The US Housing Slump And Its Repercussions On Miami Beach Real Estate

The sun, sand, vibrant lifestyle, dazzling nightlife: These are but a few words that perfectly fit the description of living in a diverse and thriving place like Miami Beach. Tourism is the main driving economic driving force, and along with the tourism boom comes a flurry of housing and property developments.

The city’s economic fundamentals are sound, and majority of the real estate offered on Miami Beach are expensive single-family homes, spacious estates and seafront mansions, as well as upscale condominium units and apartments.

Current Mortgage Rates According To Freddie Mac

According the Federal Home Loan Mortgage Corporation, or. “Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.25% in Q4, down from 6.56% in Q3; the rate was 6.22% in Q4’05.

Over the last five years, metropolitan areas with the largest single-family home price gains include California’s Riverside-San Bernardino-Ontario areas, up 155.3%, and Los Angeles-Long Beach-Santa Ana, up 142.3%, followed by the Miami-Fort Lauderdale-Miami Beach area of Florida, up 135.4%.”

The US Credit Crunch And Its Effect On The Housing Industry

As the current US housing market slump is weighing heavily on property developers, pre-construction condominium and housing assets in Miami Beach are also feeling the pinch.

Local realtors, especially those who have experience selling property in Miami for decades, are concerned that present buyers are reluctant to borrow from lenders, which results in many people shying away from condominium and apartment auctions. At present, housing analysts note potential buyers are adopting a wait-and-see attitude, anticipating what happens next to the market, and on what the Federal Reserve’s next move would be.

How Miami Beach Is Weathering The Slump

Amid the current slump in real estate markets and the effect it has made on global markets, there still appears to be a demand for affordable pre-constructed houses in a good location such as Miami Beach. This helps to explain why just last weekend, the downtown Miami real estate market had to extend their open house transactions beyond midnight.

One good thing to note is that, during first half of this decade, there was a record low set in mortgage rates, more growth in employment opportunities, burgeoning growth in Miami’s population, and an ever-increasing interest from overseas visitors, immigrants, and investors. Despite the positive attributes, Miami real estate developers and brokers are still asking for government support. Industry observers here are thinking that perhaps the state legislature could help adjust taxes imposed on home developers.

Still, many developers are saying that real estate prices are comparatively exorbitant, and that that property developers couldn’t manage to lower prices without government support. The real estate market in Miami Beach is projected to ease, which is a positive sign that the real estate market is stabilizing.

With housing projects created to target middle-income earners, sales are expected to rise significantly next year. Market analysts note that the housing market will continue to provide a strong foundation to the economy even as the market adjusts to the current slump.

Miami Real Estate – http://miamirealestateinc.com

Real Estate and the New Series LLC

There is a national trend developing. Today, more LLCs are being formed in the USA than corporations.

Necessity, it is said, is the mother of invention. Given the simplicity, protection and flexibility of the Limited Liability Company (‘LLC’), some states have begun to adopt the new ‘Series’ form of LLC. Starting 10 years ago with the concept of ‘cell’ captive insurance companies used offshore, the states of Delaware, Nevada, Oklahoma, Iowa, and now Illinois have embraced the new ‘Series’ LLC. It may be very well-suited for certain types of business and investment holdings — such as multiple income-producing real estate, aircraft leasing, container vessels such as tankers and cargo ships, franchise business enterprises (i.e. multiple fast food stores), trucking and transportation fleets, and companies having operating divisions that need to enhance the liability shield to better protect one portion of the business activity from another.

THE CONCEPT MAKES SENSE.

Use of multiple LLCs for property owners is a conservative and safe way to go. However, instead of registering a traditional LLC, forming a new ‘Series LLC’ may be a smarter way to go for real estate investors. The concept is simple. It’s based on the model of the Cell Captive Insurance Company used in other countries.

