Keeping Construction and Renovation Costs on Budget

Managing replacement reserves in the real estate industry is getting easier and less time-consuming. Processing draws and payments manually have long been a time-consuming process, in some cases requiring full- or part-time administrative personnel to process paperwork and cut checks. In real estate accounting, replacement reserve accounts fund repairs or placement of components that wear out or break as property runs through its normal lifecycle. Typically, expenses are for HVAC systems, roofs, parking lot surfacing and other big-ticket items. Replacement reserves are also important when an apartment community or portfolio undergoes renovation. Until recently, managing replacement reserves has been labor-intensive and prone to mistakes and miscalculations. Checks have to be matched up to invoices, journal entries tracked and draw packages must be neatly and professionally prepared for financial institutions and investors. It is a lot of work. Eliminating time and energy for replacement reserves In the recent RealPage webcast, “Easy Does It: Financial Suite Replacement Reserves,” a viewer poll revealed that the majority of viewers spend at least one day and as many as five preparing draws. Many viewers were simply unsure how much time they take. Eliminating the time and energy to manage replacement reserves is the big advantage of the newly introduced Replacement Reserve feature in the Job Cost module of the RealPage Financial Suite. The formerly manual process has been automated to help increase efficiency, tap unused funds, and gain better visibility in projects and operations. Reserve accounts can quickly be defined, and approval workflows for change orders and more can be created and tracked in one place. Draw packages are created for reimbursement from ledgers while maintaining thresholds by account. Also, a real estate portfolio can set up reserves for multiple lenders, capture invoices that have been coded to reserve accounts and build do...