Setting and exceeding property owner expectations keeps your property management company a step above the competition. Give owners a clear understanding of what is included in a property management report, how often they will receive reports, and how to understand them.
Property Management Report Audience
There are property management reports specifically used by property management companies, private landlords, property managers, community managers, etc, that all serve different purposes. In that, understanding the property management reports that are provided to property owners is significant to both the management company and the owners’ relationship.
These property management reports communicate how the property is performing, what goals to focus on for that property or portfolio, and improves that relationship by building trust between the property management company and the owner.
Which of the following would be included in a property management report?
- Delinquent Tenant Report
- Tenant Screening Reports
- Schedule E Report
- ACH Settlement
- Vendor Ledger
- Rent Roll
Would it surprise you to know that under most circumstances, none of the above would be included in a property management report to owner?
The above reports are certainly important for a property management company and/or private landlord to review but wouldn’t be offered to an owner. For instance, a Schedule E report lists expenses spent on a rental property for a private landlord to provide an accountant for tax purposes. If an owner hires rental management services, those expenses are already accounted for as deductions before a 1099 is issued to that owner.
If a request for a rent roll to be included in a property management monthly report to owner, you may want to think twice about providing one. The information on a rent roll is a useful tool for a property management company or private landlord as they are in direct management of the properties and those tenants. However, unless an owner is attempting to sell a property, a rent roll isn’t typically offered.
Similarly, an on-site property manager may need to review a rent roll, delinquent tenant report, or tenant screening report for a management company. The company represents an owner, the on-site manager represents the management company, however, it would be redundant to burden an owner with those details.
Which brings us to the next question.
What IS Included in a Property Management Report
Typically a property management company will provide the following types of reports to rental owners.
Income and Expense Statement
Simply put, an income and expense report shows the flow of income to the property and the payment of expenses from that income by category. The main elements of an income and expense statement for a property owner show:
Income by Category
Overall Total Income
Expenses by Category
Overall Total Expenses
Line item with total income minus expenses
Owner disbursements (also know as an owner draw) are deducted as an expense as this report is from the perspective of the property or properties — and those funds are no longer available as income for the property to use.
A red balance (and/or balance in parentheses) denotes a negative balance when rental property expense exceeded the income. When a property balance is negative, either a future income or an owner contribution bring it back in balance.
Sample owner income and expense report. Scroll to view additional sample reports.
Owner Statements
An Owner Statement (also known as an Owner Cash Report or Rental Owner Cash Report) is similar to a rental income/expense statement yet includes beginning and ending balances and reserve targets set if any. A reserve target are funds the property is holding for unexpected expenses to avoid the need to ask for an owner contribution. This statement also treats the owner draw as a separate property expense. The main elements of an owner statement shows:
Beginning Balance
Categorized Income
Categorized Expenses
Ending Balance
From the ending balance, the following will be deducted to show the property/properties available balance.
Owner disbursement
And any reserve target
Available balance
Note: This available balance will be the next statement beginning balance.
Often these reports have a master page to consolidate all the properties into one master Owner Statement, with the following pages showing individual properties and/or unit depending on how the software is configured.
Sample rental owner cash statement (also known simply as an owner statement). Scroll to view additional sample reports.
Operating Statement
An operating statement is a birds-eye view of how all the properties are performing for the portfolio as a group as it relates to the property(s) beginning and ending monthly balances over a certain amount of time; separated by months. The owner’s portfolio operating statement can also be pulled for individual properties as well.
Again, notice in the property management report sample operating statement below, that the owner disbursement is listed as an expense in this report. Simply stated, the owner has withdrawn funds as an expense to the properties and portfolio and are no longer at the disposal of the property for other expenses.
Sample quarterly owner operating statement from Rentec Direct. The article continues, scroll to read more.
Account Ledger Report
An account ledger report gets down to the nitty-gritty of every debit or credit transaction posted on a property ledger. Reports typically can be pulled by a single property, a multi-unit property, or even by portfolio. They include the transaction date, description/memo, category, and amounts.
Just like reading a bank statement, the balance available on an account ledger report is a per transaction balance and totals will be calculated based on the date range of the report pulled.
Additional Owner Reports
Vacant Properties Report
Completed Workorders
Monthly Statements
Creating Accurate Reports
Property management services include proper and timely data-entry; which of course, is the backbone to accurate property management reporting. As a busy property manager, lift the data-entry burden with a software program that automates tasks such as recording electronic rent payments, recurring expenses, auto post late fees, etc. When entering information manually, timing is everything, so be sure to have all data-entry complete before pulling any reports.
Timing and Report Access
The terms of the management agreement between the property management services company and the property owner, will dictate if these reports will be provided monthly and/or quarterly, and also yearly as a wrap up for tax purposes. Although the rental industry is a bit slower to adapt to technology, the good news is that online property management software is available with built-in owner portals.
The portals allow owners instant, anytime access to real-time data and report options. Not only does that save the property management company time but it also gives an owner some peace of mind; allowing them to see how their properties are doing without needing to wait weeks or months.
Property Management Budget and Performance Report
As a property management company, along with the above reports offered to owners, there are other important metrics to consider which are vitally important for budgeting, goal setting, daily management, and property management accounting. Reports such as:
Tenant Turnover
Property Service Reports
Bank Ledgers
Category Ledger Reports
Trial Balance Report
Balance sheet
Online Payment Reports
Reports surround the property management and rental industry for good reason. Just as a doctor needs to check vitals and conduct diagnostic testing, so rental management needs to do routine checks on the pulse of the rental management company as well as the individual properties and tenants in their care with the help of property management reports.