May 07, 2019
Property Management Income and Expenses
Successful property investors and property managers need data. And they need property management accounting reports and tools that offer decision-making insight, control costs and maximize property revenue to ensure their books stay in the black.
Let’s unpack some of the different aspects of an income statement for property professionals.
The rent roll is the driving force for revenue. However, from investors with a handful of properties right up to large multifamily property management firms, there are usually additional forms of ancillary income. Please note that some of these income sources may be regulated and subject to local, state or federal rules and regulations.
These additional revenue streams can help give a property an additional boost in profitability.
Admin Fees: Property management firms and landlords may charge admin fees to cover NSF checks, late rent, insurance lapses, application fees, lost key fees, early termination of the lease, lease violation fees and other administrative charges.
Parking/Garage: Multifamily buildings will add to their revenue by charging for parking or garage space.
Laundry: If your property units do not include a washer and dryer, you probably offer laundry facilities in the building. Typically, the average per load is around $5 to $8 (for both washing and drying). That can add up to considerable income, even with the cost of machine repairs. And, your tenants don’t have to hoof it over to the local laundromat.
Storage: Despite the movement to only keep what gives you pleasure, the truth of the matter is this: people have stuff. Stuff they need to store. Whether it’s holiday decorations or kids’ bikes, it doesn’t always fit stylishly into their rental unit. Charging for additional storage is a surefire way to generate income.
Pet Rent: Pets may be part of the family, but not every property manager wants them around. If you do allow pets in your rental properties, one of the benefits is additional rent and security deposits. While not all animals will cause issues in a property, savvy property management companies understand that not all pet owners are diligent in ensuring their place stays free of any damage caused by Fido or Fluffy. A pet rent of an extra $50 or $100 a month or security deposit can offset any potential damage.
Utilities/Cable/Insurance: Utility and cable contracts drive income to your properties. Landlords and property firms can also receive passive ancillary income by selling property insurance through their tenant portal.
Trash Valet: This service sees valets collect waste and recyclables from each tenant’s doorstep and take them to on-site dumpsters.
Building Amenities: Depending on the type of amenities a building has, you can generate revenue for:
- Co-working spaces and/or conference/meeting rooms and business services
- Housekeeping services
- Gym and pool memberships
- Concierge services
Every property incurs expenses, and they can help offset how much you pay at tax time, so it’s important to keep good property management software records. Expenses can vary from business to business, but these are some of the common ones.
Payroll & Contractor Fees: You will need to pay employees, including employee benefits and payroll taxes. As well, any monthly vendor/contractor fee invoices are considered to be an expense.
Insurance: Business-related insurance is an expense. This includes basic liability and building insurance and special perils insurance like floods. If you have employees, workman’s compensation insurance is also deductible.
Maintenance & Repairs: Maintenance costs, like landscaping, pest control and HVAC cleaning are common expense, as are the cost of repairs in any tenant units.
Rent + Office Supplies: If you rent a space, it’s an expense. Any office supplies like printer paper and toner, pens, forms, stamps are also common monthly expenses.
Legal & Professional Fees: Typical business operating expenses include services like accounting services, legal consulting and advising services, or any fees paid to an advisor. If you are a property investor and pay a property management firm to run your properties for you, this is an expense.
Advertising Costs: Prospective tenants don’t just show up at the door. Costs related to advertising your properties, such as finders’ fees, online ads, signage and flyers are considered expenses.
Utilities: If you pay for electricity, gas, heating oil, water or private trash and recycling costs, you will list these as expenses. (Of course, if the tenant is paying you a fee for the use of these utilities, you will need to claim that as income.)
Aligning Property Management Accounting + Operations
One of the challenges that property professionals face is getting the transparency they need in their accounting, to see what’s happening in their daily operations and to be able to easy send and generate secure report. A property management software solution is designed to tear down those walls and create a single source of reliable data. You do more than just accounting – so should your software.
We offer a range of packages so that our software will scale up with you, making Property Vista an investment for both now and the future of your company. Smaller portfolios will run more efficiently, while larger holdings can capitalize on our full offering to centralize and automate their complex structure. Check out pricing and ask to see a demo.