STRATAFOLIO Reveals Commercial Real Estate’s Silent Profit Drain: The Cost of Managing by Spreadsheet

Commercial property owners are losing substantial revenue to a problem they often don’t recognize until someone examines their operations closely. While the industry has modernized tenant communication, property marketing, and deal analysis, portfolio management frequently remains stuck in systems designed decades ago.

The disconnect between advanced technology and basic operational tools creates financial vulnerabilities that appear consistently across portfolios of every size and market.

A Pattern That Spans Markets and Portfolio Sizes

According to Jeri Frank, co-founder of STRATAFOLIO, the same operational gaps appear whether she’s reviewing a small family office in Tennessee or a hundred-million-dollar portfolio in California. The company works extensively with property owners across Florida, Texas, California, and Tennessee, and the challenges remain remarkably similar regardless of location or portfolio value.

“The majority of the clients that, when they’re initially reaching out to us, are only using QuickBooks and spreadsheets to manage tens of millions of dollars in assets,” Frank explains. “Sometimes it’s hundreds of millions of dollars and assets in QuickBooks and spreadsheets. That is not the way you manage or grow a portfolio efficiently or successfully.”

When reviewing new client financial data, Frank sees immediate red flags. Profit and loss statements contain too many accounts. Expenses get misclassified as income, or vice versa. Most concerning, tenant deposits arrive matching expected amounts, but no one verifies whether those amounts are actually correct based on current lease terms.

Three Critical Vulnerabilities

Frank has identified three problems that appear across virtually every commercial real estate portfolio operating without purpose-built management systems. These issues affect owners regardless of their experience level, market sophistication, or portfolio size.

Missing Lease Escalations

Commercial leases typically include scheduled rent increases at specified intervals. Property owners often assume tenants will automatically adjust their payments when escalation dates arrive. The reality differs significantly.

Tenants continue paying previous rates, deposits keep arriving on schedule, and without systematic verification, the discrepancy goes undetected for months or even years. When owners finally discover the gap, the recovery process becomes awkward.

“The hard part about that is that if you, as the owner, have now missed this for one month or a year, it gets really awkward to go back and collect that,” Frank notes. Rather than confront tenants about the oversight and signal a lack of operational control, many owners simply absorb the loss and implement the correct rate going forward.

Inadequate CAM Reconciliation

Common Area Maintenance reconciliation requires property owners with triple net leases to compare budgeted operating expenses against actual costs annually. Tenants pay their proportional share of taxes, insurance, and common area maintenance as additional rent beyond their base lease rate. At year end, owners should reconcile budgeted amounts against actual expenses and adjust accordingly.

When this process fails, gets delayed, or relies on outdated tracking methods, owners lose visibility into what they should actually be collecting from tenants.

“If you don’t do that work, you don’t really know what you should be charging those tenants,” Frank emphasizes. “And if you’re not collecting it all, that means that’s coming off of your bottom line.”

This problem has intensified in recent years. Florida, Texas, and California have experienced dramatic increases in insurance costs and property taxes, making accurate and timely reconciliation more critical than ever. What might have been a minor discrepancy in previous years can now represent substantial uncollected revenue.

Expired Insurance Certificates

Commercial tenants typically must maintain three to five different insurance policies as lease requirements and provide updated certificates of insurance annually. Property owners must track these certificates and ensure policies remain current.

Frank consistently finds that tracking systems are months or years out of date, with certificates showing policies that may have already lapsed.

“It is shocking,” Frank admits. “But it is a fair number of people we talk to. It has happened where somebody’s insurance has lapsed, and that would be a breach of contract, but it doesn’t always get caught until a tragedy happens.”

This creates significant liability exposure. Property owners may incorrectly assume their tenants maintain required coverage when policies have actually expired, leaving the owner vulnerable if damage or loss occurs.

The Generational Transfer Challenge

These operational vulnerabilities become particularly acute during ownership transitions. As the silver tsunami continues transforming commercial real estate ownership, Frank regularly encounters portfolios where critical information exists only in aging spreadsheets or in the memories of retiring owners.

“We had a client who was in his late 70s and had a substantial real estate portfolio, and he passed,” Frank recalls. “A lot of leases started in the 70s, and there are some big gaps. Sometimes somebody just has to make a call and say, here’s what it is, and at the earliest opportunity, a new lease should be written.”

Informal agreements and handshake deals that worked for previous generations create enormous challenges for incoming family members or partners. Without documented lease terms, accessible records, or institutional knowledge transfer, properties may continue renting at rates far below market value simply because no one can verify original agreements or locate supporting documentation.

In some cases, the documentation problems become so severe that legal intervention becomes necessary just to establish clear ownership and lease terms.

The Accounting Complexity

The financial management challenges extend beyond missed deadlines and lost documentation. When Frank reviews new client QuickBooks data, she often finds fundamental accounting issues that prevent accurate portfolio management.

“We see a lot of people struggling with how to do CAM reconciliation accurately,” Frank explains. “Sometimes, when expenses are getting recorded, they are not clear on their non-reimbursable versus reimbursable expenses. When that expense gets posted to the wrong account, it makes CAM reconciliation very, very difficult and muddy.”

These classification errors create cascading problems. Office utilities recorded in the same account as tenant utilities make clean separation between overhead costs and reimbursable expenses nearly impossible. Each misclassification compounds through subsequent financial reports, reconciliation attempts, and tenant invoicing.

Charts of accounts become bloated with too many categories, making financial reporting unclear. Or conversely, too few accounts prevent proper expense tracking and allocation. Either approach creates barriers to accurate portfolio management.

The Broader Impact

The financial impact of these operational gaps extends well beyond immediate revenue losses. Property owners who approach lenders for financing or refinancing must provide portfolio documentation. Delays in producing rent rolls or financial reports, or errors in submitted documentation, raise questions about management competence.

Tenants who receive inconsistent invoicing or reconciliation reports delivered months late begin questioning the professionalism of their landlord. In commercial real estate, where relationships matter and reputation affects long-term success, these perceptions carry significant weight.

The reputational costs accumulate slowly but create substantial long-term consequences in an industry fundamentally built on trust and relationships.

The Modernization Imperative

Commercial real estate has readily adopted technology for market analysis, property tours, and tenant communication. Portfolio management represents a critical area where modernization remains incomplete for many owner operators.

The typical approach relies on calendar reminders, disconnected spreadsheets, and institutional knowledge held by one or two key team members. As portfolios grow and regulatory requirements increase, this manual approach creates exponentially more opportunities for costly errors.

Property owners in 2026 face a clear choice. They can continue managing with tools designed for general accounting rather than commercial real estate complexity, accepting the ongoing revenue losses and operational risks. Or they can implement purpose-built systems designed specifically for commercial portfolio management.

The question is no longer whether such systems provide value. The question is how much revenue owners will lose before implementing them.

For property owners managing multiple entities, dozens of tenants, and complex lease structures across various properties, spreadsheet management has become a liability rather than a solution. The tools that worked for simpler portfolios or previous generations no longer scale to meet current demands.