Landlords have an average income of $97,000 a year. What if you could improve your net cash flow beyond that? With help from a property management company, it's possible.
They can draft owner statements to help you manage your properties more efficiently. How can these documents maximize your net income? Read on to learn more!
What Are Owner Statements?
Owner statements are progress reports for each rental property you own. These documents summarize each property's:
- Net cash flow
- Income
- Property expenses
The net cash flow is the difference between how much income you generate and expenses incurred. Rental income can include rent, late fees, and pet fees. Expenses can include insurance, utilities, maintenance, and property taxes.
You can review statements for a specific period to understand the property's current financial health. Receiving these reports from a property manager can help you better understand their progress. You can determine if your property management company is helping improve your profitability.
Types
There are three main types of owner statements. These include:
- Monthly owner statements
- Annual statements
- Special purpose statements
Monthly statements review the property's financial activity for the previous month. Annual statements provide an overview of the entire year.
Special purpose statements are usually for tax purposes. You may need these documents to provide information to a lender.
Deciphering Statements
Owner statements can help you review a property's performance. Key performance indicators include expenses, rental income, and occupancy rates.
Monitoring your rental income and property expenses can help you identify trends. You may recognize you're spending too much on maintenance or other services.
The occupancy rate indicates the property's demand. The rental vacancy rate in the US is over 6%. The higher your vacancy rate, the more money you'll lose.
A high occupancy rate, on the other hand, indicates a well-performing property. It could mean ideal rental rates and good living conditions.
Challenges
You may struggle to draft or understand these statements on your own. Instead, consider outsourcing to a property management company. About 44% of landlords use property managers to improve their profitability.
Otherwise, you may face challenges like:
- Understanding financial jargon
- Recognizing discrepancies
- Decoding financial data
Your property manager can help you recognize trends within these reports. They can resolve discrepancies and ensure continuous accuracy. With their help, you can fully understand these statements.
Benefits
Receiving owner statements allows landlords to maintain control while property managers handle daily operations.
Regular statements can help you recognize how a property manager is benefiting your endeavors. For example, you may recognize they're increasing your occupancy rate. This can improve your net income.
Perhaps they're gathering competitive bids from contractors. Routine inspections and maintenance services can cut costs. You can better maintain your investment property to avoid costly repairs.
Maintaining the property can make it a more desirable place to live. Tenants may even renew their leases, improving your ROI.
Hire a Property Management Company
To recap, what are owner statements? They're reports that allow you to evaluate a property's financial health. Reviewing these reports will help you recognize ways to improve your net income.
Want a property manager to review your property expenses? Our team at Brink Property Management has 27 years of local experience.
Rely on our efficient services to increase the value of your properties. Contact us to request an owner statement.
