Fixed assets management has to do with the tracking of fixed assets to ensure proper and prompt maintenance, prevent theft, and accurate recording and reporting for financial accounting, amongst other things.
Tracking is an aspect of asset management that basically has to do with the monitoring of the location and condition of an asset.
For real estate assets such as buildings and ongoing constructions, asset tracking is of great importance. Although buildings or ongoing construction works do not need their locations tracked since they are immovable, there are some other reasons for them to be monitored properly.
Let’s have a look.
Why Should You Track Your Fixed Assets?
Fixed assets are prone to depreciation due to aging, and if they are not properly managed, the risks are even greater.
Tracking your properties not only saves you some money but in the long run, could help you earn even more money.
Asides from depreciation gauging and control, here are some other reasons landlords and property managers should ensure they track their assets:
Quick Access to Asset Information
More often than not, landlords or property managers have more than one property under their care.
Keeping tabs on all these, and getting the right information when needed, could turn out to be more difficult than necessary if proper tracking is not carried out.
Tracking your assets provides you with quick access to all necessary information that you might need, such as:
- Which properties are currently on a lease
- To whom the properties are leased to
- The due date for rent renewal
- Which properties are due for maintenance checks
- Financial history
Improved Customer Service
Keeping tabs on your assets ensures that you are ready for any situation that is likely to arise in terms of repairs and renovations, or any other needs your tenants might have.
This ensures that you can respond very quickly to these issues, thereby leaving your tenants satisfied and impressed with your services.
This customer satisfaction goes on to increase the chances of your tenants renewing their rents, or referring you to prospective tenants.
Unexpected maintenance is not a rare occurrence and can turn out to be a big problem if you do not have any plans put in place as a quick solution.
However, consistently monitoring your assets makes it possible for you to carry out preventive maintenance, which is an effective way of preventing any unexpected challenges from springing up.
Prevents or Controls Theft
For landlords who rent out buildings already furnished with chairs, shelves, beds, kitchen equipment, and the likes, keeping track of these assets to ensure losses are either prevented or discovered will do you a lot of good.
This is because some of your tenants could mistakenly take the equipment that belongs to you when they move out, thereby making you run at a loss in a bid to replace these things.
Tracking Your Fixed Assets
Having gone through the benefits you stand to gain from proper tracking of your properties, you might wonder then what steps you need to take to efficiently track your assets.
As mentioned earlier, location tracking using GPS and tagging are not exactly necessary for buildings since they are not going anywhere.
So, here are some points on the other ways through which you can track your fixed assets:
Calculation of Depreciation Rate
Depreciation is a reduction in the value and utility of property mostly due to aging and poor maintenance.
One way for property managers to track their buildings is by monitoring the level of depreciation it undergoes periodically.
Asides from helping with your Real Estate Finance, doing this also helps you know how much longer your property can be utilized and how you can slow down the decline.
Some of the methods used in calculating depreciation are:
- Straight Line Method
- Double Declining Balance Method
- Sum of the Years Digit Method
- Units of Production Method
Making use of inventories is a practice that falls under Real Estate Bookkeeping. Ensuring you keep an accurate, detailed, and regularly updated inventory would go a long way in helping you monitor your properties.
Vital information such as the number of properties in your care, changes in the condition of properties, lease agreements, financial transactions, maintenance activities such as repairs and renovations, etc. should be properly recorded.
This promotes easy monitoring of your properties and quick access to information.
A computer inventory is very similar to a physical inventory, with the only difference being that the former is software-based.
By creating a fixed asset database making use of a spreadsheet or other advanced software, you could record all of the vital information mentioned above and also calculate depreciation rates on your properties, thereby aiding accurate financial reporting.
Typically, the choice of which inventory -physical or computer- to use depends on your preferences.
Computer inventories are more expensive and could be a little difficult to use for a computer illiterate, however, they carry out more functions, and information recorded on them can be accessed from any location.
Physical inventories on the other hand, although simple to use and less expensive, are limited in both function and accessibility.
Fixed Assets Tracking Software
Technology is constantly evolving to provide people with more advanced methods that can be used in carrying out different functions.
One of such methods is the fixed asset tracking software. This is a digital tool that helps property managers keep a detailed view of their properties and carry out revenue calculations, market surveys, and data analysis.
These functions promote efficient asset tracking, thereby helping real estate investors to maximize their property value and increase turnover.
Whether it is through the use of asset tracking software or other traditional methods, real estate investors should ensure their investments are properly tracked and maintained.
The tips mentioned above would help in the tracking of properties not only to mitigate losses but also to increase the amount of value each asset brings you.