If you're a Merced landlord who enjoys the services of a property manager, you probably receive management reports from them every month. This data can provide important clues about improving your rental property business and help you set long-term goals for your property portfolio.
So, if you've never really paid attention to these documents, it's about time you did. Get started with an overview of what's contained in owner statements.
What Are Management Reports?
Property management reports include a lot of data that can help you keep track of your investment performance. It may include information about the following:
- Property marketing statistics
- Your property leases
- Property maintenance and repairs
- Occupancy rates
- Tenant feedback
When you compare these reports with previous ones, you can more easily identify weak areas and work toward improvements. The owner statement is a financial report included with this documentation.
Deciphering Owner Statements
Owner statements are more important than ever, now that the IRS has decreased the tax threshold for U.S. landlords. Receiving this information monthly helps simplify your tax returns, as you needn't search for the necessary information at tax time.
Your statement includes three main sections:
Property Income
This section outlines all the money you've received for your properties during the month. It includes rent payments as well as other income like laundry fees, parking fees, security deposits, and late payment penalties.
Perusing this section can help you identify overdue amounts as well as habitual late payers.
Property Expenses
Every landlord incurs expenses related to their rental property every month. It's easy to lose track of these expenses without the help of a bookkeeper or property manager.
This expenses portion of your statement lists all the money you've spent on your property over the specified time. These costs may include:
- Property management fees
- Insurance premiums
- Utilities
- Repair costs
- Maintenance expenses
Go through this part of the statement with your property manager to find potential areas for cost savings. For instance, installing energy-efficient appliances can help you reduce your electricity bills.
Remember, many of your monthly expenses are tax deductible, too, so keep a record of your payments to help you save on your income tax.
Net Income
The final part of your statement summarizes your investment performance in terms of profits. It's a simple calculation that deducts your total expenses from your total income.
A negative answer means you need to reconsider some aspects of your rental business. Your property manager can help you make an informed decision about where to cut costs or whether you should increase the rent.
Make the Best Decisions for Your Merced Rental Properties
It's important to keep your finger on the pulse of your rental business at all times if you want to succeed as a landlord. Working with an experienced property management firm is the best way to do this.
At PMI Merced, our team can help you understand and analyze your owner statements to help you make the best decisions for your property.
Get the information you need today to ensure your Merced rental business thrives.
