It is very important that rental property owners understand the activity in their account each month. This is, after all, their money and they should feel confident that their property management company is portraying to them an accurate and easily read accounting of where their money is coming from and what it is being spent on.
One of the most common reasons I have seen rental owners change Property Managers is due to lack of communication in regards to their financials. If their funds are not being reported to them in a logical fashion, on a consistent basis, it creates a lack of trust with their Property Management Company. This can also lead to the rental property owner feeling that they are being taken advantage of, even to the point of them feeling like they are being robbed!
So, how can this be prevented? We prepare not only monthly financial reports, which rarely make sense to anyone who is not an Accountant, we also take a little extra time to give our reporting a personal touch. This includes providing all the transactions that have taken place in their account each month in a simplified, easy to read and understand Owner Statement Summary Sheet.
It is a great way for the financial team to become familiar with each owner’s properties and cash flow so when you do receive an occasional call you will already have the knowledge of their account.
Here is a list of items that can be extremely helpful to a rental property owner, when viewing their summary sheet:
• A section that includes a total dollar amount of revenue collected that month, broken out between rent, utility reimbursements, late fees, etc.
• A listing of which units have outstanding balances owed at the end of the month.
• A section that includes all expenses for the month. This doesn’t have to be detailed, a simple line marked electric bills, or maintenance costs is sufficient. If they do need more detail of the specific charge and what it entailed, they can reference the financial reports, which will provide this information for them.
• A total amount of owner disbursements that were paid that month.
The summary sheet should always include the beginning balance in the owner’s account, as well as the ending balance. The rest of the information doesn’t do much good if the owner doesn’t know where they stand when the month is over.