Even though one LLC ‘mother ship’ entity is formed, each separate cell within it (called a series) can be separately accounted for, and each can own assets and operate as a separate business enterprise. The idea behind the legislation is that the liability of one cell does not infect the others so long as guidelines are followed.

So now, instead of using land trusts or numerous traditional LLCs, a less expensive option may be to hold several rentals or fix-and-flip properties in one Series LLC -giving each cell within it a separate business designation, i.e. ‘Valley Properties LLC Series I or Series II or Series III’ or ‘Valley Properties LLC Series A or Series B or Series C’ for example. This simplifies formation and reduces legal and tax costs, since only one registration is made with the state and one single consolidated tax return is prepared. To keep the paperwork clean, each series will need to separately identify itself as distinct from the others in all business and tenant transactions — including lease and rental agreements, deposits, bank accounts etc. in the name of that particular series as opposed to the ‘mother ship’ LLC or any of the other series. Of course, it will need to register as a ‘foreign’ company in any other state in which it holds properties – but only once.

WORKING THE NUMBERS.

Real Estate investors ‘work the numbers’ every day. Acquiring an investment property, doing fix-up, advertising and insuring the property, attracting stable tenants, maximizing the tax advantages and working the cash-flow management are all part of how you build a portfolio of income-producing real estate. To save costs, rather than paying for multiple ‘traditional’ LLCs, consolidating through a single ‘Series’ LLC can offer significant cost savings.

Let’s consider one case example. If an investor has 20 properties and uses the new Series LLC, even if the franchise tax is applied the savings in multiple entity formation costs and tax preparation may be significant. The difference could be better spent on acquiring more income-producing rental properties and marketing for new paying customers, don’t you think?

WHAT ELSE TO CONSIDER?

o The Illinois-type Land Trust (sometimes called the ‘Real Estate Privacy Trust’) is effective for protecting privacy and avoiding probate, but it is not a liability shield. It is only a ‘privacy mask’. Some real estate investors in the past have used multiple real estate privacy trusts built around LLCs to save franchise tax fees but now that the Series LLC has arrived, that practice will fade away as did the 8-track tape and the Beta video system. With the Series LLC you can have privacy and protection in one entity.

o Using the Series LLC won’t make sense if there are a large number of un-related parties – because the flow-through considerations might be quite a burden to your accountant. After all, simplicity is what’s behind the new Series LLC. Real estate investors will want to take advantage of the Series LLC as a preferred form of property ownership, particularly where the LLC members are single owners, married couples, maybe a family trust or a family limited partnership.

o After your Series LLC is registered and the Members have signed the Operating Agreement, be sure to then sign separate ‘Series Agreements’ for each cell they choose to use. All future transactions should reflect that particular series’ name so that you reinforce the ‘separate’ quality of each of the series units or ‘cells’. As long as the revenue and expenses are separately accounted for (perhaps using Quicken® or QuickBooks®) and one single consolidated tax return is prepared, the fact that multiple properties are under the umbrella of one ‘mother ship’ (sub-designated as Series One, Series Two, etc.) it makes it easy to track revenues, costs, tenants, fees, property taxes and profits of each Series.

WHERE SHOULD I FORM MY SERIES LLC? About seven (7) states so far have adopted the Series LLC. However, four (4) other states have adopted legislation which strictly limits creditors of LLCs to a ‘sole legal remedy’ known as the ‘charging order’ (a passive lien on distributions). However, of all the 50 states only Nevada has done both. Once your new LLC has been formed, if you’re going to use it in another state, simply register it as a ‘foreign’ (out-of-state) company with that secretary of state’s office. Once it is registered to do business, we can show you the smart way to guard your liability risks and lawfully manage your tax costs so that you have more to put into your retirement accounts for the future.

Afterwards, in your business transactions, be sure to have each individual Series clearly distinguished from the others. Treat it as a separate business. Consider having each series use separate brokers, separate lenders, and maybe different banks just to make it clear they are separate. Rental agreements and all other paperwork will need to reflect the series designator so that it’s clear the tenant is not doing business with the LLC ‘mother ship’ but rather with one particular Series as a distinct business enterprise.

