The accounts have been organized for
ease of use in establishing percentages for
month-to-month comparisons. The brokerage
may organize these accounts to meet specific
needs. The main expense divisions follow.
Commission Expense:
This figure is a reflection of the
commission and bonus plans in place.
Comparisons using this category are
important for internal purposes.
However, analysis between companies is
difficult. Ranges of commission payout
will vary considerably based upon
internal arrangements: i.e.,
salesperson’s participation in various
expenses, payment of desk fees etc.
Advertising Expense:
The categories provided cover most
advertising media usual to a real estate
brokerage. Other classifications should
be added as required. Detailed analysis,
by individual newspaper for example, may
unnecessarily complicate the worksheet.
Personnel Expense:
Ensure that all EI and CPP expenses are
included as well as Employer Health Tax.
Owner’s salary should be isolated and
full and part-time staff should be
separated to better analyze costs.
Occupancy Expense:
If owner-occupied, the rent should be
the economic rent for the premises.
Additional categories may have to be
added in relation to upkeep and repair.
Communication Expense:
Telephone expense is broken into two
parts for recovery of toll charges from
salespeople. Additional blank expense
classifications are provided to be used
as required.
The point at which a landlord stops
paying selected operating expenses in a
commercial lease and the tenant assumes
payment of those expenses.
The expense stop is one of several
factors to consider in analyzing a tenant’s
cash flow when negotiating a lease.
Dependent on market conditions, the landlord
may offer various incentives (concessions
and allowances), that improve tenant cash
flow, normally for a pre-determined portion
of the lease period. The expense stop sets
out the maximum landlord contribution
concerning any or all of the concessions.
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