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Edmonton commercial property management Case Study 1:

Owner-Managed Property Challenges and Solutions

Introduction

Property owners often excel in investment acumen but balancing multiple ventures can make self-managing a property complex and time-consuming.

Inefficient tracking of expenses and revenues, lack of technological investment, and non-compliance with regulatory requirements due to the absence of licensed professionals are common issues faced by self-managed properties.

Challenges

Upon taking over the management responsibilities for a client, we identified several critical issues:

    • Expenses were improperly categorized, mixing recoverable and non-recoverable costs.
    • Some invoices were paid but not recorded in the system.
    • Security deposits were inaccurately documented.
    • Revenue was understated due to missed lease escalations.
    • Financial data was fragmented across various inconsistent spreadsheets.
    • Lease agreements did not align with the amounts collected from tenants.
    • Balance sheet accounts were inaccurate, with missing mortgage payments recorded.
    • GST submissions were accurate but not reflected in the records.
    • The fiscal year-end was not closed properly, leading to accumulating balances.
    • The owner lacked precise financial information, hindering their ability to determine ROI and manage cash flow.
    • Vendor contracts were neither reviewed nor re-quoted regularly.
    • Tenants had direct access to the owner for maintenance and other issues, resulting in low tenant satisfaction and unresolved concerns.
    • Tenant relations were poor, with multiple tenants reporting unresolved issues and a lack of response to their concerns.
    • COVID-related deferrals and loans caused inconsistencies in tenant ledgers.

    Solutions

    To address these challenges, we implemented the following solutions:

      • Revenue Management: We reviewed all leases and agreements to ensure accurate revenue booking and collection.
      • Expense Tracking: We contacted all vendors for a year’s worth of invoices, reconciled expenses, and recorded any missing entries.
      • Expense Classification: We reclassified transactions to distinguish between recoverable and non-recoverable expenses, ensuring tenants were charged correctly.
      • Data Consolidation: We integrated all spreadsheets into our system for better data management.
      • Security Deposits: We accurately recorded all security deposits.
      • Loan Documentation: We documented all previously unrecorded loans.
      • GST Management: We corrected GST entries in the general ledger.
      • Financial Reporting: We provided accurate monthly financial statements and reports, giving the owner clear insights into their investments.
      • Vendor Review: We met with vendors to review and renegotiate contracts as necessary.
      • Tenant Relations: Our property manager and broker met with tenants to address their concerns and establish ourselves as the primary contact.
      • Tenant Obligations: We reviewed tenant obligations and repayment plans with our accounting department to ensure clarity and agreement on deferrals and loans.
      • Property Management Software: Using Yardi Voyager, we streamlined lease management, amendments, and tenant communications, maintaining all necessary records and generating essential documents efficiently.

    Results

    Choosing a professional commercial property management company has saved the owners substantial amounts of money while ensuring proper management of tenant operating costs, thus preventing future conflicts or litigation.

    While self-management might appear cost-effective, it often results in missed financial, operational, and tenant retention opportunities.

    Edmonton commercial property management Case Study 2:

    Overcoming Challenges with a Previous Property Management Company

    Introduction

    Selecting the right commercial property management company is crucial for property owners. Our experience demonstrates that thorough research and due diligence are essential in ensuring excellent service.

    Opting for a large national firm does not guarantee superior service, especially for smaller portfolios. Many owners endure subpar service due to the perceived complexity of switching management companies.

    Challenges

    When we took over a property from a previous management company, we uncovered several significant issues:

      • Non-recoverable costs were incorrectly recorded as intercompany transactions, amounting to $500,000.
      • The client had not received a financial package since onboarding (2.5 years), leaving them unaware of their financial status.
      • The tax accountant was estimating revenues and expenses to file taxes.
      • $45,000 worth of tenant utilities chargebacks were never collected.
      • Accounts receivable amounted to $70,000, with many transactions aged over 60 days.
      • Building-related loans were not recorded.
      • The client was unaware of the building’s financial performance, leading to monthly cash flow deficits.
      • Numerous maintenance issues required immediate attention, and communication between the management company and tenants was lacking.
      • A tenant was withholding lease payments due to unresolved maintenance concerns.
      • The building had significant settling issues, causing structural problems.

    Solutions

    We tackled these issues through the following actions:

      • Expense Adjustment: We reviewed and adjusted non-recoverable expenses and reinstated year-ends with prior period adjustments.
      • Financial Reconciliation: We reconciled all accounts and provided monthly financial packages to the client.
      • Debt Recovery: We wrote off $45,000 in utilities as requested by the client but successfully recovered the $70,000 in accounts receivable through payment plans.
      • Comprehensive Financial Management: We integrated tax accountant books with property management records to ensure accurate financial statements and developed an extensive budget and cash flow forecast.
      • Maintenance Coordination: We addressed maintenance concerns with the building owner and contractors, provided tenants with contact information, and followed up after work completion.
      • Tenant Communication: We reviewed tenant ledger balances and cleared outstanding amounts by resolving maintenance issues.
      • Structural Monitoring: Our in-house maintenance team was dispatched for repairs, and an engineering firm was engaged to monitor building settling.

    Results

    By addressing these challenges comprehensively, we have provided the property owner with accurate and timely financial information, enabling informed decisions regarding their investment. We have successfully collected outstanding debts, resolved maintenance issues, and improved tenant relations.

    Our efforts have stabilized the property’s financial performance, prevented future cash flow deficits, and ensured proper documentation and compliance.

    The property owner now enjoys a well-managed asset with enhanced operational efficiency and tenant satisfaction, demonstrating the value of choosing a dedicated and professional property management company.

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    We have been with Servis Realty in our lease space for the past 8 years and the experience has been very positive. Unfortunately our business has outgrown the space, otherwise would have stayed even l Read Moreonger. Overall very convenient location, albeit sometimes hard for our customers to find. Specific details: -snow removal is always prompt the day after -our furnace was serviced regularly and when it broke down they fixed it very quickly -the parking lot was well managed, as well as the property owners investing in fixing the asphalt around the back of the building several times Special shout out to Kevin and Geoff and the rest of the team upstairs who has been very quick to address any concerns or issues we have ever had.

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    Today was one of many that Joanne and team at Service helped us out immensely with any day to day challenges we receive. As a tenant of Service Realty in the Bassani building we occasionally have a c Read Morehallenge which needs to be addressed such as plugged drain in the parking lot sewer or additional space required while we were under renovations. Their team is very accommodating, quick service and always happy to help. We appreciate the team at Servis and wanted to pass along our accolades to them!!

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    Proudline Fire protection has been working with Servis Realty Inc for over 10 years and we could not ask for a better customer. Geoff and his team are Professional, Great communicators, and overall gr Read Moreeat to work with. I would recommend their services to anyone. Keep up the great work. J Andrew Bibby GM Service division Proudline line Fire Protection Services Ltd.

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