Imagine if your home paid its own mortgage. You could build equity without budgeting thousands of dollars per month. Turning a home into an investment property can make this a reality.
This is one of the many reasons why approximately 91% of Americans claim they want to own a home at some point in their lifetime. Becoming a rental property owner comes with many nuances, and owner statements are some of the most important to remember.
We've created a brief guide on how to properly handle real estate owner statements. Let's explore the key information you should know.
What Are Property Owner Statements?
As the name implies, these documents outline your rental property's financial details. Property management companies give them to property owners to offer insight into the rental's performance. They include info about expenses, gross rental income, and net rental income.
These statements can also include data on tenant turnover or lease renewals. Your owner statement might have miscellaneous financial information, such as details about reserve fund account balances and security deposits.
Why Are They Important?
Since owner statements provide so much insight, they help you make better decisions. You can refine your budget and make necessary repairs/renovations. You can also decide whether to increase your rent.
Owner statements will streamline your tax obligations, as well. The IRS might even request to see your own statements as proof of tax-deductible expenses.
How to Read Them
The information on property owner statements is straightforward. However, issues can arise if they don't include the necessary details. Your statement should have the following:
- The statement's issue date
- List of all income sources
- List of all expenses
- Outstanding tenant debt
- Money owed to contractors/service providers
- Your account balance
- Any other relevant information
Having these details in one place will help you better understand your rental property's performance. From here, you can make decisions that improve profitability and tenant satisfaction. A reputable property manager can help you act upon these obligations.
Best Practices
The quality of your owner statements will heavily depend on the property manager you work with. Prioritize management companies that have strong reputations. There should be no shortage of satisfied clients who leave positive reviews.
Ask for examples of their own statements before signing an agreement. If these documents don't fit your standards, continue your search elsewhere.
Inquire about their compensation, as well. The last thing you want is to encounter financial surprises after hiring someone.
Find someone who can help you handle your legal obligations. You'll find the ideal choice for your situation as long as you do your due diligence.
Never Overlook Owner Statements
Real estate owner statements are key components of your accounting responsibilities. Having a strong grasp of them will ensure you manage this information appropriately. From here, you can keep your rental property income streams running smoothly.
Our team at PMI Minnesota aims to streamline property management for each of our clients. We've proudly served the industry for over 20 years and have the expertise to take your investment to the next level. Schedule a consultation today to learn more about how we can help.
