Property management can be a daunting task. You are not only responsible for all of the daily operations but also likely all of the property budgeting that goes along with this.
Well, you are not alone, as 70% of all rental property in the United States is owned by individual investors.
What can you do if you are in this situation? You can hire a property manager to help you with your budgeting and financial reporting.
What goes into budget and finance reports for your property? This guide will show you some of the most common factors.
Keeping Track of Rent
Something that you are going to want to keep a close eye on is your rent collection report. Considering that this is the majority of your income from your property, you are going to want to make sure that you have this right.
There are two things that you need to do here. The first is making sure you know how much rent has to be collected every month.
You can do this by multiplying the number of apartments or homes you collect from by the amount of rent that you charge for each. If the rent varies by tenant, account for this.
At the end of this process, you should know how much rent you expect every month. Then, create another column in your report to keep track of all of the rent that you received. Highlight any rent that you are still owed.
Another thing you need to keep track of is what your regular expenses are. This allows you to get a better idea of if your property is making a profit or not.
Some expenses that you need to keep track of are electricity, water, garbage collection, maintenance repairs, and landscaping services. On top of this, if you are paying anyone to help run your property, you need to account for their wages.
While you can pass some of these costs such as utilities onto tenants, there are other things that you are going to need to take care of yourself such as larger maintenance repairs. Make sure that this is doable with your budget.
After you add up your rent due and monthly expenses, you should have a good idea of how much money is coming in and out of your property. Once you know this, you need to set aside some money for an emergency fund.
This helps protect you in the event of a major maintenance expense, a possible lawsuit, tenants late with rent, and more. An emergency fund keeps your building running.
About 20% of businesses fail within the first year and nearly half of all businesses fail within five years. One of the biggest reasons businesses fail is lack of funds. Make sure your investment property does not fall victim to this.
Learn More About Budgeting and Financial Reporting
These are some things you need to account for with property budgeting and financial reporting. Make sure you know how much rent is due, and what your expenses are, and set aside some money for an emergency fund.
Do you need help with your budget report? Message us here to get started.