Part 6-Accounting For All Funds
Part of the fiduciary between homeowners and their property managers is the accounting of all funds. Best practices dictate an accounting of all funds collected on behalf of a property owner, and the use of “generally accepted accounting principles” (GAAP.). In addition, all documentation should include invoices and back up records to validate the balance sheet. The following information is a detailed blog on procedures that support GAAP standards and a fiduciary relationship between property owners and property manages.
Best practice of accountability to homeowners dictates the following:
Professional property managers account for all funds to the homeowner on a monthly, quarterly & yearly basis
All documentation of repairs and receipts should be accompanied by invoices
End of year statements should be provided to homeowners for tax purposes
First Coast Realty provides “best practices” by using GAAP
Property managers should provide homeowners with consistent documentation of all funds.
Monthly documentation should include invoices showing rent collections minus any repair expenses
Quarterly documentation should include any annuities or interest calculations
Yearly documentation of a recap of the year’s ROI should be provided for tax purposes
Very rarely does a month go by when home repairs and/or upkeep are not required. Any financial responsibility of the homeowner should be invoiced and documented before sending the final monthly income to the homeowner. Professional property managers should have a network of providers to offer property owners good, reliable, and affordable repair services. All invoice documentation should be detailed and include invoices for proof of service and payment
Quarterly Invoices: HOA’s & Annuities
Additional documentation may be required to provide property owners with a complete accounting of all fuds collected. Especially with respect to homeowners’ associations (HOA’s) and annuities. Regarding HOA’s, some homeowners’ associations require quarterly dues. In the interest of best practices, a property manager should offer to pay on behalf of property owners and invoice the deduction in a quarterly report.With respect to annuities, some rental properties are investments. Quarterly interest and filings are required. This also should be a service offered by professional property managers to handle for the property owner and documented in a quarterly invoice.
Yearly invoices should be provided to property owners documenting the rental income activity of the year. These “rent process statements” and 1099’s should be part of a customer service offered to the property owner. It is always advised to seek the advice of counsel or an certified public accountant.
A Word About GAAP
Generally Accepted Accounting Principles
Generally accepted accounting principles (GAAP) refers to a common set of accounting principles, standards, and procedures issued by the Financial Accounting Standards Board ( FASB ). First Coast Realty Property Management Division uses GAAP in all the financial services offered to their property owners.
Professional property management requires knowledge, experience, and a commitment to best practices. This 8-part series is an outline of what to expect and require from a property manager, whether you are a property owner or perspective tenant. The responsibilities to both tenant and property owner require exceptional communication skills, professional marketing and technology tools, accounting abilities, knowledge of the landlord laws, and public relation proficiencies. The First Coast Realty Property Management Division offers all of this and more. Reach out to us on Facebook or Twitter and we would be happy to walk you through our two great programs or speak to our property manager by calling/texting today 904-494-8408 or email firstname.lastname@example.org
About the Authors: The video "Property Management-An 8 Part Series" was provided by Broker and Broker-Associate Gene and Libby Johnson with First Coast Realty Inc. We have built a top notch Rental Division, sure to meet everyone's need. We service St Augustine, Palm Coast, Palatka, and Jacksonville areas.