Financial Statement Prep for Property Sale > 자유게시판

When a property owner opts to sell, the financial statements included with the sale typically act as the conduit connecting the seller’s aims with the buyer’s confidence

A clean, accurate, and well‑structured set of statements can speed up the sale, reduce negotiation friction, and help the seller claim the best possible price

Here is a practical guide to preparing those financial statements, covering what to include basics through the intricacies of tax and regulatory compliance

1. Know Your Audience

The initial step is to think about who will review the statements

Potential buyers include individual investors, homebuyers, institutional lenders, and real‑estate investment trusts (REITs)

While the core information remains the same, the depth and format may differ

For 名古屋市東区 不動産売却 相談 example, a real‑estate developer will want detailed cash‑flow projections, whereas a private buyer may focus on historic rent rolls and maintenance costs

Customize the presentation to align with the expectations of your target buyer group

2. Assemble Core Information

Accumulate the following key data sets, ensuring you have records spanning at least the last 12–24 months

Purchase price history and significant capital improvements

end dates, escalation clauses, and security deposit balances

Operating expense records, such as utilities, property taxes, insurance, property management fees, repairs, and capital reserve contributions

Mortgage statements and loan amortization schedules, if relevant

Tax returns, including property and income, for the past few years

Insurance policies and claim history

- Any pending litigation or zoning issues

A complete data set lowers the risk of surprises during due diligence

3. Choose the Right Statement Types

You’ll need to produce at least three essential statements for a property sale

Income Statement (Profit & Loss) demonstrates operating income, expenses, and net operating income (NOI)

Balance Sheet – Gives a snapshot of assets, liabilities, and equity at a single point in time

Cash Flow Statement – Shows cash inflows and outflows, especially valuable for buyers evaluating financing options

In addition, consider adding a Rent Roll Summary, a Capital Expenditure (CapEx) Log, and a Tax Summary

These supplemental documents help buyers dig deeper without overwhelming them with raw data

4. Build the Income Statement

First, start with gross rental income: total rent collected for the period

Remove vacancy and credit losses: estimate a realistic vacancy rate (typically 5–10% for commercial properties; 2–5% for residential) and any bad‑debt write‑offs

Remove operating expenses: utilities, taxes, insurance, maintenance, property management, marketing, and any additional recurring costs

4. Calculate Net Operating Income (NOI): the amount left after operating expenses but before debt service and taxes

Deduct any debt service (principal and interest payments)

Add or subtract any non‑operating income or expenses (e.g., sale of equipment, one‑time legal fees)

7. Arrive at Net Income: the figure that indicates profitability after all costs

Show the income statement in a clear, columnar format with amounts in the primary currency

Include footnotes for any unusual items or one‑time expenses

5. Construct the Balance Sheet

Assets:

- Current assets: cash, accounts receivable, security deposits held in escrow

Fixed assets: property's fair market value less accumulated depreciation (include the depreciation schedule if the property is depreciable)

Other assets include intangible assets such as leasehold improvements

Liabilities:

Current liabilities include accounts payable, accrued expenses, short‑term debt

- Long‑term liabilities: mortgage balances, deferred tax liabilities

Equity:

Owner’s equity: purchase price, retained earnings, and any capital contributions

Verify that assets equal liabilities plus equity

Add a short narrative explaining significant items, like pending appraisals or lease renewals

6. Create the Cash Flow Statement

Divide the cash flows into three categories

Operating activities: cash from rents less operating cash outflows

Investing activities: cash used for capital improvements, purchase or sale of ancillary assets

Financing activities involve mortgage payments, new debt issuance, or equity injections

Show how cash balances change over the reporting period and highlight any periods of negative cash flow that could be a red flag for buyers

7. Draft the Rent Roll Summary

List each tenant, lease start and end dates, rent amount, escalation terms, security deposit, and any other special clauses

Highlights:

The current occupancy rate

- Proximity to lease expirations

The rent growth trajectory over time

A tidy rent roll can assure buyers of income stream stability

8. Build the CapEx Log

Include a chronological list of all major capital expenditures in the past few years: roof replacements, HVAC upgrades, parking lot resurfacing, etc.

For each entry, note the cost, date, and purpose

Buyers typically use this to gauge future maintenance needs and determine the replacement reserve

9. Outline Tax Information

Provide a concise tax summary

- Property tax assessments and payment history

Income tax returns, if the property is held in a corporate structure

- Any tax credits or incentives, such as low‑income housing credits or energy‑efficiency rebates

If the sale is expected to be a gain, add an estimate of capital gains taxes

This assists buyers in accounting for potential tax liabilities in their offer

10. Check Accuracy and Consistency

Verify all figures across the statements

For example, the net cash inflow from the cash flow statement should match changes in the balance sheet’s cash account

Use a spreadsheet to automate these checks and flag discrepancies

11. Provide Narrative Explanations

While figures represent part of the story, narrative context can offer clarity

Details:

Reasons why expenses spiked (e.g., a costly roof replacement)

Any lease renegotiations that changed rent schedules

- Market trends influencing rental rates

A well‑written narrative can pre‑empt buyer questions and exhibit transparency

12. Format for Readability

Stick to a simple, professional layout