Six Tips for Efficient and Accurate Lease Abstracting
September 19, 2022
OHI
Lease abstraction refers to the process of condensing and deriving key clauses or provisions in leases and related lease documents to make it easier for tenants to comprehend the terms and conditions of leasing space from the landowner’s property.
Lease abstracting could be a slightly complicated process beginning with critical elements like terms, options amendments, rent schedules, etc., then transitioning into an effective portfolio organization.
So here are some proven, easy-to-follow tips on systematic and precise lease abstraction.
1. Prepare a Checklist
Most experts follow a conventional list of lease components, such as income/expense, commencement/expiry, lease options, etc.
However, it’s also crucial to consider other elements that are most significant to your approach and the lease provisions that influence your real estate’s value.
2. Plan out a Timeline
Irrespective of the number of times a lease gets amended or renewed, each comes with a distinct timeframe. It’s crucial to commence by documenting your lease at the beginning of the abstracting process.
Additionally, an effective approach would be to work backwards while abstracting a lease with multiple revisions. The most recent addendum comes first, followed by the initial lease.
3. Strategize for Crucial Dates
After establishing a timeline, compile a list of the important dates you’ll mention in the lease. By doing so, you can be sure to pay attention to crucial components like an option alert timeframe.
Decide on a framework for your reminders specifying their frequency, the content layout, and the time slot you want to be informed of before the day arrives.
4. Maintain a Constantly Updated List of Queries and Vital Information
There can be moments while abstracting that you find you’re lacking data, or some aspects in your timeline really don’t add together. So, a healthy practice is to maintain a spreadsheet tool with these queries organized by lease.
5. Complete Each Lease Abstract in One Go
Ideally, this is the best course of action to take, if at all feasible. When you take an extended break, it’s easy to lose the specifics of a lease since each one has a different timeline.
6. Keep a Copy of the Lease Language for Future Use
When you require an instant refresher, this comes in so handy. Don’t just end up by mentioning the page number; go on adding further specifics. The language should be copied and pasted in an accessible location, such as spreadsheets.
Bonus: Leverage the Latest Software Tools
Numerous robust software tools can come in handy throughout the lease abstracting process. Document converters, spreadsheet applications, and relatively simpler scheduling management applications are among the most basic technological tools.
Although each of these tools is beneficial, there comes a juncture when they are no more the best option. In such a scenario, you would need to switch to more specialized AI-enabled tech solutions.
Conclusion
Everyone employs a different method or strategy for abstracting because leases vary in terms of arrangements and configurations.
By implementing the above-mentioned tips, you can streamline the lease abstracting process conveniently, make it hassle-free to access the lease documents, and seamlessly make amendments when the situation demands.
About
OHI is a sixteen-year-old real estate services company working with 75+ commercial and residential real estate developers, funds and property management companies across USA. Our deep expertise in real estate accounting, financial analysis, lease abstraction, administration and asset management has helped clients cut associated costs by 40-50%. We currently provide these services to a portfolio of 100,000 units across clients.
