Rental properties are a business, and they need to be treated as such. For this reason, we provide our clients with comprehensive property management financial reports. This helps to ensure that you understand what’s happening with your properties from a financial perspective, and so you will have the information you need when you are filing your taxes at the end of the year.
Property management reports are easy ways to communicate how well a property is performing. The reports can help to build trust between you and the property management company. We provide a wealth of information and features in the financial reports we offer. Below, you can learn more about what is included in the your property management report. You can see just what types of information you will receive when you opt to use us as your reputable property management company.
Income and Expense Report
This is one of the most important reports for a rental property owner because it shows where the money is going with the property. You see how much money is being made from the property and how much owning the property is costing using the income statement and expense report.
These reports are going to provide detailed information about the income made from the property and general financial performance, which will typically be the rent along with any late fees that are paid, Section 8 payments, etc. It will also include all of the various expenses associated with the property for the month, which could include things like maintenance costs or a repair. Expenses would also include management fees, utilities (if applicable), landscaping (if applicable), taxes, and owner disbursement. Learn more about rental property accounting below.
Understand the Profit and Loss Statement for Rental Property
Rental property owners need to be able to understand their profit and loss statements. One of the sections on a profit and loss statement is the gross income for the period. This includes all of the rental income along with any other type of income. This other income could include laundry, vending machine income, late fees, covered parking fees, extra parking space fees, pet fees, etc. Typically, the different sources of income will each be on separate lines. When those lines are added together, it will show the total gross profit or loss.
After the gross income will be the operating expenses section. This will include all of the various expenses that are tied to the property. Naturally, they will differ depending on the type of property. One rental property owner who has multiple properties of different types can see variances in the reports they receive, even though they might have the same property management company.
Some of the most common real estate operating expenses that will be on this part of the report include property taxes, property insurance, cleaning and maintenance, management fees, repairs, leasing commissions, supplies, professional fees, garbage removal, water, loan interest, depreciation, and related items.
Net operating income will be on statements, as well. This is the profit or loss that you have made on the property during the duration the profit and loss statements cover.
Collection Rates and Vacancy Reports
Reports can also include the collection rates. Knowing the collection rate of rent is important for driving more rental income. If the rents are not being collected on your property, it means that you are likely losing money.
Nevada property management companies that are not making it a priority to get those rents collected along with the money that’s past due are a problem. If you are running into this with your current property management company, and you have a collection rate that’s below 95%, you might want to consider getting a new company. If there is uncollected rent, it can eventually be written off and can be considered an operational expense.
Vacancy reports will be included, too, which is often important for those who have multiple properties. Owners with just one or two properties will generally have a good idea of when leases are up, how long a unit has been vacant, etc. This is not always as easy when there are many rental properties to consider. Reports will let owners know the number of vacancies they have. In some cases, concessions may need to be made to motivate potential residents to move into a property. This will help to reduce the vacancy losses.
Property owners need to understand their rent roll report. This will include information on the lease dates, estimated rental value, recurring costs, and the amounts deposited. Owners will have an easier time knowing which properties are vacant, as well as when lease renewals are coming up, and which tenants have month-to-month leases. It may also provide information on renewal rates, collections, late fees, evictions, etc. Those who have a large number of properties will find that vacancy/rent roll reports are highly beneficial.
Property Management Cash Flow Report
Cash flow reports are sometimes called owner statements, and there are similarities between these reports and the income and expense reports. These reports will include beginning and end balanced along with reserve targets if any have been set. These reserve targets are the funds that the property holds to help handle any sort of unexpected expenses. These are always a good idea, as they will help to reduce the need for the owner to come up with money later to handle a repair at the property. The money will, essentially, already have been funded.
This report can let owners see the overall cash flow of their properties and let them see whether they may need to put more money into the reserve target. Elements of the report include the beginning balance, categorized income, categorized expenses, and the ending balance. From the ending balance, deductions can be made for the owner disbursement, the reserve target, and the available balance. The available balance at the end of the report will be the next statement’s beginning balance before the additions and removals are made for income and expenses.
