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Rental properties can be a great source of income, but they can also present various challenges.
Staying organized is crucial as it will reduce the chances of mistakes and help you maximize your profits. Fortunately, there are various property management tools you can use to help keep things in order, and using owner statements is known to be very effective.
In this guide, we'll go over the basics of owner statements so you can get a better understanding of how they work and why they're important. Keep reading for more.
What Are Owner Statements?
Owner statements are a way of assessing how rental properties are performing. They contain information covering the relationship between your income and expenses so you can get a better idea of how much success you're achieving with your properties.
On top of this, they can help you keep your finances organized. This makes them very important when it comes to dealing with your taxes.
What an Owner Statement Includes
An owner statement has multiple components. Note that the more properties you own, the harder it is to keep track of things. This makes owner statements especially important to investors with multiple properties.
Occupancy Rates
One of the first things your owner statements include is occupancy rates. You can use this information to determine which parts of your rental property strategy are working, and which parts aren't.
Rental Income
Rental income tracking involves keeping an eye on all of the money generated by your properties within a month. This will primarily be made up of rental payments, but can also include things like late payment fees, parking fees, and laundry fees.
From these landlord statements, you may also be able to identify tenants who consistently pay late. You might then need to take some action to deal with the issue.
Monthly Expenses
Property owner reports also cover all of the expenses for your properties. These can include:
- Property taxes
- Utilities
- Insurance premiums
- Repair and maintenance
- Landscaping and lawn care
- Property management fees
A lot of these are tax-deductible, and if you want to maximize your profits, you need to know which. It's best to go through your owner's statements with a tax professional as they'll be able to help you keep your tax payments to a minimum.
You may also be able to spot areas where you're overspending here. You can then optimize your approach to reduce your expenses.
Net Income
The net income is the difference between the income and expenses, indicating your overall cash flow. You want this to be as high as possible, and you can do so by reducing your expenses or increasing your income.
Note that you can't raise rent whenever you want to and must follow the proper procedure to do so. A property manager can help you increase your net income while remaining compliant.
Maximizing Your Profits
Owner statements provide valuable information on your rental properties that you can use to increase your overall profits. Working with a skilled property manager can be very helpful here.
Merced Property Management has been helping property owners in Merced, CA, with this and various other tasks for over 25 years. Take a look at our property management page to see how we can do the same for you.
