Predicting future revenue is a crucial part of any business. But as we all know, property values fluctuate. So how can you calculate finances and predict the future revenue in property management? 

Calculating rental revenue is pretty simple and straightforward. Still, many new real estate investors don’t fully get it right. 

Let’s discover the three ways to calculate and predict your rental revenue. But first, let’s review why rental income is predictable. 

Why Is Rental Income Predictable? 

You may be wondering how to predict future rental revenue when property values change all the time. It’s simpler than you might be thinking. While values fluctuate, rents remain far more steady. 

Of course, you also need to consider expenses. Although expenses may fluctuate from month to month, the fluctuations are minimal, giving you better predictability.  

Let’s discover three ways to calculate your finances and predict your rental business cash flow. 

3 Ways to Predict Future Revenue in Property Management 

1. Use a CRM to track property income 

Tracking your property income is one of the first crucial steps to calculate your rental finances. The easiest way to track your income smoothly is to use CRM software. 

A good property management CRM should be centralized and include tools to make it easy to manage a property and relationships with your tenants. Additionally, you can look for a CRM that offers integrations to the property management services you’re already using. 

What’s more, a CRM for property managers isn’t just beneficial for tracking your property income, but it’s a way to manage your customers effectively and improve customer retention. A CRM solution enables you to be responsive and proactive to your customer’s needs and keep a record of your discussions. This ultimately can improve your customer satisfaction and retain them for ongoing business interaction. 

All in all, there are multiple benefits to implementing a CRM system into your property business. It helps you: 

2. Forecast rental property expenses 

Forecasting rental property expenses is something that easily confuses many new property investors. 

In general, real estate investors typically have no expenditures beyond the mortgage in a typical month. 

However, they may occasionally face significant, unexpected expenses like repairs and vacancies. 

The main trick to forecasting your rental property expenses is to take a long-term average of all of your costs incurred and budget for them each month, no matter whether they occur that month or not.   

Let’s review some typical expenses you need to be aware of monthly. 

Maintenance costs 

In addition, you should also consider maintenance costs like fixing leaks, repainting, replacing flooring and carpets, and other minor upkeep. In other words, take maintenance fees for quick yet necessary fixes but don’t dramatically change your property. Generally speaking, you should contemplate 5% of the rent as a maintenance fee. 

Property taxes 

If your mortgage escrows property taxes, it will roll into your monthly mortgage payment. Nevertheless, include taxes in your property rental revenue calculation, which is typically 5 to 12% of the rent. 

Accounting, administrative, and miscellaneous costs 

Owning a rental property will likely complicate your taxes. So you may need to consider hiring an accountant to do your taxes the right way. You might also think about hiring a property manager who will take care of all your administrative tasks. 

3. Calculate your property rental revenue 

Now comes the easiest part! Once you’ve got the grip of your monthly rental income and expenses, it’s time to do some math. The main thing here is not to base your income and expenses on one month alone. Take an average number instead as situations arise which can bring a lot of variation to the figures you see. 

Ready to Predict Future Revenue in Property Management? 

Once you understand your cash flow, you can accurately predict your future property management revenue. Remember, there’s no secret formula to calculate your revenue – it all comes down to emphasizing your income and expenses while doing some simple math to get a clear prediction. 

To make things easier, optimize your CRM for the financial services industry.