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Intellisys has an impressive track record working with Property Management and Accounting, for owners/operators of Multifamily, Single Family, Commercial/Retail, Affordable Housing, Public Housing, Student Housing and Property Management companies. Our teams fully understand the nuances of servicing the needs of real estate companies by focusing our expertise on real-time task management. We enable you to:

  • Build competitive advantage from superior processes
  • Reduce cost and increase revenue
  • Re-engineer processes and adopt leading technology solutions
  • Improve quality and control by reducing challenges related to regulatory compliance and risk management
  • Enhance scalability and flexibility
  • Reduce operational expenses and increase capital efficiency

Intellisys property management services offer the value that extends well beyond cost arbitrage, improving quality and productivity through efficient process enhancement.


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U.S. adds more jobs than forecast in June – Bloomberg

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The rebound in the U.S. labor market accelerated in June as broader re-openings spurred more hiring last month, though filings for unemployment benefits remained elevated last week as coronavirus cases picked up

Payrolls rose by 4.8 million in June after an upwardly revised 2.7 million gain in the prior month, according to a Labor Department report Thursday. The unemployment rate fell for a second month to 11.1%, still far above the pre-pandemic half-century low of 3.5%.

Economists had forecast payrolls to rise by 3.23 million—the median in a range of 500,000 to 9 million—and an unemployment rate of 12.5%.

How can Intellisys Help?

Remote Work Is Here to Stay – The COVID-19 pandemic will set a “new normal” for the office workplace as companies adopt and integrate remote work practices deployed during the pandemic. Therefore, it will transform from a single location to an “ecosystem of different locations and experiences.”

Intellisys, an Illinois company, is a global provider of BPO and Information Technology services and solutions. Intellisys has a State-of-the-Art ISO 9001:2015 / 27001:2013 certified delivery center in Chennai, India. Over the past 22 years, Intellisys has been helping Real estate companies across asset class with qualified and experienced Property Accountants and Fund Accountants who are Domain Experts.

Our services can offer significant benefits

  • Reduce operational costs between 40% – 50%
  • Extensive use of RPA (Robotic Process Automation) tools which allow cutting time and costs significantly
  • Flexibility (Accordion Model – Increase and decrease team size at a very short notice)
  • Can assign large teams of real estate domain experts at a very short notice
  • Fixed Fees – No hidden charges
  • Multilingual Staff (English, Spanish and French)
  • Ad-hoc projects (such as Audits, Seasonal demands)
  • Assist re-purpose existing staff
  • Motivate the existing staff and offer them upward mobility
  • Assist to streamline operation

Please contact riyer@intellisystechnology.com or to learn about Intellisys, its service offerings and how we can assist you visit www.intellisystechnology.com


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Underwriting of Property to Sell

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Underwriting is an extension of Property valuation. A Property is evaluated for multiple purposes and the valuation method varies depending on the purpose.  A Seller would evaluate a Property to arrive at a Price, which is called as “Offer” or “Asking Price”. Based on the Price quoted by the Seller, the Buyer performs Underwriting to evaluate and forecast the performance of Subject Property to negotiate the Deal. Underwriting Analysis is done based on historical data and Assumptions. We explain some of the key terms, and jargons that are distinctive to this industry in this blog.

Assumptions / Past Analysis:

