Have you considered becoming a real estate investor in Phoenix, AZ? It's a dynamic city and offers many opportunities for potential landlords.
But before you start hunting for tenants, you'll need to educate yourself on how the landlord experience works. One of the most important aspects of being a landlord is collecting owner disbursements.
This guide will show you what owner disbursements are. You'll need to understand them to succeed with your rental property.
Here's what you must know:
What Are Owner Disbursements?
Owner disbursements refer to the total payment given to the property owner by the tenant. The tenant pays the property manager who gives the money to the landlord.
Once you receive the owner disbursements, you'll have to break down your profit and expenses. The disbursement will include your rental income, additional payments, and expenses.
You'll have to prepare a spreadsheet with the breakdown to calculate if you're earning a profit or you've got a loss! This is necessary to build a sustainable investment business.
Calculating Profits and Losses
Let's suppose you receive $2,000 as an owner disbursement during a month. You'll have to calculate your profit from this amount.
Assume you're charging $800 to your tenant as a rental fee. If the tenant has paid late, you can charge a late fee. For this example, the late fee was $50.
So you've received $850 total as a payment. The remaining $1,150, in this example, is your tenant reimbursement for expenses. These expenses can include paying the bills and other associated costs.
But let's also presume an appliance got damaged during the month. If it wasn't due to your tenant's negligence, you'll have to pay for the repair. If the cost is $200, you'll have to subtract this from your payment.
So the calculation is $850 - $200 = $650. This is your total profit for the month. You'll need to calculate this amount each month to assess whether you're making a profit or loss.
Documenting Owner Disbursements
Your property manager will keep records of your owner disbursements for you. But it's also crucial that you keep records for yourself and your tenant.
In case of a dispute, these records will work as receipts. They'll track if your tenant has always paid their rent and bills on time. Each month, you should provide your tenant with a copy of your owner disbursements.
Make sure this copy outlines the breakdown of rental fees, bills, and other expenses. Each expense should be written in detail so that there's no room for discrepancies.
Start Your Rental Business
Now you know what owner disbursements are and how they'll help your rental business.
When you receive your owner disbursements, make sure you keep records of your earnings and expenses. Write details for each expense so that you can use them as a reference. You should provide a copy to your tenant each month.
With the right property manager, you'll have no problem managing your owner disbursements.
Real Property Management Phoenix Valley has several positive testimonials from landlords throughout the area. We'll be glad to help you!
