Property owners partner with property management companies to free up time, and so that they don’t have to deal with the day-to-day demands of their investment. And while property management agents can deal with it all, it’s still important for the landlords to stay in the loop. This is why property management companies prepare the property management report.
What is a Property Management Report?
A property management report is a document prepared by property management companies and provided to real estate investors. Also called an “owner report”, it shows property owners how well (or how poorly) their property has performed in the past few months or years. It also gives property owners an overview of what has happened with their properties under the company’s management, particularly if they’re long-distance landlords.
With the report, property owners can understand how much money they’ve put into their investment, as well as where they’ve put this money into. The report allows them to tweak their property management strategies and make sure they’re working towards generating more money and improving their property (and in turn, improving its value). For instance, if they notice that they’re spending too little on maintenance, they can take action immediately so they don’t have to deal with costly repairs later on. This, in turn, will allow them to reduce the rate of turnover.
Who Prepares a Property Management Report?
It’s the role of property management companies to prepare the report in a way that’s easy to understand. That way, the property owner doesn’t have to figure things out on their own, and they can see at a glance whether or not their investment is doing well. Remember, not all landlords are familiar with financial concepts, so consolidating that information into something more digestible can be incredibly helpful.
The report is typically prepared at the end of the year, however, you can request your property management company to prepare it more frequently. It would be wise to review your report as often as possible, particularly if you live far from your property, as it gives you a general overview of how things are going. It also shows you whether or not there are issues that you need to deal with hands-on.
What Is Included in a Property Management Report?
It’s worth mentioning that property management reports are not all alike, as the details they contain are tailored to what the property owner wants to know. For instance, a landlord may prefer to concentrate on the cost of maintenance and repairs rather than the names of their renters. Or, a landlord may want the report to focus only on cash flow. In general, however, a property management report covers:
#1 Income and Expense Statement
What’s one thing that all landlords want? The answer: to make money. The income statement is one of the property management financial reports that you’ll find in your report. Also called the “profit and loss statement”, it shows the flow of income into the property, including the costs that were incurred in running it. It tells you how much you’ve earned over a particular accounting period, or in some cases, how much you’ve lost. You’ll be able to tell if you’re at a loss if the balance (the number after the costs have been subtracted) is in red.
#2 Owner Statement
The owner statement or the “owner cash report” is similar to the income statement, however, it also covers the property reserve. The property reserve is an amount of cash that the landlord provides, and is set aside to cover the cost of repairs, maintenance, and more. In that way, the property management company doesn’t need to ask the property owner for cash each time they need to conduct emergency repairs and maintenance.
Aside from the property reserve, the owner statement also shows a detailed report of property management fees, utilities paid, maintenance fees, and more.
#3 Operating Statement
The operating statement is one of the property management financial reports in your main report. If you own multiple properties, it provides an overview of your portfolio, and tells you whether or not your properties are performing well as investments. Its purpose is to show you your portfolio’s overall health. In addition, it shows you the vulnerable areas where there could be room for improvement.
Although it focuses on your properties as a group, you can request your property management firm to pull operating statements for each property.
#4 Account Ledger
This is the most detailed part of a property management report. The ledger gets into the nitty-gritty, listing every single rental-related transaction including credit card purchases. Ledgers give you everything you’d need to know about a particular transaction, like the date, time, and amount. It’s an excellent tool for property owners who want to closely examine their accounts and make sure no amount of money was wasted.
#5 Tenant Receivables Report
If you have tenants who have not paid their rent in full, this report will show you how much they owe you, and how much you would’ve earned if they had. This report details individual tenant delinquencies, allowing you to take appropriate action. Bear in mind that late rent payments are a violation of your lease agreement, giving you the right to evict them.
#6 Accounts Payable Report
The accounts payable report details the debts and payments made during the accounting period. It is designed to help you track transactions, and give you a visual aid of any overdue payments.
What Other Reports Are Included?
If you need additional reports, you can request your property management company to prepare them. Remember, no two reports are the same, as they are based on multiple factors such as the property type, portfolio, number of tenants, etc. It all depends on your property’s particular circumstances. Examples of additional reports are the vacant property report, maintenance conducted report, tenant screening report, vendor report, and many more.
Get Accurate Reporting With Luxury Property Care
At Luxury Property Care, we understand how important is it for you to stay up-to-date with rental-related matters. That’s why, when you partner with us, you will receive accurate reports monthly, yearly, or whenever you need them. We want you to have peace of mind, knowing that your property is being managed properly by your team. For more information on our reporting procedures, call us at (561) 944 – 2992 or complete our contact form.