  1. Reports:
    • Rent Roll Statement: List of all the rentals, Unit-wise, in a specific Property
    • T12 Income Statement: Trailing twelve months statement of Income pertaining to the Property
  2. Price or Value of Property:
    • Offer / Asking Price: It’s the Price quoted by a Seller after performing Property Valuation
    • Whisper Price: It’s the price as per Broker at which if we bid, we can secure the Deal
    • Sale Price: It’s the price at which we, as a Buyer, shall quote to the Seller for negotiation
    • Appraisal Review Board (ARB) Value: It’s the aggregate Market value of Land and Building as per the County’s Central Appraisal District (CAD) on which Property Tax is calculated
  3. Forms of Capital:
    • Sponsor Equity: Capital that is raised by the Promoters or General Partners (GP)
    • Investor Equity: Capital that is raised by the Investors or Limited Partners (LP)
    • Debt: Capital that is borrowed from a Financial Institution
    • Working Capital: Capital that is required for running the day to day operations in a business, it can either be raised or borrowed
  4. Financial Obligations:
    • Cost of Equity: Dividend that is paid to the Equity holders
    • Cost of Debt:  Interest that is paid to the Financial Institutions
  5. Replacement Reserve: Portion of Profits that is set aside to provide for the periodic replacement of building components that wear out more rapidly than the building itself
  6. Capital Improvements or Rehabilitation Cost: The average cost at which Units of the property are expected to be renovated during the holding period
  7. Loan-To-Value or Debt-Equity ratio: The percentage or ratio at which Equity & Debt is preferred to be maintained for arriving at Sale Price
  8. Growth Rates: These can be applied on any item of Income Statement in order to forecast, they can be arrived at either based on past trend or industry norms or market comps
    • Rent
    • Other Income
    • Opex
    • Vacancy Rate
    • Bad Debt
    • Tax Growth
    • Loss to Lease
    • Concessions
    • Capital Expense
  9. Assets Under Management (AUM) Fee: A fee that is collected by the Sponsors for managing the Asset which in this case is a Property, generally its paid out as salary or fee to the employees of Sponsors or Vendors
  10. Acquisition or Disposition Fee: The cost incurred to sell the property mainly consisting of Sales Commission
  11. Closing Costs: The Processing fee for closing a Deal
  12. Hurdles: These can be set for any of the KPIs that are listed under Financial Analysis to perform Waterfall analysis

Analysis:

  • Financial Analysis:
    1. Cap Rate: The property’s one-year rate of ROI
      • Going-in: Property’s projected first-year NOI divided by the purchase price of the property
      • Terminal / Exit / Reversionary: Property’s projected first-year NOI divided by the sale price of the property
    2. Return on Equity: Percentage of Return (i.e., Capital Gains plus Net Cash Flow) on Equity portion of capital
    3. Return on Investment (ROI): Percentage of Return (i.e., Capital Gains plus Net Cash Flow) on Initial Investment
    4. Capital Gains Yield: Percentage of Return (i.e., Capital Gains) on Offer Price
    5. Net Present Value (NPV): The difference between present (discounted) value of cash inflows and present (discounted) value of cash outflows
    6. Internal Rate of Return (IRR): A discount rate that makes the NPV of cash flows equal to zero
    7. Equity Multiple: The number of times Return (i.e., Capital Gains plus Net Cash Flow) over & above Equity portion of capital
    8. Debt-Service Coverage Ratio: A measurement of NOI available to pay Debt obligations
    9. Cash on Cash returns: Percentage of Return (Net Cash Flow or Net Income) on Opening Balance of Equity for a particular year
    10. Preferred Return or Hurdle Rate:  A minimum threshold return that LPs must receive before the GP can receive from the balance interest
  • Non-Financial Analysis:
    1. Demographics
    2. Flood Hazard Zone
    3. Crime Stats
    4. Market Comps (Amenities, Rent etc.)
    5. Accessibility to Restaurants, Schools / Colleges, Hospitals, Entertainment, Retail, Transport (Bus / Train / Airport)
    6. Vehicles Per Day (VPD)

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Unemployment rate unexpectedly falls -The rebound signals the economy is picking up faster than thought

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As per Bloomberg America’s labor market unexpectedly rebounded in May, signaling the economy is picking up faster than thought from the depths of the damage from the Covid-19 pandemic.

Nonfarm payrolls rose by 2.5 million after a 20.7 million tumble the prior month that was the largest in records back to 1939, according to Labor Department data. The jobless rate fell to 13.3% from 14.7%.

The data show a U.S. economy pulling back as states relax restrictions and businesses bring back staff. Unemployment rates declined among adult men and women, white Americans, and slightly for Hispanic and Latino Americans.

The New Normal

All businesses post Covid-19 are set to change.  What is also for sure is life that we get back to will be significantly different from the one we had before the outbreak. While we do not portend to know the future, and our lens is limited by our own experiences and a reflection of the past, it is in times of great disruption where great opportunity abounds. It is not just across the spectrum of the industries but among others that we cannot even imagine. 

The current real estate market is much like a Rubik’s cube. Once we think we have it figured out, we look at it from another angle and find out we still do not have it right. There are many factors complicating the current market.

One thing that we are seeing very clearly is a number of clients who were insistent on work being done in house on site are now very open to working from a remote location.  After having worked for 22 years, we can with great confidence say Intellisys is a Subject Matter Expert in this area.

