listed on the asset’s income statement for the period in which they occurred.
How Are You Currently Managing These Costs?
It’s no secret that commercial real estate firms are behind the curve when it comes to how they execute important daily processes and payments. Often, firms handle these payments and other transactions manually. Even if some technology is used to manage them, outdated processes such as preparing spreadsheets or inputting data are common.
Whether you have a large CapEx investment coming up, or you’re paying vendors for repairs and services each month, maintaining outdated practices won’t help you grow. Your team will continue to dedicate more team each month, quarter, and year in preparing payments, painstakingly pulling data, preparing reports manually, and more.
Today, it’s more crucial than ever for you and your team to leverage technology solutions that consolidate other platforms and processes and automate as many of these tasks as possible. Where actual automation isn’t possible, having a platform that accelerates common tasks such as paying vendors, issuing distributions to vendors, managing asset fundraising, and issuing capital calls still goes a long way in reducing the administrative burden on your team — allowing them to dedicate more time and energy to higher value tasks and creating value for LPs and tenants.
Taking It a Step Further…
The urgency here is not just about managing commercial real estate capital expenditures and operating costs more efficiently. It’s also about maximizing revenue in every way possible. For example, capital that has not yet been invested in a new deal or other area (idle capital) isn’t doing anything for your firm. If you don’t yet have an opportunity to invest those funds, that capital should be working for you. The same goes for paid-in capital.
What’s the solution here? Utilizing an interest-bearing banking solution that integrates with all other commercial real estate functions. Candidly, this is where Covercy comes into play. As the first real estate syndication platform where banking meets investment management, our platform takes managing your assets to a new level. In addition to features that support investor relations, fundraising, capital calls, reporting, automated distributions, waterfall calculations, and more, Covercy provides a streamlined banking solution that:
- Allows you to earn industry-leading interest on unspent capital in your accounts
- Consolidates banking partners and accounts into a single platform
- Enables fast and easy account opening for any new opportunities
- Streamlines incoming payments as well as outbound payments
- Provides insight and reporting at the fund and asset levels
- Simplifies transfers, overseas payments, and other complex transactions
If managing your commercial real estate capital expenditures and operational expenses has been challenging for you and your team in the past, we invite you to experience a new approach with Covercy — one that works:
“Before Covercy it felt like we were an accounting firm — that all we were doing was constantly making payments and dealing with bureaucracy, leaving us no time to truly grow our assets and portfolio. It was a colossal waste of time and energy.” — Ben Harlev, Managing Partner, Be Aviv
Connect with us today to see Covercy in action in a private demo.
