How to Create and Optimize Your Rental Property Balance Sheet

May 29th, 2023 Josh Hatter
A house

Over the past five years, you’ve probably noticed something changing in your Excel (or Google Sheets) balance sheet. Clearly, short-term rental management is not what it used to be. With compression of rates, a saturation of Airbnb and Vrbo rentals, and an emphasis on quality over quantity, the average real estate balance sheet is shifting fast.

Proper short-term rental management is now King. If your balance sheet cash flow is stagnating or decreasing, there’s a reason. The short-term game is changing, and players like Coastal Vacation Properties (CVP) are leading the charge.

Want to maximize your rental potential? First, you have to master the real estate balance sheet.

Short-Term Rental Property Balance Sheet Template

Does the process of creating a balance sheet seem daunting? Perhaps it feels like the brush strokes of this financial canvas are too intricate for your liking. Well, we’ve got you covered.

We understand that taking charge of your financial health isn’t always a walk in the park. The many layers and categories of assets, liabilities, equity, and more can sometimes complicate matters. That’s where a well-structured balance sheet template can become your best friend.

To simplify this task, we recommend downloading a Short-Term Rental Property Balance Sheet Template.

The Short-Term Rental Property Balance Sheet: What You’ve Been Missing

As you know, your real estate balance sheet is crucial to ensure the financial health of your short-term rental property business. The balance sheet provides vital information about your assets, liabilities, and equity. When done correctly, it paints an accurate picture of the company’s financial position and helps owners make critical decisions.

But what if that true picture is messy? What if you used the wrong tools? A bad paintbrush? The wrong canvas?

When your rental property income is dwindling or failing to grow, or your rental property business is not growing as you expected, take a long, hard look at your real estate balance sheet.

Your expenses, cash flow, and equity tell a story. Sometimes, you need professional management to change that story arc.

Analyzing Your Real Estate Investments on Paper

Analyze investments

For rental property owners and real estate investors, an accurate balance sheet can speak volumes about the health of real estate assets. Let’s cover what your basic balance sheet contains and how you can optimize these categories.

Are Your Balance Sheet Assets Diversified?

From fixed assets, such as your actual rental property, to bank accounts (i.e., savings account) and other short-term investments, a company’s assets should be diversified. A strong inflationary hedge, real estate is best when distributed across asset classes. Short-term rental properties differ significantly, from Gatlinburg cabins to Myrtle Beach bungalows.

Ensure you have diversified balance sheet assets not just across regions and seasonal locations but in terms of properties. Condos, houses, multifamily units, and even boutique hotels are all potentially profitable investments.

Consult Professional Firms to Reduce Your Liabilities

Your liabilities are any debt you owe, such as mortgages, loans, and credit card debt. Tracking liabilities is one of the top tasks in keeping a real estate balance sheet. Exemplary balance sheets show minimal debt and maximum cash flow on rental properties.

How Is This Achieved?

The best way is to hire a professional during tax time who can streamline deductions such as mortgage interest, property taxes, repairs, and accumulated depreciation. Deducting can help you reduce taxable net income and minimize potential tax liability. Rental property management companies can also improve cash flows and financial performance to offset liabilities.

Boost Balance Sheet Equity

Equity refers to the value of the rental property business after paying all the debts. Owners’ equity is the difference between assets and liabilities. Retained earnings, meanwhile, are profits your rental property business has accumulated over time.

Building owner’s equity in a rental home, such as a single-family home, is critical to bolstering your balance sheet.

A property management company’s point is to boost ROI and revenue while increasing owners’ equity. Companies like Coastal Vacation Properties (CVP) increase revenue in real time through many data-based adjustments.

Reduce Expenses & Maximize Income Streams

As you know, rental income is the primary source of income for a short-term rental real estate portfolio. However, there are always ways to optimize your income statements on both short-term and long-term investments. Cleaning fees, security deposits, and other guest amenity fees can generate income.

Your Income and Expenses Belong in Good Hands

A top property management firm can help you reduce expenses and boost income streams at any given point across all the investments under management. Seasonal trend data and price point adjustments are invaluable.

Another way to strengthen your bank account and boost your net worth is to streamline property-related expenses for property taxes and repairs while lowering operating expenses such as marketing on Airbnb.

