Are you looking to invest in a property in Savannah, Georgia? Home prices, on average, are lower than the rest of the country and this has attracted many potential landlords.
However, even with a great property, you may still struggle to receive consistent rental income. It's often a hassle to meet your tenant each month to collect your money.
There's also a big issue with tenants not paying their rent altogether! So what's the best solution?
Here's what you should know about owner disbursements:
How Owner Disbursements Work
Owner disbursements refer to the payments you'll get from your real estate investment. This isn't just a rental payment, however. The owner disbursement can include the following:
- Rental fee
- Money for bills
- Security deposits
- Application fees
- Late/penalty fees
A property manager will send you the owner disbursements. They'll meet with your tenants to collect the money. They'll transfer the money to you or pay you in cash. You'll have to calculate how much of the owner disbursements are your profits.
What Can You Do With Owner Disbursements?
Once you've received your owner disbursement, you'll have to separate your profit from expenses. You can always use your profits for personal use.
Many landlords like to use these profits for further investments. It's ideal to save a portion of your profits.
You might be liable for an emergency in the apartment. You can use your profits to cover the cost of any damage not caused by your tenants.
Best Practices for Owner Disbursements
Let's end by looking at a few best practices to follow with your owner disbursements.
You should create a spreadsheet with your owner disbursements. Here's a template for calculating your owner disbursements:
- Column 1: Date Received
- Column 2: Full Amount of Owner Disbursement
- Column 3: Rental Fee Amount
- Column 4: Total Expenses
- You can also break down each expense (electricity, utilities, taxes, etc.)
- Column 5: Additional Fees (Late fees, penalties, etc.)
- Column 6: Total profit
Analyze this spreadsheet at the end of each month. You should focus mainly on your profit. If the amount remains the same or increases each quarter, you're doing well!
If not, you have to analyze why your profit is decreasing. The reasons can range from you having to pay higher bills to paying higher taxes. You can use this to decide if you need to charge a higher rent in the future.
Make sure you also keep track of the average amount of expenses you have to pay. This is crucial for forecasting your financial growth.
Start Receiving Owner Disbursements
Now you know how owner disbursements work and what role they'll play in your rental business.
Your property manager will collect the money on your behalf. You'll have to calculate your earnings and expenses. This is important for assessing your rental property's profits.
You'll soon get the hang of it once you find your property manager. But where do you find the right company?
PMI Savannah Metro has had consistent positive reviews from our customers. We'd love to help you with your rental business!
