Purchasing an investment property is a great way to increase your passive income and grow your portfolio. According to Bankrate, there are around 19.3 million properties in the country. However, tracking how much profit your properties are making can sometimes be challenging.
One of the easiest ways to look at your property's financial insights is with owner statements and reporting. This blog will go over the basics of this financial document. We'll also discuss how to use them for rental income tracking.
What Are Owner Statements and Reporting?
Owner statements give you a real-time summary of everything related to your rental property's finances. The main components included in owner statements and reporting are:
- Income
- Expenses
- Net cash flow
Not only can you see how much money is going into your property, but you can also evaluate how much is coming in from it. If your property isn't showing a profit after examining your income and expenses, it may be time to rethink your strategy.
Income
The income included in your owners statements and reporting refers to all income generated during a specific period. This can also include other income that's coming in for your rental properties, such as:
- Late fees
- Pet fees
- Laundry
- Parking
You can use this section of your statement to see if you're collecting rent on time each month. You can also identify if certain tenants habitually pay their rent late.
Expenses
It's important to keep track of what money you spend on your properties. Some of these expenses may include:
- Maintenance and repairs
- Insurance
- Utilities
- Property taxes
- Upgrades
- Legal fees
- Property management costs
A property management company can help you identify ways you can optimize your cash flow by reducing your costs. Property managers are experts at finding ways for their clients to reduce their costs and increase their rental income.
Cash Flow
Your property's cash flow refers to the difference between expenses incurred and income generated. Calculating this number is essential because the higher it is, the more money you're making from your property. Having a low or negative figure means you're experiencing a significant loss on your rentals.
Property managers will evaluate your owner's statement to ensure that your cash flow and net income are on track. They'll look for months where your costs increase significantly and provide you with ways to improve this in the future.
Additional Information
Your owner statement might include other details that help you get a better idea of your property's financial health. This may include:
- Outstanding payments and bills
- Tenant turnover
- Vacancy rates
Partner With an Experienced Property Management Company in Denver
Owner statements and reporting are essential components of being a property owner. Without these documents, you're unable to see if your property is making you money. A property management company can help you create and interpret these documents.
The experts at PMI Foothills are here to provide you with property management tips and landlord tools. We work with property owners, providing them with comprehensive services in Dever. Reach out to our office to schedule a consultation.
