As your real estate portfolio grows, it becomes increasingly more difficult to manage, especially if you have multiple properties spread across different locations. Before long, a collection of small and simple tasks can snowball into a mountain of work and stress that severely hinders the owner’s productivity. To avoid these hassles, property owners often hand over these responsibilities to a reputable property management company which frees up a substantial amount of their time.
A good property management firm will take away almost all of the day-to-day responsibilities that being a landlord entails, completely removing the property owner’s workload. However, the owner must be still kept in the loop with how the property is performing, informed of any major issues that arise, and frequently updated on their investment’s financial performance. After all, their real estate investment could make up a substantial part of their investment portfolio, so they will certainly want to know how it is performing.
This article will take a look at what areas are typically covered in a property management report and what property owners can expect to find inside them. Let’s get into it.
What Is Included in a Property Management Report?
Property management reports are intended to communicate what is going on with the property so the owner can get a detailed understanding of the property without being entrenched in the day to day affairs of the landlord duties. Let’s take a look at some of the main areas that go into property management reporting and what we can expect to find in there:
Income and Expense Statement
What is the number one thing a property owner wants to know about their investment? Yep, how much money it’s making. The income and expense statement is an important part of property management reporting as it shows the flow of income and categorizes the outgoings/expenses neatly. This statement details:
- All sources of income for the property and their categories
- All expenses for the property and their categories
- The overall total (income – expenses)
The owner’s statements are an important part of property management reporting. A good commercial property manager will prepare a detailed one each month so that the owner can get a frequent snapshot of their investment and how it is performing. It acts similar to an accounting statement, with a detailed inventory of all comings and goings, including all maintenance fees, management fees, utilities paid by the tenant, and how much money is left in reserve.
The property reserve is usually an amount of cash that the owner provides the property management company to conduct repairs and maintenance. This prevents them from having to ask for permission every time funds are required.
The operating statement is vital if you want to have a thorough understanding of how your property is performing as an investment. This statement provides a clear view of the entire investment portfolio’s financial health that the property management company is responsible for.
This gives a birds-eye view of the property portfolio and often highlights areas of weakness where they could be room to improve the properties’ cash flow.
Account Ledger Report
Sometimes referred to as a general ledger report, this takes a collection of the previous reports and breaks them down into minute detail. Every single transaction should be documented and accounted for, including the date, time, purpose, and an individual transaction ID.
This allows the owner to go through their accounts with a fine-tooth comb if necessary.
Additional Owner Reports
Many other smaller reports may be included in the overall property management report provided to the owner. This all depends on individual circumstances such as the portfolio size, property types, number of tenants, and the property location. An example of such reports includes maintenance conducted, vacant property, tenant changes, and so on.
Creating Accurate Reports
It goes without saying, but property management companies must create accurate reports so that the owners can make informed and up to date decisions on their investment portfolio. With larger portfolios, especially, there are many moving parts, and there are sometimes substantial amounts of money at play.
Property management companies need to have their data-entry accuracy on point before compiling the report and delivering it to the property owner.