Owning one or more investment properties is a great way to increase your passive income. According to Bankrate, the country has around 49.5 million rental units. Staying on top of your finances as a property owner ensures you continue to bring in a profit.
Owner statements are necessary documents to help you maximize your income and reduce the risk of mistakes with your rentals. This blog will go over the basics of these real estate financial reports and how you can use them for your benefit.
What Are Real Estate Owner Statements?
Real estate owner statements give property owners a comprehensive overview of their property's activities and financial transactions within a designated timeframe. The main objective of this document is to help you stay informed about your investment property's well-being.
Some of the things that are included in this document are:
- Late fees
- Rental income
- Breakdown of maintenance and management expenses
- Calculation of net cash flow
One of the great things about an owner statement is that it allows property owners to see if they have a financial deficit or surplus after considering expenses and income. Property owners will have the information they need to do the following:
- Optimize profitability
- Make informed decisions
- Address financial concerns (if any)
Elements Included in an Owner Statement
As mentioned above, several components are part of a real estate owner statement. Keep in mind that the more rental properties you own, the more extensive the owner statement will be. Having this data readily available and easily to digest is key to managing your rental units.
Rental Income
Rental income refers to any money that's generated by your units within a given period. In addition to rental payments, this can also include:
- Laundry fees
- Parking fees
- Late payment fees
You'll be able to identify tenants who are consistently late on their rent by reviewing your owner statement. This document will help you determine if you need to take legal action.
Net Income
Net income refers to the difference between your expenses and income. The final number indicates your total cash flow. Since you want this number to be as high as possible, you can increase it by increasing your income and reducing your expenses.
Monthly Expenses
Your real estate owner statement will include the expenses you spend on your units each month. Some of these costs may include:
- Utilities
- Property taxes
- Maintenance and repairs
- Insurance premiums
- Property management fees
- Lawn care and landscaping
Keep in mind that many of these costs are tax-deductible. They provide you with an easy way to see where you may be overspending.
Partner With an Experienced Property Management Company in Huntington Beach
Reviewing the owner statements for your rental units provides you with valuable property management insights. Avoid spending money you don't need to in certain areas of your rental properties by working with a financial professional on these documents.
If you're looking for more investment strategy tips or a property performance analysis, contact the professionals at Sail Properties. We provide comprehensive property management services, including creating an owner statement guide. Reach out to our office to schedule a consultation.
