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Understanding the Basics of an Owner Disbursement

System - Tuesday, June 21, 2022
Property Management Blog

Did you know that, on average, landlords collect just under $35,000 in rent every year? The money collected from rent often acts as a landlord's supplemental income and can even replace their main source of income entirely.

Are you a brand new property owner wondering when or how to get paid for renting your property? If so, then it's crucial you know about owner disbursements. In this article, we'll define that term means and why it's so important. 

What Are Owner Disbursements?

Owner disbursements, also known as owner draws, are payments of monthly earnings from rental properties. These payments are based on the total profit of each individual rental property and get sent out once a month. 

How Are Owner's Disbursements Calculated?

The total amount of an owner disbursement is the monthly income of a property minus any fees associated with the management of the property. These are fees like maintenance or repairs, leasing fees, inspections, and evictions. 

How Do I Receive an Owner Disbursement?

If you manage your rental property by yourself then you alone are responsible for handling owner disbursements.

Otherwise, owner disbursements get handled by property management companies. Property management companies also manage things like rent collection, property expenses, balances, and statements.

If you own multiple rental properties, outsourcing property management responsibilities is the most efficient course of action. Handling the dirty work of owning rental properties on your own can be quite stressful. It's also very time-consuming, especially if you're a busy individual with little spare time.

Each property management company has its own way of handling owner disbursements. It is up to you to understand the specifics of how payments get arranged, that way there are no issues with receiving your payments on time and in full.

Owner REIT Disbursements

For people who do not themselves own a rental property but still want to invest in real estate, REITs (Real Estate Investment Trusts) are the most viable option. REITs are companies that finance, own, and manage rental properties.

REITs are often listed on major stock exchanges like the NASDAQ and the NYSE. Investing in one of these funds is as simple as buying shares of any desired trust. Similar to mutual funds, REIT disbursements are paid through dividends several times a year.

REITs are a reliable long-term investment. They have low volatility and a high return on investment. REITs often outperform the market and there is no shortage of trusts to choose from.

However, REITs dividends are not qualified dividends. Because of this, they get taxed at a higher rate. REITs also grow very slowly and are at the mercy of interest rates.

More Resources

Owner disbursements make sure property owners get paid for renting out their properties. While an owner can handle the responsibility of disbursements by themselves, it's much easier with a property management group. 

Are you a property owner interested in property management services? Look no further, Triad Property Management is here to help. Give us a call today to get started!