As one of the USA's largest cities, Houston, TX, is a popular choice for real estate investors wanting to profit from residential rentals. The city boasts a growing population thanks to its strong economy and abundant employment opportunities.
This can mean excellent returns for savvy landlords who can overcome the traditionally high vacancy rates among the city's rental properties. There's no room for complacency in this unpredictable market.
You must constantly track and monitor the performance of your property portfolio to succeed as a landlord. Owner statements and reporting are important tools to help you do this.
Read on to find out why.
What Are Owner Statements?
An owner statement is like a report card for your investment properties. It contains important and detailed financial information about your income, expenses, and net earnings for a specific period.
When you work with a property manager, they usually provide you with one of these reports monthly or at an interval stipulated in your property management contract.
Analyzing these documents can help you make the best decisions for your rental property. They're even more important now that the federal government has reduced the threshold for paying tax on your rental income.
Deciphering Owner Statements and Reporting
Every owner statement contains three crucial pieces of information. These are:
Income
In this portion of the owner statement, you'll find a detailed breakdown of all the income generated by your properties for the month. It includes rental income plus sundries like parking fees, laundry charges, and late fee payments.
You can use this section to perform a rental analysis against the rest of your portfolio or other properties in the neighborhood. It's also useful for pinpointing late rents and habitual late payers at a glance.
Expenses
This section details all the money you've spent on your property over the specified time frame. It includes things like:
- Property taxes
- Repairs and maintenance
- Utilities
- Property management fees
- Insurance premiums
A careful analysis of your expenses can help you find ways to cut costs and improve your return on investment. This section is also essential for calculating any valid deductions come tax time.
Net Income
Net income is the amount left over once you deduct your rental property expenses from your income. It's the most important measure of your success as a landlord.
If you keep seeing negative amounts in this section month after month, you need to make some changes. You must either increase your rent, implement cost-saving measures, or consider selling the unprofitable property.
Get Help Making the Big Decisions
Sometimes all you need is a fresh perspective to make sense of the financial jargon contained in owner statements. That's where Terra Residential Services makes all the difference.
We use the latest accounting software to ensure accurate and informative owner statements and reporting. Our experience, skills, and ongoing efforts to improve mean you're assured of reliable advice when strategizing for the success of your Texas properties.
Get the expert help you need to maximize your Houston, TX, rental properties today.
