You're considering buying rental properties in Virginia, and you can't wait to make your first purchase this fall. You couldn't ask for a better place to invest in rental property.
Research shows that Virginia, home to 8.5 million people, is one of the top places to invest due to its cultural diversity and growth over the past several decades. Charlottesville remains the top Virginia real estate market for cash flow, and Blacksburg is a prime spot for investing in student housing.
Effective budgeting and financial reporting will help you maximize the return on your investment in Virginia. Let's explore tips for managing finances.
Real Estate Balance Sheet
Creating a balance sheet is an essential part of managing a real estate portfolio. This document will give you a monthly look at your properties' financial positions. Use your balance sheet to report the following items:
Assets increase your company's value by producing cash flow. They include your buildings, land, and cash.
Liabilities include the money you owe as a business owner. They include accrued expenses, loans, and mortgages.
Equity is your real estate assets minus your liabilities. It gives you an accurate picture of your overall net worth.
Real Estate Income Statement
Another important document for a real estate investor to generate is an income statement. It describes your rental homes' cash flow. Use it to determine the amount of profit you've generated in a certain period.
Income statements are usually generated annually, quarterly, and monthly. They should itemize expenses and compare them with budgeted goals. Expenses include the following:
- Property insurance
- Accounting fees
- Marketing and advertising costs
- Legal fees
Your income statement should also highlight the money you made within a certain timeframe. This money may be from rent or tax credits. This document will show you if you're staying within budget each month.
Real Estate Rent Roll
Yet another significant budgeting and financial reporting document in real estate is your rent roll. This offers information about your rental properties' predicted futures based on their current financial positions. Create your rent roll by factoring in the following in your calculations:
- Scheduled rents
- Rent renewal rate
- Anticipated revenue generation
This document helps real estate investors make educated decisions about their properties. It can be applied to various types of properties. These include the following:
- Office buildings
- Shopping centers
- Commercial properties
Your rent roll can also be used for multi-family real estate. Investors who own single-family houses may find it helpful, too.
Budgeting and Financial Reporting Help
Budgeting and financial reporting can help you track your rental properties' profitability and make wise decisions about your portfolio long-term. Important documents to create in Virginia include a balance sheet, income statement, and rent roll.
PMI Commonwealth is your leading provider of high-quality property management services. We can help you maintain accurate monetary records and prepare detailed financial reports.
Our other services include preparing and monitoring real estate portfolio budgets. We'll even give you a free rent analysis to determine if you're charging the best amount for rent. Partner with us today!