From the moment you appraise your Orlando rental property, you're thinking about income potential. How much can you charge tenants and still remain a competitive housing provider? How much will you need to reinvest to manage your property?
It goes without saying that you won't get to keep 100% of your gross profits as a landlord. This is where owner disbursements come into play. In this guide, we'll look at:
- The types of owner disbursements
- Tracking expenses to maximize rental earnings
- Proper accounting methods to manage gross and net income
Read on to learn how to streamline the process of owner disbursements and financial management.
Types of Owner Disbursements
Broadly speaking, owner disbursement involves distributing profits to a rental property owner. There are several types of owner disbursements, including:
- Rental income
- Nonrefundable fees (e.g., late fees or pet fees)
- Expense reimbursements
In other words, rent is not the only potential source of income for landlords. That said, not all lump sums paid to property owners are considered profit. For example, security deposits should not commingle with any landlord assets unless and until you deduct from the deposit to cover damages.
Expenses and Their Impact on Rental Earnings
Before you can calculate your owner disbursements at any given time, you need to calculate your rental expenses. Common expenses for landlords include:
- Marketing costs
- Maintenance costs
- Utility bills (if not covered in full by tenants)
You will also need to keep track of your total rental income for the year to properly report and pay your income tax.
Accounting and Rental Income Tips
In order to properly approach owner disbursements, you'll need to start with your accounting as a whole. In order to improve your accounting strategies, we recommend:
- Separating rental finances from personal finances
- Regularly reviewing all financial statements
- Using rental property software for accurate reports and estimates
Keeping separate bank accounts for rental finances and personal finances ensures that you don't have to pull from your income to reinvest in your property. Separating expenses from owner disbursements also allows for more accurate numbers during tax season.
What if you're struggling to keep up with accounting or your rental income is on the decline? Rental professionals can implement property management strategies that promote legal compliance, accuracy, and income maximization. In other words, it may be time to outsource.
Maximize Rental Earnings with Wilson Management Group
You've got your eye on the prize, and that's a high rental income. The only problem is that you can't seem to master owner disbursements while reinvesting in the success of your rental property. That's where WIlson Management Group comes in.
At Wilson Management Group, we're committed to our clients, their tenants, and the overall success of Orlando's rental market. Our approach balances investor profits with tenant relations to ensure that everyone is satisfied. Contact us to get help with rental property accounting and more.
