In a managed building, the owner and the manager are different people. The manager collects the rent, pays for repairs, and is supposed to hand over what is left. Every month the same question comes up: how much exactly do I owe the owner? This guide shows how to work out the owner's payout so that the figure can be explained line by line.
Management fees and commissions depend on your agreement with each owner. This guide covers the accounting of what is collected and spent on the owner's behalf.
##The basic idea##
For each owner, in each period:
Due to owner = rent collected for their apartments − expenses charged to them − amounts already paid out
Each part has to be clear, and each should trace back to a document.
What counts as money owed to the owner
Rent that belongs to the owner becomes a liability of the manager as soon as it is billed or collected, depending on your policy. Many managers recognise it when the rent is received, so that the owner is only owed money the manager actually holds. Choose one policy and keep it.
What can be deducted
| Deduction | Example |
|---|---|
| Repairs on the owner's apartment | Plumbing, painting, electrical |
| Utility bills for a vacant apartment | Electricity during a vacancy |
| Building charges for the owner's share | Maintenance, security, cleaning |
| Management fee, if agreed | A percentage or a fixed amount |
| Previous overpayments | Anything paid out too early |
Each deduction needs a document and, ideally, the owner's prior agreement above a set limit.
A worked example
Owner Mr. Raza owns three apartments.
| Item | Amount (Rs) |
|---|---|
| Rent received, apartment 1 | 45,000 |
| Rent received, apartment 2 | 50,000 |
| Rent received, apartment 3 (vacant two weeks) | 22,000 |
| Total rent collected | 117,000 |
| Repairs, apartment 2 | (9,500) |
| Building maintenance share | (6,000) |
Management fee, 5 percent of 117,000 (if agreed) (5,850)
| Net due to owner | 95,650 |
|---|---|
| Already paid earlier in the month | (40,000) |
| Payable now | 55,650 |
Check: 117,000 − 9,500 − 6,000 − 5,850 = 95,650, and 95,650 − 40,000 = 55,650.
Track it apartment by apartment
An owner with several apartments will ask which one produced what. Keep the amounts per apartment, so that you can say "apartment 2 earned 50,000 and cost 9,500 in repairs." It also lets you apply a payout to specific items, so that nothing is paid twice or forgotten.
The payout Prepare the statement for the owner with every line. Agree the figure with the owner, or with their representative. Pay by bank transfer where possible, and record the date and reference. Record the payment against what it settled. Keep the owner's acknowledgement. Month-end reconciliation
The total of all owners' balances should equal the amount you are holding for them. If your bank balance is lower than what you owe owners, you have been using owners' money, whether you meant to or not.
Common mistakes Paying owners on billed rent, not received rent. You pay out money that has not arrived. Deductions without documents. The owner challenges them later. One total for the whole owner. You cannot explain which apartment caused what. Forgetting earlier payouts. The same rent is paid twice. Mixing manager funds and owner funds. Reconciliation becomes impossible. How OneAccounts Property Management does it
OneAccounts keeps a live "due to owner" balance for each owner from the accounts. A breakdown shows the amounts by apartment and by invoice. Expenses can be charged to an apartment's owner, and when you pay an owner, the payout is allocated against specific items, with owner-chargeable expenses netted off. The owner's balance then always agrees with the ledger.
OneAccounts does not calculate a management fee or commission percentage for you, and there is no printable owner statement PDF; use the breakdown as the basis for your statement. A management fee can be recorded, for example, as an expense charged to the owner. See OneAccounts Property Management and what property management software should control.
Frequently asked questions When do I owe the owner the rent?
Most managers owe it when the rent is received. Your agreement with the owner decides.
How often should I pay owners?
Monthly is common. Whatever you agree, do it on a fixed date.
Can I deduct a management fee?
Yes, if the agreement allows it. State the rate and the base in the agreement.
What if an owner's expenses are more than the rent?
The owner owes you the difference. Record it and carry it forward, or collect it, as agreed.
How do I prove to an owner that the figures are right?
Show the breakdown by apartment, with the receipts and expense documents behind it.