Do you have a rental property and are struggling to track your income and expenses? Are you facing financial issues on your rental property? You may not be managing the financial health of your business.
You need to have essential financial reports that ensure smooth management of your income, expenses, and many other things. Or you can look for a Redondo Beach property management service for the same. After all, continue reading this article to learn more.
Financial reports are health indicators of a real estate business. You should not take these reports lightly because they do more than you think.
They let you know how well or poorly your property is performing. These reports help you keep an eye on the financial condition of your rental and provide you with vital information to cut or add things whenever necessary.
And if the finances of your business are going in the right direction, it will be easier to maximize your return on investment. Let’s see what critical financial reports you need to have for your investment rental properties?
1. Balance Sheet
It is one of the first financial reports that provide you with crucial financial information. By seeing this report, you can take a snapshot of the financial position of your rental property for a month.
After all, this report is also known as a “statement of financial position.” This report provides information about the rental property’s assets, liabilities, and equity for a particular period.
2. Income Statement
If you want to know about the cash flow of your business, you will need to have an income statement or a profit and loss statement. A professional generally prepares this report monthly, quarterly, and annually.
When it comes to property management, it is the income statement that monitors the expenses incurred and compares them to the budgeted goals. As the name says, you know with this report how much profit you are able to generate from a given property for a particular period of time.
3. General Ledger
When it comes to the general ledger, it is made to show all the transactions found on the balance sheet and the income statement. It is good to maintain a record of the transactions occurring for a rental property through a proper classification in the form of liabilities, assets, revenue, expenses, or owner’s equity.
In simple terms, the primary purpose of preparing this report is to take an overview of all your transactions for your rental property. You can also call it a master list because it is prepared with all security standards in mind by professionals. That is why it is advantageous to have a Real Property Management service for houses for rent.
4. Accounts Payable
This report is prepared by finance professionals to show your short-term debts and other financial obligations for a particular period of time. It is the report that lets you know that you are making the payment to the right vendor.
In other words, with the help of this report, you are able to see that you don’t have any delinquent account (an account that still requires payment from the property owner).
5. Tenant Accounts Receivable
As the name says, this is the account that lets you know about the receivable amounts from the tenants, including rent, late fees, utility payments, pet deposits, security deposits, etc. In other words, it depicts a picture of all the delinquent accounts of your tenants.
6. Monthly Bank Statements with Reconciliation
Do you know about this report? This is nothing but a financial statement that combines your rental property’s accounting records along with the landlord’s bank reports.
The primary purpose of preparing this report is to ensure that the figure available on the bank account is also available on the general ledger and balance sheet.
7. Rent Roll
Do you want to know how your property will work in the future? You will need a rent roll report. This report is made to deliver data-driven predictions that are backed by the current financial position of the property. This monitors things like renewal rates, revenue rates, revenue generation, gross scheduled rents, and more.
Further, you are able to make an informed decision with the help of a rent-roll. This report can be prepared for all kinds of investment properties such as single-family homes, condo, multi-family properties, commercial places, shopping centers, and more.
Final Thought
These are the crucial financial reports a rental property owner must have for monitored financial health. If you are not knowledgeable about these reports, you can look for a Redondo Beach property management service.
Here is RPM Choice, your property management, with a comprehensive accounting solution for the good financial health of your property. Visit our website to learn more.
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