Intellisys Capabilities

Intellisys Technology LLC is a global provider of BPO and Information Technology services and solutions. Intellisys has a State-of-the-Art ISO 9001:2015 / 27001:2013 certified delivery center in Chennai, India. We provide high quality and cost-effective solutions to Real Estate businesses on time and within budget. Over the past 22 years, Intellisys has been helping Real estate companies across asset class with qualified & experienced Accountants without any wait time. All of them are Domain Experts.

Our services can offer significant benefits

  • Reduce operational costs up to 40%
  • Extensive use of RPA (Robotic Process Automation) tools which allow cutting time and costs significantly
  • Can assign large team of real estate domain experts at a very short notice
  • Fixed Fees – No hidden charges
  • Multilingual Staff (English, Spanish and French)
  • Flexibility (Accordion Model – Increase and decrease team size at a very short notice)
  • Ad-hoc projects (such as Audits, Seasonal demands)
  • Assist re-purpose existing staff
  • Motivate the existing staff and offer them upward mobility
  • Assist to streamline operations

Please contact riyer@intellisystechnology.com or to learn about Intellisys, its service offerings and how we can assist you visit www.intellisystechnology.com 

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Custom ‘Point of Sale’ Billing System

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High volumes of cash and credit cards that pass through a billing counter each day makes POS system a necessity, it can be in a Mall, Restaurant, Departmental stores or any other place. Not all POS systems suit one’s needs especially if the needs are peculiar. We had one such client with peculiar needs & it was a Golf Sporting Club with 1 Canteen & 2 outlets on their field.

Scope of the Project given to us was a one-liner & that is to install a POS billing system in order to replace their existing system which is decentralized / manual & to avoid pilferage. Before submission of the Proposal, based on the learnings from our experience, we conducted Due Diligence to evaluate the Project Scope & identify hurdles that we may be facing during the course of Project. This is a very important step & some may believe it to be unproductive by assuming that things can be dealt when we reach that stage of the Project but our belief is in providing exceptional service & commitment so we leave no stone unturned.  

Due Diligence proved to be an eye opener as there were many findings of which we are going to share few in this Blog. Our first finding was that, out of the 3 locations where POS system had to be implemented, only the Canteen was connected with Internet while remaining 2 Outlets were in a remote location without any sort of network or signal. After a lot of deliberation, we laid out couple of options to the Club’s management. Options available were to lay the Network or continue to remain offline & push the data from POS device whenever its brought within the reach of Wi-Fi signal. Everyone opted to go with the latter option while considering to lay Network at the time when they expand, which was in another year’s time.

Our next finding was that there were 2 categories of Customers – Members & Guests. The problem was not having 2 categories but identifying multiple workflows while developing the Billing application. Client then started mentioning the various workflows that were required like

  1. Guests would stop using the current Token system & start paying only using Cards.
  2. Members shall not pay any money at the POS instead their transactions should be clubbed in the Monthly statement so that they can pay online along with their outstanding dues.
  3. Members should have an option to Split bill and sign their copy of acknowledgement receipts.
  4. Validation for Members has to be thru Thumb impression.
  5. During any given day, Members are not expected to place their Thumb, more than once, for validation.

To finalize the above workflows, we had to deliberate with the Management multiple times as they were very wary about it & we had to boost confidence in them by explaining the pros & cons that were involved.

One other finding was that the Client wanted POS transactions to be synced with their Accounting system (Tally). After deliberating, we identified that the version of Tally which they were using is freezed due to some other integration so it was not possible to sync the data. Instead, we built a report to export the data from our application, so that User can manually upload the file into Tally.

There were many other insignificant findings that we found, but not included in this Blog, during the course of our Due Diligence but everything was a learning.   


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NMHC Reports 90.8% of Apartment Households Paid Rent by May 20

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Today, May 28, 2020 I read an article written by Mary Salmonsen in Multifamily Executive Magazine

Quote

The National Multifamily Housing Council’s Rent Payment Tracker, which draws from rent collection activity in 11.4 million units of professionally managed market-rate housing, has found that 90.8% of apartment households made a full or partial rent payment by May 20.

This marks both a 2.2-percentage point drop in the share of Americans who had paid rent through May 20, 2019, and a slight rise over the 89.2% of households who had paid rent by April 20, 2020. Last week, 87.7% of American households had paid their rent by May 13.

