According to Niche.com, Atlanta, GA, deserves a high overall grade of A, considering its many outdoor activity opportunities, A-ranking public schools, and median household income of $77,655, higher than the national median of $75,149. It's also a hotspot for renters, with 54% of the city's residents renting homes here.
Given those qualities, being a landlord in ATL could prove lucrative; as Niche pointed out, the median rent here is $1,512.
However, before you get excited about becoming a landlord, you must first learn about owner disbursements. Otherwise, you might spend money thinking it's profit when it's not.
Team PMI Atlanta West will share insights on the owner disbursement process and property management tips, so read on.
What Exactly Are Owner Disbursements?
Also called property owner payments, owner disbursements are funds a property owner receives from rental activities. Examples include:
- Rental income
- Rental profits
- Expense reimbursements
- Late fees
- Security deposits
Distinguishing Rental Income vs. Rental Profits
Rental income is the money you receive from tenants as their payment for renting your property. On the other hand, rental profits refer to the amount left over after you've deducted the expenses from the rental income.
Factoring in Expense Reimbursements
Savvy landlords are masters of rental income distribution; they know the importance of allocating a portion of the rental income for operating expenses. If you're a new Atlanta landlord, you can take a page from their book and use the 50% real estate rule for expense allocation. As explained by Investopedia.com, this strategy involves setting aside 50% of the annual rent for operating expenses.
Imposing Late Fees
Georgia doesn't have statewide laws regulating late rent fees. So, Atlanta landlords can legally charge penalties for tenants who pay rent after the due date.
However, as NOLO points out, late charges should be reasonable. For instance, 5% of the monthly rent is okay, but 10% may be too much. Think about it: Imposing a 10% late fee on a monthly rent of $1,500 equates to a $150 additional payment.
Yes, your renters are responsible for on-time payments, and you must be able to collect rent promptly. Still, an extra fee of $150 is exorbitant. Tenants will likely feel highly dissatisfied and no longer want to renew their lease.
Charging But Not Touching Security Deposits
At the beginning of a lease agreement, Atlanta landlords can require tenants to make a security deposit. The amount can equal one or two months' rent, but it's not income or profit. It's collateral that can help protect you from shouldering the costs of a tenant's unpaid rent, utility bills, and severe property damage.
Simplify Owner Disbursements With PMI Atlanta West
Because owner disbursements influence your Atlanta rental's profitability, you should handle them carefully and learn how to distinguish income from profits and expenses.
If you find things too complex, worry not: PMI Atlanta West can handle them (and all your other lease-related chores). We're a full-service real estate asset management company.
From marketing to tenant placement, property maintenance, accounting, and financial reporting, we can do all these (and more!) for you. We're part of PMI, a fast-growing property management franchise with over 20 years of industry expertise and $5+ billion of assets under its management.
Call us today to request your complimentary property analysis!
