5 Tips to Overcome Commercial Lease Abstraction Challenges

On the surface, commercial real estate doesn’t seem overly complicated. There is a building for sale. The building could be for retail, office, housing, medical, storage, or related to any number of industries. There is a buyer or investor interested in purchasing the property. The Commercial real estate broker provides the investor with the proper paperwork so the investor can decide on whether or not to buy the building. A lender lends the money for the purchase, and an insurance company insures the property.




However, commercial real estate is full of paperwork. Some forms categorize tenants based on rent and terms and rent projections. The lease explains leasing information and the rules for both the tenant and management company. In some cases, you have non-standard lease agreements that accompany the original lease agreement. The list goes on.




A CRE lease abstraction simplifies the buying, selling, lending, and the insuring process for commercial real estate.

 

The lease abstract is a summary of all of the forms that accompany the commercial real estate building. The abstract has details about critical components of the lease, such as financial, legal, and business information.

 

Problems with the CRE lease abstraction process

 

· Deadline for the project

· The high cost of human resources

· Lack of knowledge of various leasing platforms for data capture, customization, migration, and integration

· High potential for error

 

Without a lease abstraction, the decision to purchase, lend, insure, or properly manage a property can take longer than necessary.

 

The benefits of lease abstraction

 

 

· One of the benefits of lease abstraction is that investors, lenders, management, and insurance companies use abstracts to make a decision. The details are either high level or in-depth, depending on their purpose. The lease abstract should summarize all standard lease provisions, any special lease provisions and bring attention to any critical issues in the lease.

 

 

· Another benefit of lease abstraction comes in managing commercial real estate. By making the lease abstract a standardized document, the most vital information readily accessible to tenant and management companies, managers will have fewer tenant conflicts. Management companies can quickly identify terms, rents, and answer questions for potential tenants.


· The third benefit of lease abstraction is that it can help speed up decision making. Lenders, investors, and commercial real estate brokers want to make sure their decisions are sound. By providing a standard lease abstract where they can quickly review the key metric will allow them to be confident in their choices.

 

The CRE lease abstraction process will simplify and standardize your leasing information across all properties.

 

 

Here are Five tips to overcome commercial lease abstraction challenges:-


 

1. Gather all important information. All leasing agreements, riders, non-standard agreements, and everything about the tenant and leasing terms should be collected for review.

 

2. Have a standard template to populate with the key components you’ve collected. A standard model will help remove errors and omissions.

 

3. By marking and tagging where the summarized information came from, you will save yourself headaches, a question arises.

 

4. Update your financial modeling system. Keeping your lease terms, rents, exclusions, and dates updated in your modeling system, you will make the lease abstraction process easier and error-free.

 

5. Save time and money by outsourcing your CRE lease abstraction. Lease abstraction is a very time-intensive process. Property valuation issues could arise if someone is not familiar with where to find all the necessary information, how systems can integrate, and what data is usually customized.

 

Find a trusted company that is an expert in CRE lease abstraction and lease abstraction software. Lease abstraction software helps to point out crucial leasing information and standardizes it for all industries.

 

 

The Clik Services Hub has CRE lease abstraction experts who use the latest lease abstraction software to help you. Visit the Services Hub today to get started.