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As with any investment, knowing the numbers are a key part of managing your rental property portfolio. Without them, you have no idea if you’re making money.
Part of the service you get from a property management company are reports that give you those numbers each month. While there are many different types, the critical one to get and review monthly is the owner statement. It’s often the main communication you have with your company and an important part of the service.
Let’s take a look at what exactly an owner statement is and what it tells you.
What Is an Owner Statement?
The owner statement you receive is pretty similar to your bank statement. Its job is to show you what money came in and what money went out. It’s a way for your property manager to account for and communicate about your money each month.
These are sometimes called an owner’s report or owner cash report, and it can be part of a larger property management report that includes non-financial details.
The statement provides a point-by-point record of the property’s money standing, summarizing every transaction during the reporting period. Most of the time, these statements default to a cash basis for accounting purposes, so make sure you know what your manager is using.
The statement should come at the same time each month and reconcile with the previous month just like a bank statement. Because it’s the main form of communication you have with your manager, it should be clear and easy to understand. If you have multiple properties, a master version can give you a consolidated look rather than having multiple reports.
What Is Included
Because this is a financial report, you won’t see details about tenants or a rent roll. Instead, the statement should include the following:
- Beginning balance
- Income by category
- Expenses by category
- Ending balance
- Distributions
- Reserves
After that listing, it’s possible to have another page that breaks down expenses further so you can see how much was for one-time expenses like a new water heater and how much for recurring expenses like lawn care. Other expenses could be management fees and HOA fees.
The income breakdown should include rent and reimbursement of utilities if you operate that way. There might also be a line for security deposit if you took on a new tenant that month.
Once the ending balance is reached, that money can be distributed out to you or set aside as a reserve in the property’s operating account.
Check Your Statement Monthly
Reports of all types are important for assessing how the various properties in your real estate portfolio are doing. The owner statement provides a quick look monthly at the basics with line items for all the cash in and cash out for the month. It should be the minimum your property manager provides you, and you should review it closely each month.
If you need better information on your rental properties, contact us to discuss our management packages. We handle everything for you, including the monthly paperwork and reports.