LOOKING AT THE ‘BIG PICTURE’.

Forming an LLC to hold investment property is a positive step in the right direction. However, it’s one step. Keep the ‘big picture’ in mind: what are you trying to accomplish by investing in real estate in the first place? You’re trying to build – and preserve – secure wealth that gives you cash flow and a future for your loved ones. Keep in mind that each property you acquire is part of a building process that is dynamic. You are using a system to find, acquire and finance each property. Use the tools that empower you and don’t be overwhelmed by the small details that can sidetrack you if you let them. Use professionals for tax preparation, property acquisition and finance, and keeping adding to your portfolio with focus and discipline. Use professional advisors as a support system but remember they work for you so that you can enjoy what you do best — acquiring more income producing real estate.

MMRDA – A Growth Engine For Mumbai Real Estate

With its city development and management capacities, Mumbai Metropolitan Region Development Authority (MMRDA) has set new benchmarks in the process of urban governance. The authority also enjoys the credit of undertaking path-breaking deals owing to which, Mumbai witness a lot of real estate and infrastructure developments today.

Take, the 553-acre commercial centre called the Bandra-Kurla Complex (BKC), for instance. MMRDA developed it from a swampland, in the early 1990s which is now buzzing as an active Secondary Business District (SBD) of Mumbai.

It was only last year in 2007, the MMRDA sold some chunks of land in the complex for about Rs 2,300 crore, and even managed a real estate transaction at a whopping $7,330 per square metre.

The other major developments MMRDA boasts as its contribution in the planned development of India’s most populous city:

. MMRDA’s Rs 1,493 crore extended Mumbai Urban Infrastructure Project (MUIP) to be launched soon in the entire Mumbai Metropolitan Region (MMR) – will include developing the road network with surrounding areas in the MMR. The project put forwards Rs 380 crore for the development of four main roads on Vasai-Virar stretch, Rs 449 crore for the development of four roads in Mira-Bhayandar, Rs 604 crore for the construction of Dombivli-Bhiwandi and Dombivli-Mumbra Link Road in Thane-Dombivli and Kalyan. It also intends to construct four flyovers on the Thane-Godbundar road, one on Panvel council; three within Thane Municipal Corporation and five main roads.

. MMRDA also proposes to develop growth centres similar to the BKC in the Mumbai Metropolitan Region.

. Recently MMRDA has got the sanction from Central Railway for the Rs 600-crore skywalk project for over 50 skywalks in the city.

Taking such initiatives, the MMRDA is not only prospering the infrastructure plinth of Mumbai but is also providing the real estate developers a potential platform to operate successful businesses.

In the lead this will also help boost up the Mumbai Real Estate [http://www.magicbricks.com/property/city/p/p~p!ct~4320!/Mumbai.real-estate] industry as all these developments will add on to the profile of the city, thereby attracting lot of buyer and investor interest in the times to come.

Panama City – New Law Gives Additional Boost to Already Booming Real Estate Market

‘Law 41’, recently passed by Panama’s National Assembly, created a stir throughout the region earlier this month as savvy investors recognized its potential to give a further boost to the already booming real estate market in the Republic of Panama.

The Law, designed to encourage the establishment of Multinational Companies in Panama, gives exemption to Multinationals from the payment of income tax in the Republic of Panama for all services provided to any entity domiciled outside Panama. In addition, it allows licensed Corporations to hire trusted foreign employees to fill management positions in the company authorizing them to work and reside in Panama which could spell an influx of international professionals moving to Panama.

In recent years, Panama’s significant real estate growth has been triggered by the country’s favorable economic development, which in turn has been boosted by political stability, an increase in tourism and the recovery of activity in the Panama Canal. However, this latest development will give an unprecedented additional boost to Panama City’s real estate market as multinational corporations relocate to Panama and the demand for residential and office space increases.

