How much can you make from renting real estate? On average, the S&P 500 Index reports that the yearly ROI for a United States residential real estate investor is 10.6%.
There are many variables for distinguishing the return on investment for a rental property owner. Owner disbursements and how much-invested funds you reallocate toward your property will make a big difference come tax time.
To better understand what you may owe tax-wise, it is important to understand what owner disbursements are. Also, you want to know how it affects your profits, and why a property management company makes it simple to keep tabs on it all.
Keep reading for the details.
What Are Owner Disbursements?
They are payments of your earnings that are kept from a rental property. It does not show as a business expense, but it is an amount based on the profit you earn.
If you have a property management company that is helping you to manage your rental property, then you will receive owner statements. You will work with the property management company to determine how you will receive payment for your disbursements.
The owner statements you will receive will detail your rental income and your expenses for the property.
Owner Disbursements as Working Capital
While you could withdraw the profits for personal use, you do not have to do this. You could leave it in your equity account and use it to make further investments in the property. However, whether or not you can do this varies depending on your ownership structure.
For a sole proprietor, you can pay a regular salary to yourself, and this would appear in the bottom-line net profit. The profit-and-loss statement of a sole proprietorship does not make any distinctions from the owner's draws on salary and additional distribution if the owner has funds left still after paying his or her salary.
Owner Statements From a Property Management Company
It is a tremendous help to the real estate investor. The property management company not only takes the burden of having to collect rent away from the real estate investor, but it also simplifies the bookkeeping.
Essentially, the property management company is keeping tabs on everything that the owner of the property needs to know in the reports they document. Besides the owner disbursements, the owner statements keep a tally of an income report, expense report, monthly balance, and operating statement.
Especially if you own multiple properties. Details like these are highly valuable.
Maximize Your Rentals Potential
Precision Realty & Management LLC is a Houston property management company real estate owners can trust. They help their clients every day get the most out of being a real estate investor, including timely and accurate owner disbursements and owner statements.
In business since 1989, they pride themselves as the leaders of the Houston market. Precision Realty & Management LLC stays current on industry trends. They are a proud member of the NARPM or National Association of Residential Property Managers.
Contact Precision Realty & Management LLC and see how they can help you boost your rental property profits!