According to Scott Max Business School, 86% of property managers planning to buy more units in the future, it's crucial to have important documents in place.
Honing your financial reporting skills lets property managers stay on track of their finances and ensures everything runs smoothly. But if this is your first rodeo or you struggle with financial reports, you likely won't know which areas need your attention.
Sound like your situation? Luckily, we've got the answers you're searching for. Here are the must-know budgeting and financial reporting tips to take on board.
What Is a Financial Report?
Before we discuss what to include in your financial statement analysis, it's important to offer a definition.
Financial reports show a unit's financial performance to give landlords and property managers an overview of the property. In the document, you must cover the net operating income, expenses, cash flow, and vacancy rate.
The more detailed the report, the better, so that it's easier to track. For instance, in the expenses, explain how much is spent on maintenance, taxes, or other costs to figure out where you can cut back.
Benefits of Creating a Financial Report
The main benefit of a financial report is it creates a rental income forecast for managers. This is an estimate of how much you can earn from the property in the future.
When you commit to good financial reporting, you get accurate data, making it easier to make an informed decision about the property. The report also tells you if there are any risks so you can take active measures to maximize profits.
Tips for Your Financial Report
When it comes to real estate budgeting, you'll need robust financial reporting software. You want a program that works with your current property management software and lets you remotely access data.
Make sure you choose software that produces detailed reports, including a balance sheet. You want to know where money is coming from and going, so you can spot issues before they develop further.
To be successful, you must be meticulous and gather financial data from bank statements, invoices, and receipts. As it's time-consuming, automate wherever possible, such as integrating other financial platforms with the reporting software. A bonus is that it reduces the risk of errors so you produce an accurate report.
Tips for Budgeting
Set aside funds every month to build a reserve. You never know when an emergency will strike, such as a costly repair or an unexpected eviction. For maintenance budgeting, choose a set percentage of your monthly profit and place it in a special bank account.
Budgeting and financial reporting
Now that you know the basics of budgeting and financial reporting for your portfolio, you'll save a huge amount of time when generating reports. The key is to find robust software that integrates with your current program to save time.
At PMI Puerto Rico, we understand that using the latest tech is a game-changer, which is why we use it for our properties. If you need help with managing your property, we'd love to hear from you. Contact us today to chat with a representative.