HP and Caterpillar are just two of the first to announce new offices in Panama City and with Proctor and Gamble also rumored to be relocating a significant part of its Latin American business to Panama, the trend looks set to continue.

While residential sales prices have been increasing, particularly in prime locations, another interesting trend has been those related to Class A office space.

Vacancy rates for Class A office space are already down from 30% last year to 3% meaning that today there is virtually no available Class A space in Panama City. In addition, with Class A office space in such demand, lease rates have increased by approximately 20% over the past year.

“Average lease rates for Class A are $16-$20 per m2 per month with total occupancy costs at $22.74 per m2 per month (below those in the region including Costa Rica, Dominican Republic, Bahamas, Uruguay, Caracas, Bogota, Mexico City, Buenos Aires, Sao Paulo, and Rio de Janeiro) giving ample space for growth and also allowing for multinationals moving to Panama”

“In addition, current sales prices are favorable, with the average sale price at $2,200 per m2. With these prices and Law 41 providing the final impetus for Multinational Corporations to relocate to Panama, the time is right for those looking to make an investment in real estate in Panama.”

Real Estate Investing In Mexico

Mexico is CHEAP! But its getting more expensive. As property values rise, especially in resort areas, investors wonder how they can profit from this.

Compared to major US cities, Mexico is still very very cheap. But compared to 5, 10, or more years ago, values have really risen.

There are some particulars to pay attention to with Mexican property purchases. For instance, Mexico forbids foreigners from owning land in resort areas. This is worked around by shares in a development, partnerships, or strata arrangements.

Foreign ownership is limited only in the “restricted zone,” land located within 100 km of the Mexican borders, and within 50 km of the coastline.

Instead, a real estate trust must be set up to hold title for the foreigner. Since foreigners are not able to enter into contracts in buy real estate, they must have a bank act on their behalf, much as a trust is use to hold property for minors because they also can not contract. Potential buyers should always get advice and have all real estate transactions overview by a licensed Mexican attorney.

Mexican real estate transactions are not carried out in the same manner as United States real estate transactions. The buyer must retain professionals to assist in the transaction. Mexico has yet to regulate real estate transactions. Real estate agents and brokers are not legally licensed in Mexico. Consequently, a foreign buyer cannot always depend on the normal safeguards that would be applied to real estate transactions in the United States. The old saying “let the buyer beware” is very appropriate. Anyone can set up a real estate company in Mexico. There are no special requirements or brokerage licenses to obtain. A would-be real estate agent merely has to establish a Mexican corporation, obtain a work visa, and he is in business.

As a rule, a foreigner should assume nothing. Was THAT enough of a warning to make sure to get good legal assistance in your transactions??

The best part about investing in Mexico is the proximity to North American investors. You can vacation and view your property, even stay in it if it is not occupied. Mexico has become North America’s playground, so it is likely that you would return every few years.

Anywhere in Mexico that there are tourists, there are vacation properties and property management companies. And realtor’s to re-sell your property when you wish to take your profits!

Your best bet is to travel to Mexico, find an area that YOU really like, and will return to again and again, happily. Then you get a two fold benefit from your investment – it draws you back to your version of paradise as well as hopefully making you money!

Commerical Real Estate Business Types

A condo unit could be owned by Joint Tenancy, by a Corporation, or a Partnership. If the organizational structure is as Joint Tenancy, the owners to be on the deed as joint tenants with each owner having an undivided equal interest in the condo and share in the financial obligations of the organization. If a Corporation is to be used then everyone would be issued shares of stock, and when an owner decided to sell their share, they could simply sell their stock in the corporation. Also if a Limited Partnership is used, the owners could sell their percentage in the partnership.

