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Home » Investment property » Owner Disbursements: What Real Estate Investors Need to Know

Investing in real estate can be an exciting venture, but it can also be intimidating when you start exploring its financial aspects. Among the many money-related terms you’ll likely encounter is owner disbursements—the funds you receive for owning an investment property.

Even if you’ve entrusted this task to a property manager near you, understanding what it is can offer you greater transparency into your property’s financial performance. Discover what it is, and how partnering with property managers near you can help ease the burden of managing disbursements.

What Are Owner Disbursements?

In response to the challenges of managing real estate investments, many landlords in Florida opt to partner with a property management firm. These collaborators are responsible for overseeing your property’s day-to-day financial operations, such as rent collection and bookkeeping.

Once your property management firm obtains these funds, they facilitate the transfer to you in the form of owner disbursements, also known as owner’s draw. These are payments made to you, arising from the ownership of a real estate asset.

Disbursements often reflect the profit generated by your property—in other words, what’s left after subtracting expenses (e.g., property management fees) from rent. They are then forwarded to you at agreed-upon intervals, which are usually monthly, semi-annually, or annually.

Examples of Owner Disbursements

Owner disbursements come in different forms, such as:

  • Rental Income. This is the most common source of owner disbursements, representing the monthly rent collected from tenants. Property management firms often use tenant portals and set up automated payments to streamline rent collection.
  • Owner disbursements may also come in the form of profit, which is what remains after deducting all rental-related costs from the total rental income.
  • Security Deposits. These are funds that tenants put down at the start of their lease, intended to cover the costs of potential property damage resulting from their negligence.
  • Pet Fees. If you allow pets on your rental property, your owner disbursement may include pet fees—a sum of money designed to cover the costs of damage caused by pets, such as scratch marks or stains.
  • Late Rent Fees. In cases where tenants fail to meet rent deadlines, property management companies may collect minimal late fees or penalties. These are designed to compensate for the inconvenience caused by delays, and may be part of owner disbursements.

How Are Owner Disbursements Sent to You?

How Are Owner Disbursements Sent to You?

How you receive owner disbursements depends on your initial agreement with your property management company. In most cases, the third party that’s tasked to handle your property’s finances will deposit the funds directly to your designated bank account. While some landlords may still opt for check payments, electronic methods like direct deposit are more common due to their convenience.

What Can You Do with Owner Disbursements?

How you use your owner disbursements is entirely up to you—after all, it is from your investment. While the option to treat it as your salary and withdraw your funds for personal use is tempting, it would be wiser to use it in alignment with your goals, such as:

  • Reinvest in the Property. You could choose to reinvest the funds back into your property, such as by carrying out improvements to boost its value and appeal to prospective tenants.
  • Put it in Your Reserve Fund. Consider setting aside your owner disbursements as your reserve fund, allowing you to cover unexpected costs related to repairs, maintenance, vacancies, and more.
  • Grow Your Investment Portfolio. Use your owner disbursements to buy more properties, growing your real estate portfolio. This strategic move offers you additional sources of passive income, allowing you to maximize your monthly earnings.

Ultimately, the use of owner disbursements is dependent on your investment goals, strategy, and immediate needs. It’s advisable to seek advice from professionals, such as a property management firm near you, to identify the most ideal use of your funds.

Owner Disbursements for REIT Investors

Investors who’d rather not deal with the nuances of operating a rental often invest in real estate investment trusts (REITs). These are companies that pool capital from multiple people to invest and run income-generating properties, and divide at least 90% of that income to shareholders. Those who’ve invested in REITs also receive owner disbursements, but the amount they get will depend on the total number of shares they own.

What If You Self-Manage Your Rental Property?

What If You Self-Manage Your Rental Property?

If you’ve chosen to self-manage your property, you can still receive owner disbursements—think of it as the salary you pay yourself. However, do note that the process of owner disbursements works differently compared to when partnering with a professional property management firm.

While self-managing offers you complete control of your rental property’s operations, it requires meticulous attention to detail. As a self-manager, you’ll be responsible for not only calculating your property’s profit, but also for navigating its tax implications—which can be very complex if you have no experience.

Note that it’s crucial to practice proper record-keeping, not only to maintain transparency but also to abide by tax-related rules and regulations.

Why Collaborate with a Property Management Company for Owner Disbursements?

Managing owner disbursements by yourself can be complicated, which is why most real estate investors opt to partner with property managers near them. These professionals take on the responsibility of preparing owner statements—detailed reports that offer in-depth insights into the property’s financial performance.

Additionally, your property management firm will be the one to calculate and provide you with owner disbursements, while aligning themselves with all relevant laws. Leveraging their years of experience, these firms also have tried-and-tested systems in place, allowing for the seamless and timely collection of rent each month. This guarantees that you get paid on time, all the time.

Property managers near you also bring valuable expertise to the table. Having been in the industry for years, they’re able to implement effective strategies for maximizing your property’s profit potential. This includes methods such as cost-cutting without compromising quality, and the continuous implementation of improvements to increase your property’s value over time.

Hire Reliable Property Managers Near You

If you’re looking for property managers near you to streamline your investment’s financial functions, get in touch with Luxury Property Care’s experts. We understand how complex managing your property’s finances can be, which is why we offer a suite of services, ranging from bookkeeping to strict tax compliance.

Beyond that, we’re committed to being your long-term partner in property management. Or goal is to provide you with strategies for maximizing your ROI—that way, you’ll have a steady source of passive income for the years ahead.

Call us at (561) 944 – 2992 or complete our contact form for a comprehensive look at how our property managers can help you.

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