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Real Estate Budgeting with Best-in-Class Benchmark Data

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Real Estate Budget Planning—From Excruciating to Efficient

 

As 2018 comes to a close, most real estate asset managers are beginning to recover from the dreaded ‘budget season’ grind. Before this process begins again in 2019, there are budgeting solutions out there that can make the process more efficient and result in fewer headaches.

One of the biggest hurdles for real estate companies is inherited in the budgeting process itself—the need to manage data. Doug Laney, VP and Analyst at Gartner and author of Infonomics, stated in a recent CIO article, “Corporations typically exhibit greater discipline in tracking and accounting for their office furniture than their data.”

Recently we talked about hunting for the right data on our blog as well as how valuable time is wasted on compiling reports from segmented data stored in silos. On top of lost time and trapped data, meaningful budgeting conversations require the context of the larger market, bringing in benchmark data that is comparable to properties in your portfolio.

Put away the shovel, no more digging for data

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From emailing various team members to track down the latest numbers to digging through excel spreadsheets and national survey data, tedious information gathering can be avoided by using a performance management platform like Waypoint. The tool allows all stakeholders to quickly and objectively access necessary commercial property data for budgeting discussions, rather than use datasets from broker sources or colleagues in similar building areas. The more objective data you have, the better your foundation will be going into the process.

Waypoint provides the largest dataset of operating expense and revenue numbers available for the commercial real estate industry. Users pull data straight from accounting systems, anonymize and normalize it, and average it together. Detailed asset and market peer sets allow Waypoint’s market analysis to be more accurate than a broker’s pro forma, and they are much easier to view relative to your own assets’ performance than national survey results.

A draft that matters

As a real estate asset manager, the ideal scenario has your property managers entering numbers into MRI, giving you a good base budget. It’s time to review the variety of datasets that have been entered over the past year. From original projections to actuals, it’s crucial to know what is happening to similar properties like yours. With this in mind, does it appear things will trend similarly for the following year or change? Waypoint’s market index data allows you to reliably benchmark your assets’ performance against the most comprehensive dataset in the United States. This will save numerous hours of pulling from different sources simply to complete your elusive first draft.

Attain approvals

The budget approval process can be even more taxing than the data mining. However, access to better market data gives you an objective view to work with revenue and expenses, resulting in more constructive budget conversations. The data can speak for itself, without having to argue about assumptions. Fortunately, Waypoint provides a cloud-based solution that standardizes your chart of accounts and provides an interactive way for asset managers and property managers to review and comment on budget performance in real-time so that these conversations are more fluid. The result is a unified, single source of truth for budget performance that allows asset managers and property managers to spot issues before the end of the budget cycle.

Better outcomes

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Despite having access to tools like Waypoint and MRI that support the budgeting process, the commercial real estate budget planning process will never be stress-free. However, with accurate data and benchmarking leveraged from the beginning, projects will be clearly prioritized, allowing teams to feel empowered to make a direct impact on the company’s goals. Download the case study to find out how LBA Realty, a full service vertically integrated real estate investment and management company, uses Waypoint and MRI Software to improve data aggregation and reporting across their portfolio. You can also read our guest post about commercial real estate budgeting on MRI’s blog.

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