Probably the easiest method of ownership would be to use a Limited Partnership. With a Limited Partnership, the partners are only liable to the extent of their contributions, while the General Partner has unlimited liability. The General Partner, (or General Partners), is the only one who
makes the decisions for the partnership. (You could be the General Partner and serve as manager of the organization and buy insurance to cover any liability.) With a Corporation, each owner has shares of stock in the corporation and should they decide to sell their interest, they simply sell their shares. It might be a good idea to put the “right of first refusal” in the by laws. That way the other owners could have the first opportunity to purchase the stock before it was offered to the public.

The attorney would produce Articles of Incorporation, Bylaws and Shareholders Agreement and the corporation would be managed by a Board of Directors in accordance with the Bylaws.
Everyone could be a member of the board with the officers of the corporation elected by the board with everyone having one vote unless they had bought more than one time slot. The officers would be the President, Vice-President and Secretary-Treasury. The Bylaws would state what percentage of the total votes would have to be cast for approval of decisions by the corporation. Annual stockholders meetings would need to be conducted with all owners invited.
The attorney could put the language in the shareholders agreement as to how the corporation would handle a situation where one or more of the owners did not pay their monthly or annual contributions to meet the organization obligations. The Board of Directors can vote to sell
the shares of any shareholder who does not pay their assessments. The corporation should keep funds set aside to meet monthly obligations should an owner fall be behind in their payments.

You should confer with a CPA or tax attorney as you are setting up your organization to make sure you receive the proper tax treatment. If you use a corporation, you might be better off to term your corporation as a “non profit” corporation, but you will need proper tax advice on that. The corporation will not make a profit and its use is strictly for ownership of the unit. You would probably elect a Sub Chapter S corporation and some of the expense of maintaining a second home could possibility become a tax deduction for your partners. That would be great to have a second home in a resort area and have a tax deduction.

Understanding Why The Real Estate Fund Administration Needs To Be Outsourced

Real estate and private equity funds are defined as a type of mutual fund that focuses on investing in securities offered by public real estate companies. These are also described as securities that sell like stocks that are invested directly in real estate, either through properties or mortgages. Also known as REITs or real estate investment trusts, they receive special tax considerations and usually give investors high returns of investment.

There are different types of REITs that people can invest in and they are as follows: Equity REITS, which are when you invest in and own properties, which make you responsible for the equity or value of your real estate assets. The revenues for this REIT come in the form of property rentals. The second type is known as the mortgage REITs, which deal mostly with investment and ownership of property mortgages. These REITs involve loaning money for mortgage to owners or purchasing existing mortgages or mortgage-backed securities. Revenues for these types of REITs come from the interests earned on mortgage loans. And last but not the least, there are the hybrid REITs which combine the investment strategies of both equity and mortgage REITs.

A REIT is also a tax designation for a corporate entity investing in real estate, with the purpose of this designation being to reduce if not completely eliminate corporate tax. In return, REITs are required to distribute at least 90% of their taxable income to investors. These can also be companies that own and operate income-producing real estate that range from commercial office and apartment buildings to warehouses, hospitals, shopping centers and hotels to name a few.

Because multiple investments like these can be difficult to handle or manage, most REITs decide to outsource the services of a third-party fund administrator with specialized skills. They hire companies that not only offer traditional services but also companies that have significant real estate finance domain expertise. Outsourcing has long been something that is done by most companies as part of their re-engineering processes within their respective organizations.

Managing assets is no easy task and outsourcing especially as the more the organization grows, the more complex funds handling become, especially in real estate, which are multi-tiered financial structures that will need specialized management skills to run. Also, since they require timely financial reporting, tracking and analysis, it is important that they be streamlined for effective fund administration. Third party administrators enable you to fast track the processes, thereby increasing productivity and enabling more focus to be given to company growth.

Outsourcing third party fund administrators also allows for integrated communications especially since you will be dealing with asset managers, bank, legal and tax advisors. Third party fund administrators a customized fund community which can be accessed by your service providers to achieve faster tracking of important details regarding the fund structure, as well as access to key documents. These enhanced solutions reduce the number of manual errors and give you more time to focus on other priorities.

