{"id":54528,"date":"2020-05-20T14:46:09","date_gmt":"2020-05-20T14:46:09","guid":{"rendered":"https:\/\/www.tbmaestro.com\/uncategorized\/whats-the-cost-of-maintaining-your-real-estate\/"},"modified":"2023-06-29T19:10:06","modified_gmt":"2023-06-29T19:10:06","slug":"whats-the-cost-of-maintaining-your-real-estate","status":"publish","type":"post","link":"https:\/\/www.tbmaestro.com\/en\/assets-management\/whats-the-cost-of-maintaining-your-real-estate\/","title":{"rendered":"What\u2019s the cost of maintaining your real estate?"},"content":{"rendered":"[et_pb_section admin_label=”section”]\n\t\t\t[et_pb_row admin_label=”row”]\n\t\t\t\t[et_pb_column type=”4_4″][et_pb_text admin_label=”Text”]\n
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Managing a property portfolio means managing its performance, for the benefit of users, and its risks, to best, anticipate problems that would require immediate and often ill-prepared action. But almost always, property management activities are carried out in a constrained financial environment. It is therefore necessary to be well aware of one’s financial needs in order to target a budget that is in line with the issues and objectives of one’s organization. But what are the accounting techniques to identify the required budget envelopes? And how can operating expenses (OPEX) and capital expenditures (CAPEX) be adequately estimated? <\/p>\n\n

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A bit of history: the origins of value counting and its objectives<\/strong><\/p>\n\n

The idea of accounting for the activities of an organization dates back to the time of European antiquity, but it was officially theorized by the Italian Franciscan Luca Bartolomes Pacioli in a book published in 1494 in Venice. Much more than the simple recording of acts related to the purchase of products or services, accounting aims, from its origins, at estimating the value of tangible goods considered as useful assets for production and trade in order to determine an exchange value and possibly a profitability. And in the case of accounting for cities and other public entities, the interest is not profitability, but rather the fair expenditure to achieve the objectives of society. <\/p>\n\n

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For example:<\/em><\/p><\/blockquote>\n\n

A cow is an asset that costs \u20ac1,500 to buy and has a milk production of about 10,000 liters per year. It brings in about \u20ac345 per 1,000 liters but also generates many expenses to feed and maintain it during its 15 years of productive life. The accounts show a profitability. <\/em><\/p>\n\n

By analogy, in the field of public expenditure, let us take the case of a primary school: the building is a physical asset enabling the headmaster of the establishment to train citizens who will be both bearers of the values of a country and contributors to the wealth of that country through their economic actions. There is therefore a series of expenditures necessary to achieve the objectives during the nine to ten years of a pupil’s schooling. <\/em><\/p>\n\n

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As with any activity, the right cost is sought. Today, accounting standards are tending to become uniform in organizations with certain requirements for the use of IFRS in addition to the French standard. The approach often used is that of the historical view of expenses based on general accounting, which is an information tool aimed at the legal correctness of the use of funds. In addition, it is essential to set up analytical accounting, as an analytical tool that enables good decisions to be made. <\/p>\n\n

In the field of physical asset management, the knowledge of the architect, engineer, and all other technicians responsible for the construction or operation and maintenance of a building is essential to establish both the structure and content of cost accounting.<\/p>\n\n

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Applying accounting tools<\/strong><\/p>\n\n

Even with the best will in the world, an accountant, experienced in the exercise of general accounting, needs the asset management expert, whether internal or external to the organization, to properly estimate the financial needs required throughout the life cycle of an asset.<\/p>\n\n

An analysis of the expenses incurred in the context of real estate asset management reveals essentially two distinct but complementary types of budgets:<\/p>\n\n