Distribution keys - how and why should you use them?
When monitoring net operating income at property level, there are two different types of costs: direct and common costs.
Direct costs refer to the costs directly associated with each property, such as media costs. These costs are simply recorded via cost centers.
Common costs are those that are distributed across the portfolio, such as central administration. To get the most accurate picture of how each property is performing, it matters a lot how common costs are allocated. Some common ways of allocating costs are:
Rentable area
Energy usage per m2
Number of units
One problem, however, is that many real estate companies do this manually.
It is very time consuming and there is a high risk of human error as the process requires exporting different files from different systems and processing in Excel with advanced formulas.
Due to the high workload involved, this type of analysis is done too rarely, which means that important insights and optimizations risk being missed. Employees lack accurate information and up-to-date data, which hinders fast and accurate decision-making.
In addition, it is not an efficient use of resources. Staff spend more time collecting, compiling, processing and manually managing information than analyzing and acting on insights.
In Homepal, you can automatically allocate common costs using the allocation that suits your particular portfolio. With a few keystrokes, you save tons of time and remove the risk of miscalculations and mistakes.
By automating manual work, you can use your time and energy for value-adding activities like decision-making and optimization. Moreover, you can do so with continuous and constant access to accurate and up-to-date information.
