Maximizing Profits and Efficiency: Your Guide to Yardi Voyager 7S Advanced Budgeting & Forecasting

Ever wondered how to turn financial chaos into organized magic? Yardi Voyager 7S is the pinnacle of real estate management software, harmonizing property operations, financial prowess, and tenant satisfaction. With scalability, data-driven insights, and seamless integration, it empowers businesses of all sizes to orchestrate success in the dynamic world of real estate, making it a must-have for industry players.

The Yardi Voyager Advanced Budgeting and Forecasting (“ABF”) module includes three sub-modules, which are, Budgeting and Forecasting, Advanced Budgeting and Valuations, all designed to integrate with the Yardi Voyager property management system and provide accurate forecasting to help you run your business and determine the best strategy for your investments.

Significance

Advanced Budgeting and Forecasting are crucial in property management and leasing as they provide financial clarity and largely help to remove uncertainty. It enables accurate predictions of rentals, service charges, and expenses, optimizing resource allocation, and identifying potential issues in cash flow and profitability. This proactive approach enhances informed decision-making resulting in tenant satisfaction and overall profitability of the business in a dynamic and competitive real estate market.

Getting Started

 Based on the business requirements, we need to establish a detailed and comprehensive setup that includes the following.

1. Forecast Books: This is needed to record the forecast in the system separate from the day-to-day accounting books.
2. Account Tree: Setting up an account tree ensures systematic categorization, and consistency of structured hierarchy to match a company’s specific needs, facilitates compliance with accounting standards, and supports effective analysis.
3. Workflows: Create Workflows for approval of budgets.
4. Inflation: Setup Inflation tables based on either a flat annual rate or on varying annual rates.
5. Allocation: Set up GL Allocation templates to allocate budgeted data among segments, if needed.
6. Formulas: Create Formulas for forecasting which are assigned to GL accounts using models
7. S Curves: Setup S curves to forecast expenses according to a spread that is defined.
8. MLAs: Create Commercial/Residential market leasing assumptions to forecast revenues during periods of tenant vacancy. MLAs are then assigned to units in a property. Setting up MLAs also includes creating leasing commission (LC) rate tables.
9. Rate Table: Create global monthly rate tables for residential forecasting.

Features: 

Budget Worksheet

Adding a new budget is very easy, straightforward and just a matter of few clicks. Various account security features in Yardi Voyager ensure only those with assigned authority can add/edit/view budgets. Users can add additional forecasting assumptions to the budget once it is created. The budget worksheet which is like an excel spreadsheet but on steroids is the primary working environment in ABF module. They display forecast data by account, according to the account tree that the user has selected. Commercial budgets in ABF module contain links for forecasting commercial revenues and retail sales, while residential budgets in ABF module contain a link for forecasting unit-type revenues.

Users can create multiple budgets like monthly, quarterly, half-yearly, yearly, etc for a given property into an account book. Users can drill down on individual accounts and edit the budget, or drill down on the account name to enter a narrative.

The ‘Reforecast’ report style in the Budget Worksheet helps users to understand the actual GL balances, the budgeted GL balances, and the variances in amount and percentage. This comparison allows users to understand the effectiveness of forecasting assumptions and the need for forecasting again if possible. The Budget Worksheet also allows users to drill down on individual lease level to view budgeted revenue trends against the actuals.

Model Properties

If you are working with a commercial property, you can create a model property, which is a copy of the original property with the copy of units and leases associated with that property, including straight-line rent dates, carry forward adjustments, straight-line exclusions from calculations, lease end dates, and assignments for tenant improvements and leasing commissions. Users can then edit the units and leases within the model property without affecting the rent roll or data of the original property.

This is a powerful and extremely useful feature of the ABF module for business users to try out various scenarios of assumptions related to lease renewals, negotiations, and market conditions and then view the impact on the property’s financial standing. For users to access a budget, Yardi Voyager requires that they have access to both the real property and the model property.,Only commercial properties need model properties. It is best practice to not create model properties for adjustment book budgets.

Market Leasing Assumptions (MLAs)

Yardi’s Voyager 7S introduces two types of Market Leasing Assumptions (MLA) Residential MLA and Commercial MLA. You can assign MLAs to units to enhance budgeting and analysis with sets of assumptions.

