Are you looking to make money off of a rental property? Whether you already have a property, are looking to invest, or are willing to work with a property management company, there are a few key components of rental properties that you need to know.
One of those components is owner disbursements. If you're not sure what an owner disbursement is or how it works, this guide will walk you through it.
Here are 3 things about owner disbursements you need to know.
1. What Owner Disbursements Are
An owner disbursement is the process of distributing profits or funds to the owner or owners of a particular property. A disbursement may be from rental income or possibly other sources such as security deposits, pet fees, and late fees.
Effective owner disbursements mean keeping accurate records, understanding tax laws, and properly allocating funds for repairs, maintenance, and other issues.
2. Who Owner Disbursements Are For
If you're a property owner or real estate investor, owner disbursements can work for you. You may want to consider investing in a REIT or real estate investment trust instead of outright owning a property.
A REIT uses investors' money to purchase rental properties and maintain them as income generating assets. REIT properties can be residential or commercial and may be spread across different geographic areas.
That's because owning a property has its own set of issues. There's a time commitment to being more hands-on. Your property may require ongoing maintenance or extensive renovations.
You may have issues with tenants. This could lead to a lengthy and expensive eviction process.
If you work with a property management company, they can handle many of these issues for you. However, you may have issues with your property management company, so make sure you choose a property management company that guarantees your satisfaction.
3. How Owner Disbursements Work
Your landlord or property management company should let you know how owner disbursements work. Usually, it's monthly.
For REITs, disbursements are different. A minimum of 90% of taxable income must be distributed to shareholders annually. These dividends may be paid quarterly or even monthly, depending on the REIT.
Rental income is taxable, which means it is important to keep accurate records and report them on your tax returns. A property management company can help you with your owner statements and reporting for tax purposes.
For best practices, set up a separate bank account for your rental finances. This will keep your personal and rental accounts separate.
Let Us Handle Your Owner Disbursements
As your Atlanta area property manager, we handle all aspects of managing your property. From marketing to tenant screening to rent collection to legal compliance and owner disbursements, we've got you covered.
If you're a property owner, investor, or REIT looking for someone to manage your property, give us a call at (678) 782-1004. Or click here for your free rental analysis.