According to the Bureau’s household pulse data survey, 80.3% of all renter households had made their rent payments on time in April, while 17.2% had not and 2.5% had their rent deferred. Of the respondents, one-third had no confidence, or only slight confidence, that they could pay rent the next month.

Management companies are being “flexible” with their renters, absorbing credit card fees and offering deferral or repayment plans. However, this translates into a loss of revenue for the operator. a “wave” of economic uncertainty and reduced cash flow for the sector, could “come to shore” in the third quarter.

The highest-performing assets are higher-end market-rate properties and Section 8 housing. The Section 8 residents, largely low-income seniors, are able to pay their subsidized rent on time thanks to Social Security, which provides them with a steady income. Low-income housing tax credit properties are “trailing” more, as they are un-subsidized rental properties occupied by working families hit hardest by the pandemic.

Unquote

How can Intellisys help?

Intellisys Technology LLC is a global provider of BPO and Information Technology services and solutions. Intellisys has a State-of-the-Art ISO 9001:2015/27001:2013 certified delivery center in Chennai, India. We provide high quality and cost-effective solutions to Fortune 500, mid-sized, and small businesses on time and within budget. Over the past 22 years, Intellisys has been helping business with qualified & experienced Accountants without any wait time. All of them are Domain Experts.

Our services can offer significant benefits

  • Reduce operational costs up to 40%
  • Extensive use of RPA (Robotic Process Automation) tools which allow cutting time and costs significantly
  • Fixed Fees – No hidden charges
  • Multilingual Staff (English, Spanish and French)
  • Flexibility (Accordion Model – Increase and decrease team size at a very short notice)
  • Ad-hoc projects (such as Audits, Seasonal demands)
  • Assist re-purpose existing staff
  • Motivate the existing staff and offer them upward mobility
  • Assist to streamline operations

Please contact riyer@intellisystechnology.com or visit www.intellisystechnology.com to learn about Intellisys, its service offerings and how we can assist you.


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Importance of Effective Reconciliation System for an e-Commerce client

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E-Commerce revenues are projected to grow to 4.88 trillion US dollars in 2021 worldwide. With such a rapid growth, eCommerce marketplaces are good channel of choice for sellers.Introduction of new technology and availability of multiple eCommerce software solutions in the market, it has become very easy for the sellers to onboard marketplaces and start selling.

In today’s competitive e-commerce market, it is essential to be quick, responsive, and accurate when a customer makes the transaction. But receiving and tracking online payments is a major challenge that many of the sellers still face today. Maintaining records regularly becomes almost impossible to manage with growing sales.

This is when, effective payment reconciliation system can help track your payments for the orders received. In this blog, we explain the characteristics of an effective payment reconciliation system with couple of case studies.

Case Study 1: Often, waiting period to receive supporting documents for missing transactions cause delay in reconciliation process.

Generally, we download statements from bank portal and upload them in client’s Accounting system (Quick Books). QB then auto matches the Deposits with AR invoices and Payments with AP Bills. Once it is completed, we check for unreconciled transactions. Most of them remain unreconciled because invoices are missing in QB & we had to wait until missing documents are received.

We overcame this challenge by suggesting Client to implement Bill tracking system for uploading Sale Invoices and Vendor Bills based on which AP Bills and AR Invoices get automatically created. Payments are then processed after 3-step approval process. Then, entries in Bill tracking system get synchronized with Accounting system. This process reduced the missing entry cases and improved the Bank Rec TAT.

Case Study 2: Bank Recs relating to past period which were already closed / completed are changed to unreconciled status without intimation. This used to result in re-doing the entire reconciliation from beginning to identify the difference.

As a general practice most of our clients like any other, close their books on periodical basis – Daily, Weekly, Monthly etc. based on the volume but this client of ours practices yearly-closure of books. Coming back to the issue, primarily, this used to happen due to lack of reporting. We suggested Client to list all such approved JEs / Bills which have been edited. To do this effectively, we have set cut off dates & maintained a log report to identify the items that were frequently being edited & investigated them to make sure they do not get repeated. Over a period, activity got streamlined and it became seamless.


