In 2022, as per the report by Amber, the U.S. student housing market attracted over $22.8 billion in investments. This highlights the importance of student housing in the real estate sector. Despite economic volatility, student housing remains a stable and lucrative investment opportunity. However, this market’s growth also brings significant management challenges. Property managers are responsible for balancing operational efficiency, tenant satisfaction, and financial stability—a task that becomes increasingly complex with larger portfolios.
Managing student housing properties involves more than collecting rent checks. Property managers must handle financial forecasting, budget maintenance, and compliance with various regulations. These tasks, if not managed properly, can disrupt cash flow and reduce profitability. For instance, a missed rent payment or an unexpected maintenance issue can quickly escalate into larger financial concerns.
More and more student housing providers are turning to outsourced finance and accounting solutions to address these challenges. According to a 2023 Deloitte survey, 74% of real estate companies, including student housing sector, use outsourcing to simplify operations and reduce costs. Outsourcing helps property managers focus on core business functions while benefiting from specialized financial expertise that can optimize financial performance.
In this writing piece, we will explore how outsourced finance and accounting can boost profitability in student housing.
Why Outsourcing Financial Reporting in Student Housing Isn’t Just Smart—It’s Essential
Student housing refers to accommodations provided specifically for college and university students, either by the institution itself or by private real estate companies..
Challenges Without Outsourcing
Managing financial reporting and accounting internally can lead to several challenges for student housing providers, especially as portfolios grow and become more complex —
- In-house financial management can strain resources, as dedicated accounting staff need continuous training to keep up with real estate accounting regulations and software. This can detract from core business activities, like tenant services and property management.
- Without specialized expertise, internal teams may struggle with the nuances of real estate accounting. This can result in financial errors, late rent payments, and poor cash flow management, ultimately impacting profitability.
- Keeping up with local, state, and federal regulations is a challenge. In-house teams might not stay updated, resulting in compliance risks, legal penalties, and reputational damage.
- As portfolios expand, the financial workload increases. Internal teams may struggle to scale their operations efficiently. This can lead to bottlenecks in financial reporting and delays in decision-making.
Given these challenges, outsourcing financial reporting and accounting provides a strategic advantage.
The Game-Changing Benefits of Finance & Accounting Outsourcing in Student Housing
Cost Reduction through Efficient Resource Management
Outsourcing finance and accounting in student housing significantly reduces costs by supporting the in-house finance team, and not unnecessarily expanding it. Instead of completely eliminating in-house roles, outsourcing helps your team to focus on strategic tasks, while external specialists handle routine accounting processes. The balance leads to cost savings, improved accuracy and greater efficiency.
How It’s Done
- Flexibility in Costs: By outsourcing, you only pay for specific services as needed. It helps in scalability without the commitment of full-time staff.
- Reducing Training Costs: External providers handle specific functions, so you can save on training costs without losing control over financial operations. Access to Advanced Software: Outsourced firms use advanced financial tools and software, such as Yardi or RealPage, .
- Example: According to a case study, a mid-sized student housing operator reduced accounting-related costs by over 50% after outsourcing. The firm previously spent substantial resources on payroll, accounts payable, and compliance, but outsourcing allowed it to focus on core business operations, resulting in immediate cost savings.
Transform Financial Insights into Action with Outsourced Financial Reporting
Outsourcing finance and accounting helps student housing operators access advanced financial reporting and analysis that may not be available in-house. Outsourcing firms provide detailed financial reports that allow property managers to make data-driven decisions. This could include insights into cash flow, operational expenses, and budgeting, which are critical for long-term planning and profitability.
How It’s Done
- Customized Reports: Outsourced firms can provide customized reports to focus on specific financial aspects such as occupancy rates, rent collection efficiency, and maintenance costs.
- Real-Time Insights: By using advanced tools, outsourced teams can deliver real-time financial data for better decision-making.
- Scenario Analysis: Outsourced accounting firms often provide scenario-based analyses that help student housing providers predict future financial trends and adjust their strategies accordingly.
30% Faster Rent Collection: How Outsourced Cash Flow Management Boosts Efficiency
Cash flow management is a critical aspect of managing student housing properties. It involves ensuring that money flows smoothly in and out of the business. This allows managers to meet financial obligations, plan for future expenses, and maintain profitability. Seasonal fluctuations in rent payments, maintenance costs, and unexpected expenses make cash flow management particularly challenging in the student housing sector. Outsourcing finance and accounting helps optimize cash flow by automating rent collection, streamlining payment processes, and providing detailed cash flow forecasts. This can prevent financial shortfalls, improve liquidity, and ensure student housing operations run smoothly.
How It’s Done
- Enhanced Rent Tracking: While EXO Edge does not handle rent collection directly, our services include financial tracking systems to monitor rent payments and provide seamless cash flow management.
- Detailed Cash Flow Forecasting: Experts in outsourced firms use financial modeling and forecasting to predict cash flow patterns. It helps managers to plan for low-occupancy periods.
- Expense Management: Outsourced accountants track and manage expenses in real-time, so that payments are made efficiently and cash flow remains stable.
Example: A student housing operator in Texas saw a 30% improvement in rent collection efficiency after outsourcing its financial operations. The outsourced team implemented an automated system that significantly reduced the number of late payments and provided more accurate cash flow forecasts.
Avoid 40% in Compliance Fines: Outsourcing that Keeps You Audit-Ready
Regulatory compliance in student housing is complex, with managers needing to adhere to local, state, and federal regulations related to property management, tax filings, and financial reporting. Failure to comply with these regulations can result in fines, legal penalties, and reputational damage. Risk mitigation is an essential concern as inaccurate financial reporting or non-compliance can expose a company to audits and other risks.
How It’s Done
- Expert Knowledge: Outsourced firms are staffed with professionals who specialize in real estate accounting and stay updated on changing regulations.
- Timely Tax Filings: Outsourced teams manage tax filings, so they are accurate and submitted on time to avoid penalties.
- Risk Mitigation through Audits: Regular internal audits conducted by outsourced teams help detect discrepancies early and mitigate risks before they escalate.
Example: A real estate firm managing student housing across multiple states reduced compliance-related fines by 40% after outsourcing its accounting functions. The firm’s outsourced accounting team was proactive in staying updated with new tax regulations and for accurate financial reporting.
EXO Edge: The Expert Touch Your Student Housing Operations Need
When we manage student housing in real estate, it might seem simple at first glance. However, the reality is that it requires a deep level of expertise and highly skilled personnel to handle everything from rent collection and financial reporting to compliance and risk management. This is where EXO Edge becomes a game changer.
EXO Edge provides top-notch finance and accounting outsourcing services tailored specifically to the real estate sector, including student housing. With a dedicated team of over 400 accounting associates, EXO Edge leverages industry-leading software like Yardi, RealPage, and Entrata to deliver customized financial solutions.
To take your student housing operations to the next level, explore EXO Edge finance and accounting outsourcing solutions. Visit www.exoedge.com today and discover how they can help you enhance profitability and focus on growing your core business.