If you manage properties, you know that one of the most important things to keep an eye on is your operating statement. It might sound like paperwork, but it’s actually a tool that can help you make more money, cut costs, and keep your properties in great shape. Let’s break down how you can make the most of your operating statement and boost your profits.
What is an Operating Statement?
An operating statement, sometimes called a profit and loss (P&L) statement, shows the income and expenses of your property. It’s a snapshot that tells you how much money is coming in and where it’s going out. A well-kept statement helps you make smart choices, spot problems, and improve the way you run your business.
Think of it as your financial dashboard. Just like a dashboard in a car shows you how fast you’re going or if you’re low on gas, an operating statement lets you see if your property is running smoothly. If you understand what’s happening with the money, you can make better decisions about what needs to be fixed and where you can save.
Why the Operating Statement is Key to Profit?
When you manage property, it’s not just about collecting rent. You need to manage your expenses carefully too. Here’s where an operating statement helps. It highlights the following:
Income:
This includes rent, fees, and other revenue streams like laundry or parking.
Expenses:
These cover everything you spend on the property, including maintenance, utilities, management fees, and pest control.
If you’re spending more than you’re earning, your profits will shrink. But when you look at your statement regularly, you can catch issues early and make adjustments.
Keeping Your Costs in Check
One way to boost profits is to keep a close eye on expenses. Many property managers miss out on savings because they don’t review their operating statements often. By doing this, you can spot areas where costs can be reduced. For example:
– Maintenance:
Are you spending too much on repairs? Maybe it’s time to find a new contractor or get preventive maintenance done more regularly.
– Pest Control:
If pest problems are a frequent issue, using a service like Pest Share can help you reduce long-term costs by catching issues early. With Pest Share, you don’t have to worry about the back-and-forth between residents and pest control companies. It’s all taken care of, which means fewer complaints and less damage to your property.
When you keep track of where your money is going, you’ll notice where changes are needed. Even small adjustments can lead to big savings.
Increasing Your Income
Next, let’s look at income. Raising rent isn’t the only way to increase what you make from your property. Other things can add to your revenue too:
– Amenities:
Offer services like pest control as part of your lease package. Residents will appreciate the convenience, and it’s one more way to make your property stand out.
– Fees:
Some managers charge extra for parking spaces, laundry facilities, or even pet rent. Look at your operating statement to see if you’re missing out on any extra income.
Boosting your income doesn’t always mean charging more rent. It can also come from offering things that residents find valuable and are willing to pay a bit extra for.
How Regular Reviews Make a Difference
It’s not enough to just create an operating statement and forget about it. Regularly reviewing it—at least once a month—helps you stay on top of changes and make improvements quickly. Let’s say one month you notice a spike in utility costs. You can investigate and fix the problem right away, rather than letting it continue for months.
When you compare your income and expenses month by month, you’ll also see patterns. Maybe one season is slower for rent collection, or maybe certain expenses pop up regularly. Once you know what to expect, you can plan for it and avoid surprises.
The Role of NOI in Your Operating Statement
One term you’ll often hear in real estate is NOI, or Net Operating Income. This is your total income minus your operating expenses. In other words, NOI tells you how much profit you’re making from the property before things like mortgage payments and taxes are considered.
By managing your expenses and maximizing your income, you can boost your NOI. A higher NOI makes your property more valuable, which is great if you ever plan to sell. It also means you’re getting the most out of your investment in the meantime.
How to Use an Operating Statement to Make Smart Choices
The numbers in your operating statement aren’t just there for show—they help you make decisions. For example, let’s say your pest control costs have been going up, and residents are complaining about infestations. This might be a sign that you need a better pest management system. By switching to a service like Pest Share, you could lower these costs, reduce complaints, and protect your property from damage.
Or, maybe you see that your utility costs are unusually high. A simple energy audit could help you find ways to cut these expenses, like switching to energy-efficient appliances or checking for water leaks.
Every part of the operating statement gives you clues about how to improve your property’s performance. Use those clues to make changes that save money and keep your property in top shape.
How Pest Control Fits Into Your Operating Statement
You might not think of pest control as a major expense, but it can add up quickly. Plus, if pest problems aren’t handled quickly, they can cause damage that leads to bigger costs down the road.
With Pest Share, you can include pest control as part of your regular services. This means residents are less likely to try DIY fixes that don’t work, and problems are handled before they get out of control. Plus, it can be a selling point for potential residents. They’ll appreciate knowing they don’t have to worry about pests, and you’ll benefit from fewer maintenance issues related to infestations.
Including pest control as part of your services can also help with retention. When residents know that pests won’t be a problem, they’re more likely to stay in your property longer, reducing turnover and vacancy rates.
Final Thoughts
A well-managed operating statement is the key to boosting your profits in real estate. By regularly reviewing your income and expenses, you can find areas to cut costs and add value to your property.
Pest Share can play a role in this by reducing your pest control costs and helping you maintain a pest-free property. When residents are happy, they stay longer, which means more consistent rent and fewer vacancies. And when your property runs smoothly, your profits will naturally increase.
Don’t wait until something goes wrong. Keep an eye on your operating statement, make adjustments where needed, and you’ll see the benefits in your bottom line.
