Temporary housing includes hotels, motels, resorts, apartment complexes and rental homes. The number one tool to measure performance is occupancy rate. This is the number of nights the facility is occupied against total available nights.
Real estate refers to the industry that is most commonly tied to raw or developed land. Real estate has its own set of business dynamics. In accounting, real estate will include the structures and other improvements on the land in the total value accumulated.
Long and short term housing rental businesses use a financial operations tool to maintain, repair and upgrade the physical facilities. This tool is known as replacement reserves in the real estate industry. In almost all cases it is a contractual agreement requirement between the mortgage lender and the borrower.
The rage in real estate for the last 17 years has been flipping houses. Simple principle of buy low, fix it up and sell high – House Flipping Business Dynamics. What if I told you there was more money to be made with less risk and very little work if you simply finance the deal? You would say I’m crazy. Well, I’m going to show mathematically that I know what I’m talking about.
I love the game of Monopoly. My sons enjoy playing it too. But we all have the same complaint about the game; it takes forever to accumulate all the wealth and ultimately win the game. Being a landlord means the same thing. It will take a long time to accumulate wealth. So for those of you considering becoming a landlord, there are certain business dynamics and economics you should understand.
In the apartment complex industry I have had the privilege of reviewing four different presentation formats prepared by different Certified Public Accounting Firms. Interestingly enough, they were all distinctly different. But one stood out! It made much more sense than the others. One of the other three had an interesting subsection and so I combined the best attributes of both.