These days, being a landlord in Utah is a great way to make money. Due to high mortgage rates, more and more people want to rent rather than buy.
Of course, holding a hot asset is only one part of the puzzle. To actually turn a profit on it, you need to know how to manage owner disbursements. Doing so involves keeping accurate records and being aware of tax implications.
Want to know more about the importance of owner disbursements for landlords? This short guide will serve as your starting point!
What Are Owner Disbursements?
In simple terms, owner disbursements are the payments you get from owning your property. Managing these payments is key to your success.
The most common type of disbursement is your rental income. This is the amount your tenants pay you for the use of your property. For most Utah landlords, this will serve as their primary source of revenue.
You also have expense reimbursements. If you pay for repairs or maintenance, there's a chance you can get some of that money back. This can happen through tenant recoveries or tax write-offs.
Other common types of owner disbursements include:
- Security deposits
- Application fees
- Late fees
- Pet fees
Calculating Your Disbursements
Calculating owner disbursements involves keeping accurate records of all rental-related transactions. This includes income, expenses, and repairs.
First, you'll need to invest in the right property management software. This will ensure your tax compliance and help you optimize your finances. This is particularly important if you own more than one property.
Keep in mind that property owners can get REIT disbursements as well. REITs are companies that finance rentals and distribute their profits. If you own REIT shares, you'll receive regular disbursements without doing anything.
Since calculating all this stuff can get tedious, many owners outsource this task to property managers. Hiring a Salt Lake City property management company allows you to focus on other aspects of your business.
Disbursement Management
Want to manage your disbursements yourself? If so, let's go over some of the best practices you'll need to implement.
Number one: collect your rent on time. If the property is generating the expected income, you'll always have a positive cash flow. Try to automate and streamline as much of the rent collection process as you can.
Next, have a plan for how you'll track your finances. A good place to start would be to separate your business and personal accounts. This will make it easier to identify potential tax deductions.
Finally, know how your rental is performing at any time. To do that, you'll need to keep track of all operating costs. If you hire a Salt Lake City property manager, they'll organize this information in owner statements.
Need Help With Owner Disbursements?
The bottom line: managing owner disbursements isn't for the faint of heart. It's a complex process that involves many moving parts. If you're not a seasoned landlord, it's worth considering outsourcing this task.
Looking for a property management company in Salt Lake City? At Wolfnest, we can help you with owner disbursements and other rental-related tasks! Contact us here to learn more about our 100% satisfaction guarantee!
