What is an owner distribution?

An owner distribution is the money a property manager pays out to a property owner from the funds held for them, after expenses, fees and any reserve have been covered. It is the amount the owner actually receives each month.

How it is calculated

Available = beginning balance + income - expenses - management fee

Distribution = available - reserve to keep (if the result is above zero)

If expenses are larger than income, nothing is distributed and the reserve covers the gap. Security deposits are not part of the calculation. In most places they belong to the tenant until the lease ends and are held under their own rules.

Worked example

An owner with two units, a $2,000 reserve and an 8% fee on rent collected:

LineAmount
Beginning balance$2,000
Rent collected+ $5,400
Expenses (repairs, landscaping, water)- $1,150
Management fee: 8% of $5,400- $432
Available$5,818
Reserve kept- $2,000
Distribution$3,818

A distribution is not profit

A distribution is cash moved to the owner. It doesn't include the owner's own mortgage payments, property taxes they pay themselves or depreciation. For income tax, owners generally report rental income and expenses, not distributions, so the year-end summary of income and expenses matters more than the total paid out.

Common mistakes

  • Distributing before bills clear. A bill that arrives after the payout comes out of the reserve.
  • Paying out the reserve without the owner agreeing to a lower target.
  • Treating deposits as income.
  • Changing the payout date. Owners plan around it, often to pay their own mortgage.

Related terms

  • Owner statement: An owner statement is the report a property manager sends to each property owner, usually monthly.
  • Reserve fund: In property management, a reserve fund is cash the manager holds back from an owner's funds to pay repairs and bills that come up between statements, usually a fixed amount set in the management agreement.
  • Repair approval limit: A repair approval limit is the most a property manager may spend on a single repair without asking the owner first.

Further reading