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Paycheck Protection Program (PPP) Loans under the CARES Act

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Coronavirus Aid, Relief, and Economic Security (CARES) Act was adopted on 27th March 2020. PPP loans are open to be applied from

  • 3rd April for small businesses & sole proprietors
  • 10th April for other applicants

Latest version of Application & other details can be viewed by clicking on https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

Lenders list is available on SBA website i.e.,https://www.sba.gov/article/2020/mar/02/100-most-active-sba-7a-lenders (or) find zip code wise by clicking on https://www.sba.gov/paycheckprotection/find

Qualified Applicants:

  • Wide range of small businesses as defined under Small Business Administration (SBA) Act
  • Any business with 500 or less employees working in the US
  • Non-Profit Organizations with 500 or less employees working in the US
  • Veterans Organization with 500 or less employees working in the US
  • Tribal business with 500 or less employees working in the US
  • Sole proprietors or self-employed individuals and few others as defined in the Act

Affiliation rule states that 500 count is Company-specific but not Branch-specific.

Qualification Rules:

  • If your business has been suspended or 50% drop in Revenue.
  • Borrower must have been in operation as of 15th Feb 2020.

If one does not qualify for this program, then they may consider applying for Tax Deferral or other programs.

Terms:

  • Lesser of $10 Million or 2.5 times of average total monthly payroll costs incurred during the past 1-year
  • Interest rate is 1% (as per SBA) from the date of disbursement of loan
  • Maturity is of 2 years (as per SBA) period with no prepayment / penalties
  • Repayment begins after 6 months from the disbursement of loan
  • Certification must be provided by the Borrower that they shall not reapply for another PPP loan in future

Proceeds can be used only for,

  • Payroll expenses
  • Mortgage / Debt Interest payments in existence as of 15th Feb 2020
  • Rent / Lease payments in existence as of 15th Feb 2020
  • Utility payments in existence as of 15th Feb 2020

Proceeds cannot be used for,

  • Cash compensation in excess of $100,000 during the year per employee
  • Taxes
  • Non-US employee payroll
  • Qualified Medical / sick leave for Covid-19
  • Few others as specified under the Act

Guidance on Waver of the loan is expected to come soon but primarily, at least 75% of the loan proceeds must be spent towards Payroll costs. This must be separately applied by the Borrower by providing documentation justifying the usage of loan proceeds for allowable purposes.


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There is no such thing as an Island when you Outsource

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Recently, I came across an outsourcing engagement in a company run by my friend. He was narrating the story and I felt compelled to share with all of you as it opened up an important part of the outsourcing success ingredient. One of the metaphors we always use is ‘it is not a boxing match between the two teams that are located in two corners of the world’. Once you feel this way, the engagement is doomed for failure. Let us come back to this story.

My friend’s company got engaged with a client for doing some of the back-office tasks. The client must have researched enough and was putting in lot of efforts on preparing the ‘blue book’ as they call it. This ‘blue book’ is also sort of a bible for the remote team to follow once they begin the project. The client therefore spent enormous amount of time on two tasks-  one to identify a task that was deemed as a stand-alone (island) and therefore could be sent to the remote team. Second, they took pains to list out the steps in carrying out this stand-alone task.

As you may have guessed, the project began very well. The remote teams even were able to suggest improvements to the ‘blue book’ as they went along. Thru’ out the weekly cycle (the first task was to work on transactions that occur on a weekly basis), the remote team hardly had to discuss/engage with the project sponsor. What happened to the onsite team that was doing this task until now? Where are they?  The remote team had no clue and had probably talked to them once during the kick-off.

Story looks really rosy – this is how an outsourcing should work – auto-pilot almost?

Nah, the disaster came in after 3 months of transition. Why? The stakeholders of the task were blindsided totally during the weekly cycle. Any challenges that they faced, they had no clue to respond to the field /vendors. There was no problem with the remote team’s quality or timeliness. What was missing was the bonding between the onsite and the remote teams. The project manager or what we call SPOC (Single Point of Contact) from the client side did her job perfectly (Blue book, shared folders, access credentials, work allocation etc). However, she did not involve the original team mates all thru’ the process /weekly cycle.

What we learn from the above experience is that there is no such thing as

  1. Stand-alone (Island) tasks in outsourcing.
  2. Teams must meld together from the beginning and must avoid the boxing match syndrome.

We always recommend taking baby steps however nothing must be done in isolation.


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