As an Austin, TX landlord, you may already know that the job comes with a whole bunch of paperwork. Even small-time landlords have to navigate endless financial documents, contracts, and communications just to keep things ticking.
And that's before we get into the complex state regulations that landlords and tenants alike must stay on top of.
Of all of the documentation around landlord finances that you need to handle, owner statements are probably the most important. Read our two-minute explainer to find out what they are, and why they matter to your business.
What Are Owner Statements?
An owner statement is essentially a summary of your rental property accounting. It is a document that covers all transactions related to a property that you rent out.
It is supposed to be a clear, unambiguous summary of all rental income, expenses, and any other financial activities associated with the property. An owner statement should be generated regularly, usually on a monthly basis.
Key Elements of an Owner Statement
So, what should your owner statements include? There is no required format, but any compliant statement for accounting purposes should always include certain information related to property finances.
You'll need a clear breakdown of all rental income generated by the property, as well as any maintenance or repair expenses for that month. All due and paid property taxes should also be listed. So should any insurance expenses that you are responsible for as a landlord.
Any loan payments such as mortgages should also be listed, as should any deposits or refunds you have executed. Finally, make sure to tally the net income generated by the property for that month or accounting period.
Essential Terminology to Know
Most owner statements will contain certain terms specific to this type of documentation that all landlords should be aware of. For example, you'll need to detail your "cash flow" as either "positive" or "negative".
Positive cash flow is simply when your rental income exceeds your expenses for the property, indicating an overall profit. Meanwhile, negative cash flow means that expenses have surpassed your income, indicating a net loss (which can be offset through tax breaks).
The "vacancy rate" means the percentage of time over the accounting period that the property has been unused.
Finally, the so-called "cap rate" (capitalization rate) is a measure of the property's profitability, calculated by dividing the net operating income by the property's current market value.
We Take Care of Your Paperwork
Owner statements are not just another bit of bureaucracy. They are essential for accounting purposes and ensuring that you stay on top of your tax obligations.
They are also good for business, allowing you to maintain a clear picture of your operations and follow a realistic strategy for long-term profitability. This is where we can help.
At Austin Property Management Services, we help local landlords stay on top of their paperwork so that they always stay in the know. Get in touch today to find out exactly how we can help you.
