The secret to a successful rental property investment in Maryland is to manage it like a business. Many first-time landlords assume their rental property will be profitable the moment a tenant moves in and starts paying rent. But there is so much more to it! 

When you start seeing your rental property investment as a business, you’ll have more control over your income. The first step is to create a rental property profit and loss statement. 

By tracking your income and expenses, you can make data-driven decisions that are invaluable to maximizing your profit and ROI. But where should you start?

Whether you’re an accidental landlord turned real estate investor or you’re finally ready to take your rental property investment seriously, you’re in the right place! By the end of this article, you will know how to create a rental property profit and loss statement and why it’s so valuable to your success. 

What is a Rental Property Profit and Loss Statement?

A rental property profit and loss statement (P&L), also referred to as a rental income statement, is a document, often a spreadsheet, that summarizes your monthly income and operating expenses over a set period. 

Inputting your gross income from the property and the expenses paid to manage it will help you calculate your overall profit and provide insight into the success of your investment. 

What is Included in a Rental Property Profit and Loss Statement?

There are three main components of a rental income report. 

1. Gross Monthly Income

Any income that you earn from your rental property is considered gross income. This type of income includes:

• Monthly Rent
• Parking Fees
• Pet Fees
• Laundry  
• Late Fees
• Rental Application Fees

2. Operating Expenses

Any expenses incurred to manage and maintain the property are referred to as operating expenses. Keeping track of these expenses will help you determine how much you spend each month compared to how much you’re earning. 

Common operating expenses include:

• Mortgage Interest
• Property Management
• Utilities
• Water & Sewer
• Trash 
• Maintenance & Repairs
• Property Taxes
• Rental License Fees
• Advertising
• Rental Taxes
• Tenant Screening Fees
• HOA Fees
• Office Supplies
• Software Subscriptions
• Travel Expenses

These expenses are usually tax-deductible, so having a record of them will be helpful when it comes time to file your returns. 

3. Net Operating Income

This is the most important figure in your profit and loss statement. It represents the actual profit you’re making from your rental property after all expenses have been deducted.

To calculate this, subtract the operating expenses from the gross monthly income. 

(NOI = Gross Income – Operating Expenses)

If your NOI is negative, it means you are losing money on your investment. 

If the NOI is positive, it means you are making money from your investment! 

How to Create a Profit and Loss Statement for Your Rental Property

Now that we’ve covered what a profit and loss statement includes, it’s time to create your own.

Choose Your Period

There are many different periods to track in your profit and loss statement. 

Some landlords prefer to conduct a detailed analysis of their rental property by tracking only the monthly profit. While others prefer to have an overview of their rental income over 12 months or year-to-date (YTD). 

It’s a good idea to have information for both monthly and yearly NOI for a better overview and analysis of your investment’s performance. 

Start a Spreadsheet

The best way to track your profit and loss is by creating a spreadsheet where you can input the data and use formulas to calculate the total income, expenses, and NOI. 

If you aren’t savvy with spreadsheets (not to worry!), there are free templates online, or landlord management or bookkeeping software that you may consider investing in. These tools can automate calculations, provide visual representations of your financial data, and make it easier to keep your records up to date.

Update Information Periodically

The most crucial task of maintaining a profit and loss statement is ensuring the information is up to date. Set aside a day each month to input all of your expenses and income to calculate your net operating income accurately. 

Keeping up-to-date information is essential for understanding the performance of your rental property and identifying areas where you can maximize your profit. This understanding empowers you to make informed decisions and take control of your investment. 

Example Rental Property Profit and Loss Statement

Below is an example of what a profit and loss statement for a rental property may look like for a single month.

Gross Income

• Monthly Rent – $3,500
• Pet Fees – $100
• Parking Fee – $150

Total Gross Income – $3,750

Operating Expenses

• Mortgage Interest – $450
• Property Management – $500
• Insurance – $70
• HOA – $150
• Trash – $35
• Utilities – $100
• Maintenance – $200

Total Operating Expenses – $1,505

Net Operating Income

Gross Income ($3,750) – Operating Expenses ($1,505) = $2,245 monthly NOI

Why Every Landlord Should Have a Rental Income Report

Never underestimate the power of data when it comes to becoming a successful landlord! Having a rental income report is your key to maximizing your rental income. 

Analyze Investment Performance

When you track how much profit your rental property is earning each month and what operating expenses you have, you can trim the fat where needed, as they say. 

Having an overview of the money you’re putting into your investment can help you analyze what you can cut back on or if you need to consider raising the rent to cover expenses. 

Track Tax Deductions

When tax season rolls around, it’s incredibly helpful to have your tax-deductible expenses already recorded and calculated. You’ll save a ton of time, and your accountant will thank you! 

Maximize Your Rental Property Income the Mainstay Way

Owning and managing a rental property in Maryland can turn into a full-time job if you don’t have professional help. From tracking income and expenses to coordinating repairs and communicating with tenants, it can be highly time-consuming. 

But with the right professional help, this burden can be lifted, allowing you to enjoy the benefits of your investment without the stress. 

That’s where Mainstay Management comes to save the day—and your profit! With our professional management services, you can rest assured that your investment is in good hands, allowing you to enjoy a sense of security and peace of mind. 

At Mainstay Management, we are more than just a property management company; we’re also financial guides dedicated to helping our landlords maximize their rental income. 

We’ll keep your profit and loss statement updated and analyze it to see where we can cut expenses and raise rent when necessary to ensure you’re making the most from your investment. 

But here’s the best part: You don’t have to do a thing, we’ll take care of everything!

Contact us to see how we can help you maximize your rental income today!  

If you enjoyed this article, make sure to read, Tax Deductions to Maximize Rental Property Income, next!