What is index-linked rent in SAP RE - Real Estate Management?

SAP Term: index-linked rent

• Component: RE

• Component Name: Real Estate Management

• Description: A type of rent adjustment allowing only index-linked rent adjustments for a lease-out. Under German law, the German State Central Bank must authorize this adjustment type, which is set in the lease-out.

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• Key Concepts: 
  Index-linked rent is a type of rent in SAP Real Estate Management (RE-FX) that is linked to an index, such as the Consumer Price Index (CPI). This type of rent is adjusted periodically based on changes in the index, allowing for a more stable rental income over time. 
  
  How to use it: 
  In SAP RE-FX, index-linked rent can be set up by creating a new rent type and selecting the “Index-Linked” option. The index to be used must then be specified, along with the frequency of adjustment and the amount of adjustment. Once this is done, the index-linked rent will be automatically adjusted according to the specified parameters. 
  
  Tips & Tricks: 
  When setting up an index-linked rent, it is important to consider the frequency of adjustment. If the adjustment period is too short, then the rental income may fluctuate too much; if it is too long, then it may not keep up with changes in the index. It is also important to consider the amount of adjustment; if it is too small, then it may not keep up with changes in the index; if it is too large, then it may cause large fluctuations in rental income. 
  
  Related Information: 
  For more information on setting up index-linked rent in SAP RE-FX, please refer to SAP Help documentation or contact your local SAP support team.