Property investors with multiple units have to maintain hundreds of lease agreement documents for their tenants. Without a workable strategy, these investors can lose valuable time and resources going through detailed leases.
A lease abstract is a solution for property owners in such a position. Lease abstracts provide a brief analysis of your lease. The summarized information is entered in a lease abstract template that is scannable and easy to understand. An abstract contains all the crucial information that an investor needs to make a decision.
A standard lease abstract template for all leases simplifies the data entering process and ensures relevant parties can find important clauses quickly. Modern automated lease abstraction tools also have an auto-update feature that automatically adds agreed changes during the lease term.
A lease abstract is a must-have for a property investor to succeed in having an efficient property management structure. Read on to discover more valuable information about lease abstracts.
Importance of Lease Abstract
An airtight lease often contains multiple pages of legal, financial, and business information that requires a high level of attention to detail. Incorporating a lease abstract helps landlords and property owners do the following:
- Save on resources: A lease abstract can integrate with property management software that tracks events and important dates. The software sets reminders for landlords, which helps them manage tasks such as collecting fees, paying taxes, maintenance costs, and updating renewal rates. It would take hours to update such information on an original lease document.
- Risk mitigation: A summarized lease abstract helps landlords comply with all clauses of a lease. It also gives landlords a clear picture of their responsibilities and that of the tenants. Such measures ensure property owners reduce the risk of making mistakes or failing to communicate something that could lead to losses.
The Lease Abstraction Process
The abstraction process begins after you’ve:
- Started the landlord-tenant relationship
- Worked on an abstract lease template that you’ll use for all leases
- Chosen a competent property management software
Once the lease is signed, you or your team goes through the document with a keen eye for essential details and enters it into a pre-structured lease abstract template.
The abstraction process is tedious when done manually. Property owners are turning to advanced technology to help them manage their leases. Modern real estate software programs categorize and arrange the lease information efficiently.
Once the first draft of the lease abstract is ready, you should go through the document to ensure that the most crucial points are included, such as the rent amount and the lease expiration date. If you notice an omission or vague statement, you can return to the lease and manually input this information.
This process is necessary to eliminate as many errors as possible and reduce your investment risk level.
What is Automated Lease Abstraction?
Automated lease abstraction is a simplified and efficient way of creating your lease abstract using advanced property management software with artificial intelligence. The AI goes through your lease, picks out important details, and transfers them to your customized lease abstract template.
The use of AI for lease abstraction offers faster data retrieval that takes minutes instead of hours. There’s still a need for your or your team to review the documents for errors, but the mistakes made are minimal, if any.
Lease Abstraction Tips
- Hire a team of attorneys, real estate brokers, or professional abstractors to work on the lease abstracts. Sometimes a mistake can severely cost you financially. Contracting the work to professionals reduces your risk as they’ve insurance to cover costly errors.
- Have one format for all lease abstracts; you’ll internalize the document and know where to look for critical points when the need arises. It also simplifies the work for abstract writers.
- Ensure the abstract is short but practical; balance the abstract’s length to avoid it being too short and missing necessary details or too long and losing its purpose. The recommended length is two to three pages.
- Use a scannable format in your abstract; let your lease abstract template have short and clear paragraphs, headings, and bolded sections.
Simplify Your Lease Abstraction Process
UnitConnect’s property management software contains a complete set of tools that helps you manage all your property management tasks. It integrates with your lease abstract and updates crucial information such as lease renewals, amendments, and transactions.
Schedule a demo today and simplify your lease management.