It’s a difficult time for many Commercial Real Estate (CRE) operators. As interest rates continue to rise, post-pandemic occupancy challenges persist, particularly in office and retail. It’s a challenge affecting many CRE investors, but not all – performance remains strong in some asset classes including student housing and self-storage.
The fast-changing conditions in the commercial real estate industry underscore the importance of having a clear understanding of the financial position of your business. For CRE owners and operators, it’s near-impossible to make high-confidence decisions without sufficient access to timely, precise financial data.
The support of an accounting team that’s well-versed in the commercial real estate industry is a vital asset. Of course, it’s possible to employ an in-house finance team, but for many CRE operators, this is neither necessary nor financially feasible. Instead, many CRE funds are turning to outsourced accounting teams with the skills and capacity to handle all manner of complex real estate accounting challenges.
These types of services represent a great fit for many small to mid-sized CRE funds that lack the scale to justify an in-house accounting department. They offer a comprehensive suite of services that help real estate investors gain assurance they’re not missing anything that could hamper the performance of their portfolio.
If you haven’t worked with an outsourced financial services firm before, it’s likely you’re unsure of how these relationships are typically structured. In this guide, we detail the types of tasks you can delegate to an outsourced accounting team and explore some of the benefits that these relationships typically deliver.
Commercial real estate businesses can be extremely complex – particularly larger funds with a variety of assets. Effectively understanding performance on both a short-term and long-term basis is vital to success. Doing this effectively requires expertise in three key areas: bookkeeping, accounting, and financial leadership.
Fortunately, each of these categories of tasks can be outsourced to an external provider. Read on as we break down the different types of commercial real estate accounting tasks and detail how you can outsource them to a third-party firm.
Bookkeeping is the foundation of all financial analysis. While bookkeeping itself is relatively simple, it’s a labor-intensive, often manual process that demands attention to detail. To ensure your CRE firm always has access to accurate, timely financial data, consider outsourcing certain bookkeeping tasks, including:
By outsourcing these tasks to a partner with proven processes, CRE operators can reduce errors in their financial reporting and streamline decision-making.
Outsourced CRE accountants operate at a higher level than bookkeepers, taking charge of running the daily operations required to keep your fund operating like a well-oiled machine. They typically handle tasks such as:
While most accountants don’t yet have the strategic vision to build for the future of your portfolio, they do bring the expertise required to ensure your business continues to meet its financial commitments.
An outsourced Chief Financial Officer (CFO) is an invaluable asset for any commercial real estate fund. These services are bespoke, providing CRE operators with the strategic insights and advice they need to build the foundation for long-term success.
Outsourced CFOs can help out in a wide range of areas. Some of the most common include:
An experienced CFO service combines the combined wisdom of proven executive leaders from every area of the commercial real estate industry, offering your fund unparalleled insight as it navigates challenges and assesses growth opportunities.
Considering the wide variety of tasks outlined above, it’s clear outsourcing accounting and financial processes for your commercial real estate fund can deliver a series of benefits to your overall business.
An outsourced real estate accounting and finance team will encourage your firm to adopt a consistent, robust approach to financial reporting that drives higher levels of clarity. Some of the key benefits of this include:
Together, these benefits add up to one key impact: access to more accurate financial information with which you can make more informed decisions. That allows for better investment decisions, more productive relationships with investors and lenders, and an ability to troubleshoot issues and uncover opportunities within your portfolio.
Maintaining a keen focus on the financial performance of every asset in your CRE portfolio is central to your success as an investor and operator. But for many CRE operators, this can be a complicated process. It’s likely you operate multiple properties, all at different stages in their lifecycle, from development through to exit.
The characteristics of CRE present a wide variety of finance and accounting challenges. When you only operate a property or two, it’s possible to manage these yourself, but once you start expanding your portfolio, it’s crucial you bring in qualified financial professionals with a demonstrated knowledge of the commercial real estate industry.
At G-Squared Partners, that’s exactly what we provide. Our team offers a full range of outsourced accounting and financial services for commercial real estate operators, covering everything from basic bookkeeping to high-level strategic guidance. We serve clients in various areas of the commercial real estate industry, operating as a long-term financial partner that builds for lasting success.
To learn more about how G-Squared Partners can support your commercial real estate business, contact us today.