To avoid being swindled by lying owners who overstate their property's rental income, you must always reconcile the rental rates listed on the rent roll against the rental rates stated in the rental agreements. For example, I once had an owner who claimed on the rent roll that the gross rental income for a six-unit rental property during the past year was $39,600 (6 units x $550 x 12 months) when the contract rental rates listed in the rental agreements showed that only four units were rented for $550 a month while the other two were rented for $500. Use the income and expense analysis worksheet on page 139 for your reconciliation.
FORM 12.2 Sample Monthly Income and Expense Analysis Worksheet
1. Gross monthly rental income: $_
2. Total monthly income: $_
3. Less vacancy allowance and credit losses: $_
4. Gross monthly operating income: $_
5. Property taxes (divide annual amount by 12): $_
6. License fees (divide annual amount by 12): $_
7. Property management fee: $_
8. Employee wages and benefits: $_
16. Building maintenance and repairs: $_
18. Swimming pool maintenance and repair: $_
19. Parking, walkway and driveway maintenance: $_
20. Insurance premiums (divide annual amount by 12): $_
21. Maintenance and office supplies: $_
22. Automobile expenses: $_
23. Net monthly operating income: $_
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