New Year Resolutions for CRE Firms: 3 Tips to Create & Achieve Your Goals in 2024

The new year is here! To celebrate, you may have set some personal goals that you’d like to achieve throughout the year. But what goals have you created for your CRE portfolio or firm? If you haven’t yet determined your business goals and how to accomplish them, you may want to take a minute to jot down ideas, connect with your internal and external stakeholders, create and document a formal plan, and make plans to execute on it!

We’ve created some ideas to consider as you create and prepare new year resolutions for your firm.

New Year’s Resolution: Enhance Your CRE Cashflow Management for Sustainable Growth 

Cash flow is more than likely your firm’s top priority. With rising costs, you’re probably considering whether you’ll have enough money to make debt service, distributions, and lender escrows. Or, you’re thinking about controlling vendor payments and balancing the need and risk of capital projects. As expenses and delinquency rise and income and occupancy cool, you need to be nimble and quickly adjust your cashflow management strategies with the market (not because of it).

But, it can be difficult to drive and optimize cash flow without having accurate, easily accessible portfolio data. A lack of portfolio insights can prevent you from fully understanding your portfolio’s performance today, accurately projecting its trajectory, and knowing which steps to take next. These roadblocks can limit the effectiveness of your cashflow optimization plan, and you may miss red flags in the portfolio that require action sooner rather than later.

To make progress toward this resolution, you may want to consider: 

• Conducting a comprehensive cashflow analysis
• Exploring cost optimization measures
• Diversifying your portfolio
• Regularly reviewing your strategy, benchmarking against your peers, and making adjustments as necessary 

New Year’s Resolution: Optimize Business Operations with Asset Management Software

Today, technology is at the core of effective portfolio management. The right asset management solution can enable your firm to extract actionable insights about your portfolio. By implementing and leveraging a tech solution, you can gain the competitive edge to optimize cashflow for faster returns and propel your firm’s growth.

As the market changes, you’ll want a solution to help you manage yield expectations better, monitor and track performance, understand how your properties are performing in comparison to peers, and more. In short, you want to be able to shift your strategy with the market – not because of it. Unfortunately, spreadsheets are not suited to address many common CRE asset management challenges. Nor can they effectively keep a pulse on changes within your portfolio.

To make progress toward this resolution, you may want to consider: 

• Evaluating asset management software solutions, such as Lobby CRE
• Determining manual or time-consuming tasks that could be streamlined and automated with technology
• Identifying your internal champions (i.e. power users) and ensuring they’re fully trained on your new solution

New Year’s Resolution: Establish Financial Clarity by Creating a Budget and Proforma

A pro forma document typically provides in-depth details regarding anticipated revenues, including sources such as rental income, as well as operational costs like maintenance, insurance, and property taxes. Additionally, it encompasses debt service if the property is financed, and outlines capital expenditures for planned improvements or repairs. Essentially, a robust budget and proforma can enhance your firm’s ability to make informed investment decisions and navigate the complexities of commercial real estate finance.

To make progress toward this resolution, you may want to consider: 

• Identifying your financial goals and metrics, like IRR, that should be tracked
• Analyzing historical financial data to identify trends and potential risks
• Factoring in contingency reserves to account for unexpected expenses or market fluctuations
• Collaborating with stakeholders, including lenders, investors, and project partners, to validate assumptions and projections.

The commercial real estate market is constantly shifting. Now, more than ever, CRE firms need solid asset, debt, and equity management strategies if they are to “survive until 2025”. A carefully crafted new year resolution can help guide your firm through the uncertainties of this year.

Want more tips on how you can prepare an actionable new year resolution for your firm? Contact us today!