Hello, greetings from Colorado Springs!
My name is Lance Kohler and I'm the managing broker for Cornerstone Real Estate Team.
Today, I'd like to talk an owner through reviewing their owner statement. So if you're a brand new owner and you've not yet received an owner statement—or you received your first owner statement—I’d like to talk you through what that looks like, how best to read the statement, and where to go if you have any questions.
I'm going to first review an owner statement for a single-family home, and then secondly, I’m going to touch on some points of difference for a multifamily property.
First thing—if you pull up an owner statement that you want to review—the first thing I draw your attention to is the upper right corner (number one), and that's the statement period. It shows the period that we ran the statement and also the statement date, which shows the date that the data was pulled. As you probably know, we run our statements and pay our owner draws after full-month accounting. So the example I'm looking at here is a September statement, from the 1st of September to the 30th of September, and we sent that out to owners on the 15th of October.
The second item I want you to look at would be on the left side of the page—and that's the owner name and address. That’s just to confirm that you’re looking at your statement and we have the correct address for you.
Now I'm going to get into the kind of the meat of the owner statement, and there are three parts to every owner statement.
The first part is always the summary that shows you kind of a high-level overview—income, expenses, and what you should receive for payment that month.
The second page or second part is the income statement.
The third page is the detailed transactions.
We’re going to cover some points on each of those.
I'm looking at the summary by property first, and the first line is the beginning cash balance—it's number three on the example. Beginning cash balance is the cash balance that’s carried over in your account from the previous month, and that should match your ending cash balance from your previous month’s statement. If you had a previous month. If you’re a brand new owner, it's going to be zero.
Beginning cash balance—number four on our example—is additions to cash. So that shows income, which is typically rent income or rent that was paid. It also shows owner contributions. So if you, as an owner, provided contributions—maybe we had to make some repairs or there were repairs that exceeded the funds that we had on hand for you—that will be reflected here. And again, remember, if it's in this example the 15th of October and you just sent us a payment, the statement you're looking at is for the month of September. So this is all things that happened in September. That owner contribution wouldn't show up until your next statement, although we have it in your account.
Number five on the example—subtractions from cash. So those are your expenses. That’s going to be any repairs that were done, management fees, if we had to pay your HOA or some other fees. Any owner draws that we sent you in September are also shown there.
Number six is the ending cash balance. So that's the beginning cash balance plus your income minus your expenses—that gives us your ending cash balance.
Line number seven shows the property reserve—typically $750 for a single-family home.
Line eight shows what's available for payment. So that is what you should be expecting—that’s your ending cash balance minus your property reserve that we're holding for your property. And then that line shows “available for payment,” so that’s what you would receive for your owner draw.
I'd like to move to the second page—that is the income statement.
That provides a little more detail on each of the specifics for income and expenses. So for this property, the income shows pet rent income and shows rent income for a total income. This property had association fees and expenses. So we paid an HOA fee—probably for this property—a cleaning and maintenance fee, and the management fee. That totals your expenses, which are summarized on the front page, and it shows your net income.
Part three—page three—is the detailed transactions.
This is where I want you to go to find out specifically where that money came from or went, and for what reason. So again, it's broken down by additions to cash and subtractions from cash.
For this property, additions to cash are rent income and pet rent income—and that’s it. So it shows who—it will show you who paid the rent, and for what unit or what property, and what day.
The subtractions from cash—I use this property as an example because it shows a couple different expenses.
First is the owner draw that we sent you the previous month.
Then there’s a cleaning and maintenance fee—so that shows the name there for the cleaning maintenance fee is Cornerstone. It shows that Cornerstone Maintenance provided and did some work, and then there's, in the memo block, it shows that we reattached a shower handle.
Third expense was association fees—it shows that we paid Pine Creek Village Association in this example, and that was a monthly HOA due.
Then the last line under subtractions from cash is the management fees, which is paid to Cornerstone, and it shows the management fee period and the amount.
So the third part shows you the detailed transactions for additions to cash and subtractions from cash—your income and expenses.
I also included a multifamily owner statement so that I could talk about the detailed transactions again, for those of you that may have multifamily properties.
In this case, the summary section is the same. The income statement is the same as a single-family property. But the difference is—you’ll see on the detailed transactions, the third part of the report—when you look at additions to cash or expenses, it also includes the unit. So in many cases, you can see that unit number four paid rent on the 1st, utility income for unit four was paid on the 1st—so you can see the income based on the unit number. Whether it's 1, 2, 3, 4 or A, B, C, D—those will reflect on the additions to cash and on the subtractions to cash.
Under subtractions from cash or expenses—if it’s a property expense, like the owner draw—that’s at the property level. If it’s mowing the lawn, again, that’s at the property level. But if there’s an electric bill that’s done by unit level, so in this case, unit number three—utility charge for unit electric—so that’s the difference between what you may see on a multifamily statement versus a single-family rental owner statement.
I hope this information was of value to you.
I appreciate your time.
Make it a great day.