Along with the rest of the residential and commercial real estate market, rental properties have exploded in the last few years. They can be an extremely lucrative source of income.
They also require a lot of work and hoops to jump through to make a profit. This involves careful handling of owner disbursements, or payments received from your real estate investment.
This article covers everything landlords and investors need to know about owner disbursements. Keep reading to learn how to get the most out of your rental property.
What Are Owner Disbursements?
Many people assume owner disbursements are just rent. They do include rental payments but also any other fees or cash received from the property. Other examples are application fees, security deposits, late fees, pet fees, and payments for utilities or other rental unit bills.
Most often, property managers handle the collection of money from tenants. They then transfer this money to the landlord or investor in the form of owner disbursements.
Note that sometimes the term is used to refer to profits for investors after expenses. For this article, we will use the former definition: cash payments to landlords before expenses are taken out.
How to Manage Owner Disbursements
There are a few basic rules for properly managing owner disbursements. Here are the most important ones to consider:
Keep Meticulous Accounting Records
One of the best things you can do is keep detailed records. Like with any budget, astute rental property accounting will give you a firm grasp of how much money is coming in and going out. This eliminates guesswork and financial mistakes that can be costly to your business.
Collect Rent and Bills On Time
Collecting rent and other payments on time can go a long way to ensuring your funding stays in the black. It also helps you better predict cash flow and plan for the future.
While flexibility may be warranted in some situations, insist that renters pay their bills on time. Setting up electronic and automated options for your tenants can help in this regard.
Be Realistic About Expenses
Keeping track of money coming in is one part of the equation. Anticipating expenses is the other.
You need to plan for operating costs, including administrative and maintenance expenses. Budget for repairs and improvements that regular property inspections reveal.
You should always have sufficient funds to cover any costs that could arise. This will keep your tenants happy, which will minimize turnover and vacancies (and maximize profits).
This applies to taxes as well. It is vital to stay up-to-speed on state and federal tax laws, so that there are no surprises when tax season rolls around.
Get Help Managing Owner Disbursements
Now that you understand the basics of owner disbursements, you can be sure you are managing funds properly. If you need assistance doing so, a reputable property management company can help. They can help you set up financial reporting, accounting, and even automated rent collection, so that you know all expected and unexpected expenses are covered.
Texas Prime Real Estate is a full-service real estate management company. Our vision is to leverage our team's extensive knowledge and experience to improve the lives of our customers--from real estate investors to landlords and residents.
Reach out to us today to learn more.