Commercial Real Estate Syndication: Property Selection and Purchase, Part 1

Let’s assume that you’ve decided to start assembling groups of investors to buy investment real estate. If you followed my Roadmap of a successful syndication in my previous articles (Part 1 and Part 2), then you know that the first step is to research a neighborhood and pick a property to buy. You’ll first want to focus on the type of commercial real estate to purchase for your syndications.

So what is the best kind of investment real estate? In the process of putting together your groups, you’ll come to realize that not all types of real estate are “created equal” from an investment perspective. Here is a breakdown of property types and their attractiveness as syndication investments:

LAND: Including Remote (currently unusable), agricultural, and “pre-builder” land.

1. “Remote” land is held for a long period of time with the expectation that growth will increase its value. Unfortunately, it’s highly risky and provides no current income for investors. The biggest down side is that investors would have to make periodic contributions of capital to cover expenses for taxes, insurance, and possibly loan payments.

2. Agricultural land is used to create crops for sale. It is essentially unimproved land used in a business and its value is derived from the ongoing operations of that business.

3. “Pre-builder” land is subdivided and sold off to various builders who complete the end product, whether housing or commercial. The land is effectively inventory and its value is created in the subdivision process.

CONSTRUCTION: Including new commercial and sub-division projects, beyond the pre-builder stage.

EXISTING: Operating residential and commercial income producing property.

If we go by the list above, we’ll soon realize that as syndicators, we’ll want to focus our efforts on only one of the major categories. This would be income producing rental property. There are several reasons for this, some obvious, and others that can get you into a heap of trouble if you don’t spend some serious time with your attorney. You’ll want to be clear on the benefits both you and your co-investors will derive from your real estate investment efforts, as well. This will help not only in focusing your efforts, but in promoting your properties to prospective investors. Here they are:

– Agricultural land, pre-builder land, and new construction projects derive their value from the efforts of others beyond the investment in the property itself. This creates a “corporate securities risk” for the money investors and puts the syndicator under the jurisdiction of both state and Federal securities laws. Ultimately, it means that you could be severely liable to your investors if things don’t go as planned. Do not operate in these types of investments without both significant previous experience and excellent legal help.

– Remote land will most likely require “capital calls” to existing investors to pay real estate taxes, insurance, and debt service as you wait for its value to increase. There is nothing an investor hates more than a call from his managing partner to ask for more money. Even if it’s disclosed up front and anticipated, it’s not good psychologically.

With existing properties:

1. Investors’ capital is contributed without the expectation of future contributions, in most cases.

2. There is minimal involvement of the capital contributors beyond providing the investment funds.

3. The owners can expect to receive spend-able income on a periodic basis.

4. The owners can expect an increase in equity through the amortization of any loan used to assist in the acquisition.

5. There is also a realistic expectation of an increase in value of the asset from both monetary inflation and appreciation.

6. There will also be tax benefits from depreciation of the improvements (not the land) and utilizing a 1031 Exchange reinvestment strategy at the property’s sale.

So as we go forward on this topic, we will focus on existing, operating, commercial rental income properties. This greatly reduces the syndicator’s exposure to regulatory requirements and provides investors with regular checks, making them very happy to get your phone calls!

A Property Management Company and Its Role

This article explains what a property management company does. It cites some of the benefits of using one.

A property management company is established by people for a specific purpose, which is to control and manage real estate. There are now so many of these types of companies in the world and all have the sole purpose of taking care of pieces and parcels of land at the behest of the lands owners.

Main Responsibilities

The main responsibility of this sort of establishment is the act of managing residential, commercial and industrial real estate. In doing so, those in charge of the company controls various aspects including managing and controlling personal property, physical capital assets and equipment which have been acquired and accumulated through taking care of several pieces of land and real estate. The manpower, processes and the systems that are involved in running the establishment are all included in a property management company. It involves so many direct and indirect things that one can say that it is just like managing another company. The financial, the people and the micromanagement of so many things are included in it.