When you need revenue, property, and guest-stay management at the rental or portfolio level, call CVP.

Creating a Short-Term Rental Property Balance Sheet

Emerging companies and senior companies alike want all the data. A premier short-term rental management firm uses this real-time data to dynamically adjust pricing, manage online presence, predict the fair market book value, and optimize revenue-building strategies.

By pulling current market values to adapt a property value at any given point, for any specific date, CVP can help bolster your real estate balance sheet continuously.

A Good Balance Sheet Starts with a Good Business

You don’t need to be a real estate industry expert to understand how adaptive pricing combined with concierge-level guest experiences can boost your ROI! CVP beats its competitors by 25-30% more revenue generated.

How does this look in, for just an example, a property balance sheet template?

It’s not as complex as it seems. Let’s cover – just as a sample idea – what to include in top real estate templates for a real estate balance sheet. Here are the crucial steps to organizing your rental property balance sheet template. As always, a full-spectrum short-term rental management firm can assist.

Step 1: Organize the Balance Sheet Data

Any good rental property balance sheet or balance sheet template will clearly and concisely organize information categorically. The balance sheet should delineate categories for income, expenses, taxes, and liabilities. Whether you use Microsoft Excel or some other program, ensure your real estate balance sheet template is backed-up. Save a PDF format file on your computer and multiple flash drives.

Consult revenue management firms if you’re overwhelmed by the software or don’t want the ongoing hassle (because it can be a significant hassle).

Step 2: Organize Total Assets on Your Real Estate Balance Sheet

Next, you need to determine your rental property’s assets. These are the items that you own that have value, such as your property, furniture, and appliances. To determine the value of these assets, you can either use their original purchase price or pull each current market value. Enter these values in the assets section of your balance sheet.

Include money in your checking account, savings account, and capital expenditures (CapEX) account.

Step 3: Determine Your Total Liabilities

Determining liabilities can sometimes get murky when you’ve got a million different moving parts and aren’t adequately tracking and measuring all aspects of your short-term rental business.

An outstanding mortgage payment is probably the most salient of balance sheet liabilities. A good balance sheet or balance sheet template will separate each liability value for easy cross-checking.

Understanding Taxable Rental Income

Ensure you understand your taxable rental income or income you earn from renting out your property after deducting allowable expenses. Allowable expenses include property maintenance and repairs, property management fees, and mortgage interest.

To determine your taxable rental income, subtract your allowable expenses from your rental income. Your operating income should be its own line item in the balance sheet template.

And don’t forget the difference between annual depreciation expense and accumulated depreciation. Report depreciation expenses on your income statement like any standard business expense. Accumulated depreciation, however, is a continuous aggregate of depreciation expenses. Report accumulated depreciation on your balance sheet.

Street View

Step 4: Calculate Owner’s Equity and Retained Earnings

Calculate the difference between rental property assets and liabilities to get your owner’s equity. Also, list any retained earnings that you kept and reinvested instead of distributing as dividends.

Include a cash flow statement, and you’re good to go!

Optimizing Your Balance Sheet in Real-Time

Are you feeling unsure or overwhelmed?

Many current investors are finding short-term rental management challenging. If you’re not prepared at any particular point, the competitive market can quickly siphon your potential profits.

Your property’s current value is only current for so long.

Maximize your rental property potential, build your owner’s equity, grow your net worth, and find just the right balance on paper and in life. Entrust short-term rental property management to proven professionals. Book a call with the CVP team today.


Josh Hatter

By: Josh Hatter

Josh Hatter moved to Charleston from the Washington, DC area in 1999 to complete a Business Administration degree at the College of Charleston. He graduated from the Moore School of Business at the University of South Carolina with an MBA in 2010.

After spending nearly 20 years of his professional career growing businesses primarily supporting the US Navy, he decided to rent a single bedroom out of his home in 2016. Since that single bedroom nearly 6 years ago, he has grown his portfolio into several businesses owning investment short-term rentals both alone and with partners, as well as managing a portfolio of nearly 100 bedrooms for clients to help them meet their long-term investment property goals.

He loves supporting his clients, growing their investments and hosting thousands of guests as they visit Charleston through his property management company, Coastal Vacation Properties.