Profit vs. Cash Flow: Why It Matters for Real Estate Distributions
Profit doesn’t mean you can take money out. One of the most common mistakes real estate owners make is assuming…
Most property owners don’t lose money overnight.
They lose it slowly, by not reviewing the right reports regularly .
Below are the core reports I suggest property owners review monthly and why each one matters.
This report shows rental income, operating expenses, and net profit.
Why to review it monthly:
– Understand overall profitability
– Identify unusual expense increases
– Compare performance month-over-month and year-over-year
I strongly suggest reviewing the Accounts Receivable report every single month.
While the Income Statement shows how much income was recorded, it does NOT show which tenants owe rent, how much is outstanding, or how long balances have been unpaid. That visibility comes only from Accounts Receivable.
This report tells you:
– Which tenants owe rent
– How much is outstanding
– How long balances have been unpaid
Without reviewing Accounts Receivable, a property owner may believe an investment is performing well — while rent is actually overdue, uncollected, or quietly piling up.
I also strongly suggest reviewing the Accounts Payable report monthly.
This report helps confirm:
– Mortgage payments are recorded and paid
– Utilities and recurring bills are up to date
– Vendor invoices are not missing or unpaid
Knowing what you owe is just as important as knowing what you’re owed. Unpaid or missed bills don’t always show up immediately — but they eventually show up in cash flow.
The Balance Sheet shows what you own, what you owe, and your equity.
Why to review it monthly:
– Confirm bank balances are accurate
– Verify loan balances are declining correctly
– Ensure security deposits or trust balances are properly recorded
If the Balance Sheet isn’t accurate, your financial reports are not reliable.
I suggest having a budget for each property and reviewing it monthly.
A Budget vs Actual report allows you to:
– Compare rental income to projections
– Spot expense overruns early
– Understand whether a property is performing as expected
Without a budget, it’s difficult to evaluate performance objectively.
Final Thought
In 2026, successful property ownership requires proactive, monthly financial review, not year-end guesswork.
You don’t need dozens of reports. You need the right reports, reviewed consistently, to clearly see what your investment is earning, what’s owed to you, and whether additional capital may be required.
Need help with your monthly property reports?
Reach out today!