Primarily, it always centers on real estate and property. While real estate is easily understood as land, property can be anything else such as companies, corporations, buildings and other things. The financial aspect is one focus which is crucial. There has to be gains and incomes for the outfit to be successful and for its clients to want to continue being with them. There are many cases of there being no clients, and the property management company only takes care of its own properties, assets and finances. Other possible problems that may need supervision are possible litigations that the owned real estate properties may be involved in as well as legalities concerning the tenants who may be leasing or renting the areas. In many cases, lawyers are employed specifically to litigate for real estate and other forms of property Landlord and tenant relationships should be clear and concise to be able to have a long lasting and tension free one. Lawyers are also usually involved in the drafting of contracts as well as the implementation of the conditions within these. There are laws that are primarily aimed at minimizing conflict between the landlord and the tenant and these are the common ground for most contracts unless there are other agreements stated otherwise. State wide and municipal laws and other rules and regulations which are focused on real estate and property are applicable for most contracts and lawyers are very useful when it comes to these aspects.

A property management company not only stops with managing and controlling pieces of land and buildings, the acquisition of additional properties is also another primary concern. Adding to the roster of properties involved in the company is yet another goal for it. After such acquisitions, the newly acquired property is then managed the same as the others contained in the establishment. The responsibility of each and every piece of property that is currently within that of the company is shouldered by it. Therefore, a property management company has a lot of responsibilities and roles under it.

Real Estate Management Processes

No matter what particular type of real estate your business has evolved ? residential, commercial or industrial ? a successful business model primarily focuses on real estate performance metrics, which help to streamline financial and operations processes. Monitoring the factors that affect the business particularly enhances the ability to improve the whole portfolio performance.

Appropriate performance measures can include calculation of rates of return, space quality and comparison to market, unresolved transactions, monthly feedback by staff, accuracy and completeness of property records, quality assessment of properties, client surveys on staff performance and occupancy patterns.

Occupancy rates can be increased on condition of the availability of the right amount of space at the right time ? that’s what prospective customers usually await. Meeting their expectations is key to customer retention and consequently to higher performance level.

In addition to other information, the occupancy rates can be viewed by property, lease changes, rent roll, operating statements and accounts receivable information. If the company gets the actual data, from accounts payable and receivable to lease origination and occupancy patterns it manages the entire portfolio cost effectively.

Building up value oriented real estate management, property companies look forward to the optimization of the portfolio and the relevant services seeking to measure strategic orientation, structures, processes, qualifications, performances together with the costs and resources by certain benchmarks.

Benchmarking is a continuous learning process targeted at creating advantages by means of identifying the problem, whether it is realization in profit or cost reduction potential, and finding the right solution. The latter can be the result of a profound analysis of the company’s own experience as compared with others’. The points of the comparison may be standardization of properties information, a uniform performance measurement, identification of performance gaps and others.

To find the best solution to future development problems the benchmarking system known as the Balanced Scorecard (BSC) is used for measuring and monitoring business performance. Designed as an early warning system it is based on the assumption that a future-oriented consideration of value influencing factors contributes to the optimized evaluation of the company’s future progress. The benchmarks provided by the system enhance detailed controlling necessary for the further promotion of corporate processes and enable the company to evaluate the future ability of the property. The Balanced Scorecard goals may include several strategies. For instance, customer orientation means achieving client satisfaction. Financial perspective concerns providing financial management of real estate assets as well as managing and minimizing risk. Internal processes involve standardizing and organizing the tools to estimate usage efficiency. Growth projection is connected with management efficiency.

In other words the company can employ the effective instrument to measure the performance of the portfolio with regard to real estate controlling. Relevant evaluation gives information of present risks of investment and use as well as corporate rating resulting thereof. Identifying risk areas is a prerequisite for building up an effective real estate and services controlling.

Does performance measurement tools worth investing in? Actually, the question is do you realty want to measure and control real estate performance? I’m sure you will find performance measure tools to be must have to this business.