Account Ledger Report
The account ledger report tends to go deeper into the finer details for each of the transactions that have been posted to a property ledger. Generally, it’s possible to look at reports from single properties, multi-unit properties, or within a portfolio. Account ledger reports will include transaction dates, amounts, the category of the transaction, and a description of the transaction. The account ledger report can provide you with detailed information on the inner workings of the property and what is happening with all of the expenses.
Property Owner’s Monthly Operating Statement
An owner’s statement is a simple way to help maintain proper, accurate records of financial transactions. This includes any service fees, payments to maintenance or contractors, utilities, etc. These types of statements are often included with the income and expense statement. This type of information is important to owners and should be made available monthly.
This can provide the owners with up-to-date information on their tenants, expenses, income, lease dates, and more. If the property management company you are currently using or considering does not offer a monthly operating statement or any other types of reports that you need, it may be worth considering looking for a different option. Below, you will learn more about why having a monthly operating statement is better than having quarterly reports.
Timing and Property Management Report Access
One of the things to consider when looking at property management companies is when the property management reports will be provided. In some cases, they are sent monthly, which provides owners with better data. Other times, they may be provided quarterly instead. This is often too much time between statements to be truly useful to most owners.
Instead of opting for a company that offers limited access to reports quarterly, it’s better to work with a company like Faranesh Real Estate and Property Management. We have an online portal available for property owners that will make it nice and easy to get all of the needed information quickly. This portal is available around the clock, and you can access it as easily as you can access your bank account.
When you use our portal, you will have access to the owner statements, along with invoices. This will provide you with all of the information you need about your property when you need it. It is a fast and simple way to have a better understanding of everything that’s happening with the unit.
You Will Receive a 1099 at the End of the Year
In addition to the reports, owners will receive a 1099 at the end of the year for their taxes. This allows you to file your taxes on time and with confidence. It’s much easier to have the 1099 provided by the property management company than it is to try to handle everything on your own. You will also find that the information provided via these reports is accurate, which may not be the case if you are handling all of the finances on your own. Something to note is that when an owner hires property management services in Henderson or Las Vegas, the expenses are often already accounted for as deductions before the 1099 is issued.
Benefits of Getting Monthly Property Management Accounting Reports
Why should you opt for a company that can provide you with monthly owner statements rather than quarterly? Owning rental properties is an investment, and you need to be aware of how your investments are doing. You need to have updated and accurate information regarding the state of the property, how much you are making, how much you are spending, and whether it is still a good investment for you to hold.
In some cases, you might find that the property is not providing you with enough profit, or that you are losing more than you are gaining. It’s better to have a precise understanding of whether it is a good investment for you or not. If you were to wait for quarterly reports, you wouldn’t necessarily have a robust sense of where you stand in terms of that investment.
Monthly statements allow you to have a more active role with your investments. This is particularly important when you own a large number of properties or several multifamily properties. Having quarterly statements may not let you see as quickly when units are vacant or how long they’ve remained vacant. Monthly statements, on the other hand, provide you with faster knowledge. Being able to access reports through the online portal, as you can with Faranesh, makes the process even easier.
The monthly statements can also give you a better idea of how well your property management company is doing. If you have a lot of vacancies or vacancies that never seem to get or stay filled, you will want to talk with the rental management team you are using.
Are they doing a good job of marketing the properties? Are they taking care of the clients when they are renting the unit? If you only have access to vacancy information on a quarterly basis or when you specifically ask, you might not be getting the true picture of what’s happening. If they are not performing for you, it is time to choose a property management team that can provide real help, better service, and the right reports.
Why Choose Faranesh Real Estate & Property Management
A lot of work and effort goes into owning rental real estate. We believe that property owners should have an easy time with their rentals from start to finish. Faranesh provides you with the financial reports you need to better operate your property rental business.
You can have a fast view of what’s happening with your properties at any given time, so you can make better decisions on what needs to be done with those properties. The reports help to make these assessments faster and easier, and they can help with taxes at the end of the year.
Of course, as a top-tier property management company, we offer far more than just financial reports. We can help with marketing, finding and screening tenants, rent collection, maintenance issues, and much more. Take the time to get in touch today with our property managers to see just how we can help make your life far easier and to learn more about the various financial reports that we can offer.