• Assigning and Managing MLAs

We recommend assigning an MLA to a parent property and creating a copy of the property when setting up budgets or analyses. Yardi Voyager 7S seamlessly maps the MLAs from the parent property onto the units in the copied forecasting property. By attaching the MLA to the parent property, it remains available for copying. You can import any modifications made to an MLA on the parent property into forecasts using the ‘Refresh Tenants’ procedure.

• Managing Vacancy Probability

Each commercial MLA iteration includes a period of vacancy, and Yardi Voyager calculates the probability of vacancy by subtracting the user-specified renewal probability from 100. For instance, with a renewal probability of 70%, the vacancy probability is 30% (100 – 70). The Advanced Budgeting and Forecasting (ABF) module allows users to post revenue and vacancy loss to separate accounts to understand the impact of vacancy on financial reports. Renewal probabilities are used to calculate the abatement period for each MLA iteration—an abatement being a period of free rent during a commercial lease.

• Customizing Lease Terms

Creating an MLA iteration grants users control over how tenant improvements or leasing commissions are spread over the lease term. Users can choose to allocate them all at once in the first month, equally over the lease’s life, or through a custom schedule.

• Streamlining with MLA Templates

MLA templates are a valuable tool for populating new MLAs with predefined sets of Tenant Improvements, Leasing commissions, recoveries, recovery estimates, rent charges, abatement, and miscellaneous charges. This feature not only saves time but also reduces the chance of entry errors when creating new MLAs identical to existing ones or MLA templates.

Forecast Leasing Options (FLO)

Also known as Forecast Leasing Options in Yardi’s Voyager 7S ABF module and also commonly known as assumptions. Yardi Voyager saves FLO separately from equivalent data in the model property and MLA. Users can review and edit FLO for multiple units, for one or more properties, and for multiple charge codes and accounts, all from a single grid. When a user creates an analysis or a budget with a model property, they can edit termination dates, area measurements, lease terms, rent amounts, inflation, leasing commissions (LCs), and tenant improvements (TIs) without affecting the contract lease information on the parent property.

In the standard budgeting process in Forecasting, we refresh the model property data after making changes to the tenant or lease details on the parent property (in Core) to update the model property with the latest information. When we refresh the data in the model property on a Rent Roll budget (by generating the Refresh Tenants function), it overwrites any speculative leasing setup. However, when Yardi Voyager refreshes the model property on a FLO budget, it saves the speculative leasing setup.

As an alternative to discounted cash flow (DCF) calculations and reporting within Valuations, you can use direct capitalization (cap) to calculate property valuations. There are four different market rates that you can set and use, either individually or in combination:

1) Capitalization rate

Yardi Voyager applies global cap rates when you generate a direct-cap valuation report. You can create global cap rates that Yardi Voyager applies for all years within a valuation, or you can specify global cap rates for individual valuation years. Yardi Voyager uses cap rates to calculate the value for each period, as follows: Value = (Market Rent, Market Revenue, or Market Expense) ÷ Capitalization Rate

2) Discount Rate

Yardi Voyager uses discount rates to determine the value of revenues and expenses for a specified part of the holding period, unlike the single present-day calculation used in DCF reporting. In addition to a global discount rate, you can also set separate per-year discount rates for temporary units, future units, NOI, and general vacancies.

3) Acquisition-cost rate

Every sale has costs associated with it. The Acquisition cost rate is the cost of executing the sale of the asset. It is a percentage of the “above-the-line value” less Total Adjustments.  Yardi Voyager uses this percentage to calculate the final valuation after acquisition costs.

4) Terminal Discount rate

Yardi Voyager uses the terminal discount rate for rolling present values in the Rolling-DCF Cap-Valuation report.

Ready to Transform Your Real Estate Management? Join the Yardi Voyager!

If the symphony of efficiency and profitability promised by Yardi Voyager 7S and its Advanced Budgeting and Forecasting module has intrigued you, then it’s time for you to take action. Don’t miss out on the opportunity to streamline your property management, enhance financial clarity, and make data-driven decisions.

Join the Yardi Voyager today and unlock the full potential of your real estate business. Whether you’re a seasoned pro or just starting, the ABF module offers a treasure trove of features, from budget worksheets to property valuations, designed to make your life easier and your business more profitable.

Don’t stay on the sidelines – dive into the dynamic world of real estate management with Yardi Voyager 7S. Your success story begins here!