Financial statements for property management are essential for confirming how effectively you manage your properties. They assist you in keeping tabs on your finances and point out areas for development so you may change spending as needed. The key to running a profitable business is ensuring you bring in more than you spend. It becomes essential to know about the income and expenses associated with the real estate firm. Software for Property Management is the new one-stop solution for enhancing profitability.
Various revenue streams are supported in the property management company’s top line as far as its income statement is concerned. Rules and regulations of the different residential locations might restrict those income sources. There are other trends and laws in various rental markets. Before getting into the specifics, be aware of the following primary sources of income, regardless of where you conduct business:
- Rental owners and associations pay management fees, maintenance markups, and Finder’s fees.
- The Rental Application fee is to be given by the Applicants of the property for the tenant screening procedure.
- Residents are supposed to pay –
- For re-key/Lock-out fees as a penalty in case of lost keys,
- The out-of-lease surcharge is to be paid by them to encourage tenants to sign a long-term lease,
- NSF fees for fraudulent payments
- Late fees in case the residents haven’t spent any of the charges on time.
Collection Rate: One essential element contributing to a better rental income stream is the collection rate. An appropriate collection rate for a typical residential property is between 95% and 98%.
Vacancies and Incentives: In some instances, you might offer concessions to encourage new residents to move in faster to reduce building vacancy losses. This tactic is administered frequently in a market for rental housing with a high turnover rate or during an economic slump.
Property management companies also spend money in various ways! The most frequent offenders include:
Another fundamentally solid technique is expanding your clientele constantly. Sometimes, even after having a strong clientele base, you still lose a client occasionally. Losing clients may occur for infinite reasons. For instance, real estate prices are rising, and a landlord might decide to sell their rental property. Expenses include Payroll and contract fees, Rent, supplies, Utilities, Bookkeeping, Service fees, and membership fees.
You can avoid losing clients by employing consistent growth techniques for improving the top-line income statement, such as increasing revenue without opening more doors. You must keep track of your “net income” (revenue minus expenses), and good fiscal hygiene includes monitoring this figure every month and maintaining a functional chart of accounts.
It would help if you were particular about tracking your net income, revenue minus expenses. Monitoring this figure every month and updating a functional chart of accounts is considered a part of Good financial hygiene.
Tools to Help You Stay Automated and Updated
After all, you have a business to manage, and bookkeeping isn’t usually the job’s most enjoyable or lucrative aspect. REDA Crm For Property Management can automate a large portion of the procedure and make it simpler to communicate with owners important information about the condition of your assets and the value you are creating.
You’ll understand the exact items to watch out for and how to track them with minimal effort if you know the above and the property management tools at your disposal.