What are the best practices for forecasting and budgeting real estate expenses?

1 Understand your portfolio

The first step is to have a clear and comprehensive understanding of your real estate portfolio. This includes the location, size, type, lease terms, occupancy, and performance of each property. You should also assess the current and future needs and preferences of your tenants, clients, and employees. This will help you identify the opportunities and risks in your portfolio, as well as the drivers and constraints of your real estate expenses.

2 Use reliable data and tools

The second step is to use reliable data and tools to forecast and budget your real estate expenses. You should collect and analyze historical and current data on your portfolio, as well as external data on the market trends, regulations, and benchmarks. You should also use robust and flexible tools that can handle complex and dynamic scenarios, such as spreadsheets, software, or cloud-based platforms. These will help you create accurate and realistic forecasts and budgets that reflect the changing conditions and expectations.

3 Align with the business strategy

The third step is to align your forecasts and budgets with the business strategy and objectives. You should communicate and collaborate with the key stakeholders and decision-makers in your organization, such as the CFO, the CEO, and the business unit leaders. You should also align your forecasts and budgets with the corporate vision, mission, values, and culture. This will help you ensure that your real estate expenses support and enhance the business performance and growth.

4 Review and update regularly

The fourth step is to review and update your forecasts and budgets regularly. You should monitor and measure your actual real estate expenses against your planned ones, and identify any variances or discrepancies. You should also track and evaluate the impact of any changes or events that may affect your portfolio, such as market fluctuations, tenant movements, lease renewals, or property acquisitions or disposals. This will help you adjust and optimize your forecasts and budgets accordingly, and avoid any surprises or errors.

5 Seek expert advice

The fifth step is to seek expert advice from external sources when needed. You may not have all the skills, knowledge, or resources to forecast and budget your real estate expenses effectively. You may also face some challenges or uncertainties that require specialized or independent guidance. In such cases, you should consult with professional advisors, such as consultants, brokers, appraisers, or auditors. They can provide you with valuable insights, recommendations, or solutions that can improve your forecasting and budgeting process.

6 Learn and improve continuously

The sixth step is to learn and improve your forecasting and budgeting process continuously. You should not treat your forecasts and budgets as static or final documents, but rather as dynamic and evolving tools. You should also not be complacent or satisfied with your current results, but rather seek to enhance your skills, methods, and outcomes. You should solicit and incorporate feedback, best practices, and lessons learned from your own and others' experiences. This will help you refine and advance your forecasting and budgeting capabilities and performance.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?