How to prepare an owner statement, with a worked example

01What is the method in one line?

Payable to the owner = rent actually collected in the period − maintenance and other costs spent on his property − the management fee as the agreement defines it − what was already paid to him on account.

The word that matters is collected. Rent that was due but not collected, or a cheque that was deposited and bounced, is not the owner's money yet; it belongs on the statement as arrears, not in the total.

02The example building

A building in Muscat with six flats, managed for one owner. Five are let at 300 OMR a month, paid by post-dated monthly cheques; one is vacant. The agreement sets the management fee at 8% of rent collected. The statement covers one quarter, July to September. Tax is left out of the example because it depends on the agreement and on registration.

03Step 1: rent due, and rent collected

Fifteen cheques were due in the quarter. Fourteen cleared. Flat 4's September cheque was deposited and returned by the bank, so it stays on the statement as an amount owed by the tenant, with the date it bounced, and is left out of the collected total.

The vacant flat is shown too: three flat-months vacant out of eighteen, which is 16.7% of the building's months. An owner who sees the vacancy on the statement does not have to ask why the total is lower.

04Step 2: what was spent on the property

Each line is the actual cost on the vendor's bill, with the bill kept behind it. An estimate or an approval is not a cost until the work is done and billed.

05Step 3: the management fee and the amount payable

The owner receives 3,614 for the quarter. If the fee had been worked out on the rent due instead of the rent collected, it would have been 360, and the owner would have paid a fee on a cheque that bounced. Check which base your agreement uses.

When flat 4's tenant replaces the cheque in October, the 300 is collected in October's period, and the fee on it is taken then.

06Where do owner statements usually go wrong?

• A cheque is counted when it is deposited, not when it clears, so a bounced cheque is paid out to the owner and has to be clawed back
• The management fee is taken on rent due rather than rent collected, or on the gross before maintenance when the agreement says otherwise
• A tenant's security deposit is added to the owner's income, though it has to be returned when the lease ends
• Maintenance is paid from the company's own account and never reaches the statement, or reaches it twice
• The owner's money sits in the company's account with everyone else's, so the balance due to him exists only in a spreadsheet
• The vacant flat is left off, and the owner finds out from the total

07How does Revora do this?

Revora property management, by mbsystems, follows the same lines:

• Cheques are records with a state — deposited, collected, bounced, replaced — so a bounced cheque is a state with a history, not a deleted row
• A collection writes its accounting entry with it; the money and the record are one step
• Money collected for an owner is held as owner-payable, not as company income, and the management fee is taken as its own entry
• Maintenance requests go to vendors with approval, assignment, actual cost and the bill
• Owner settlements show what was collected, what was spent, the management fee, and what is payable; a payout to the owner moves the money and writes the entry in one step
• Owner statements, the return per property, and vacancy; owners have a portal of their own, or the statement is sent as a link

Ask for a demonstration on your own buildings: info@mbsyss.com, or Muscat +968 7277 7269, Cairo +20 100 520 5900, Vienna +43 681 8411 0547. The price is given as a quote for your company.