The Zebra reports that in 2022, individual investors owned 70% of rental properties in the U.S.
As one of these investors, you might hire a property management company to oversee your rentals. They will give you owner statements regularly. These reports show how your property is doing financially.
To make smart choices, you need to understand them. Owner statements show your income, expenses, and profits. In this article, we will share four easy ways to analyze them.
1. Review Income and Expenses Report
The first step in analyzing owner statements is to check your income and expense reports. These reports show how much money you make and spend on your property.
Look at your rental income and compare it to your monthly operating costs. This will help you see if your property is making a profit or losing money.
Pay attention to expenses like:
- Maintenance
- Repairs
- Utility bills
Tracking these costs will help you understand where your money is going. If expenses are too high, you can find ways to save. Reviewing these reports often also helps you manage your property better.
2. Analyze Cash Flow
Many new investors in Wantagh, NY, rely on projections to determine their first rental property. These projections estimate how much income the property will generate. However, the reality can be very different.
Your property might be fully occupied but still have poor cash flow. Tenants may delay rent payments, causing a slow inflow of money.
At the same time, recurring expenses, like maintenance and utilities, must be paid on strict deadlines. This can create a financial gap.
While the property may appear profitable in property financial reports, you may not have enough cash on hand. Regularly reviewing cash flow can prevent such problems.
3. Assess Profitability and ROI
Compare your rental income to the total costs of owning and managing the property. This includes maintenance, taxes, and loan payments.
Many landlords in Wantagh, NY, use loans to buy rental properties. These loans accrue interest, which reduces your real estate earnings.
Even if your rental income reports look good, loan payments and interest can lower your profits. Calculating your return on investment (ROI) is also important.
ROI shows how much profit you're making after all costs. With financial statement analysis, you can make informed decisions about upgrades, selling, or other changes to improve profitability.
4. Compare Owner Statements Across Different Periods
Comparing owner statements across different periods gives valuable property management insights. Over time, trends and patterns start to appear. For example, you may notice seasonal changes in rental income or rising maintenance costs.
Comparing property financial reports will help you identify these trends. This information is useful for making projections about future earnings and expenses. It can also help you make smarter decisions to improve your property management strategies.
Mastering Owner Statements for Better Property Management
Understanding your owner statements helps you manage your rental property better. Reviewing income, expenses, and cash flow shows if your property is profitable. Comparing reports over time reveals trends and improves planning.
At PMI Empire Solutions, we make property management simple. Our reports give clear insights. Contact us today to maximize your rental property!
