Annual Income of Properties and Area Where Belinda & Steve Incurred Highest Expenses - Case Study Example

Table of Contents Introduction 2 Purpose of maximum, minimum & average in spreadsheet 2 Annual Income of Properties 2 Highest contributor of income 3 Expenses on Each Category 3 Area where Belinda & Steve incurred highest expenses 3 Property which had the highest cash flow 3 Annual Expenses on Rental Property 4 Annual Income on Rental Property 4 Best Performing & Worst Performing Property 4 Should Belinda & Steve raise the rent on property 5 Conclusion 6 Recommendations 7 Introduction The report looks towards analyzing the financials of Belinda and Steve Jones who have 3 different properties and looks towards identifying the expenses, income, cash flow and other financial information based on it so that better understanding and manner in which the different assets were used and contributed towards the growth of Belinda and Steve Jones can be identified. Purpose of maximum, minimum & average in spreadsheet It as appropriate to have maximum, minimum & average in spreadsheet as it helps to understand the manner in which the different expenses or income were made. This facilitates comparison as the user can compare the monthly figures with the averages and identify the months which the business did well and months were the required return were not as expected. Further using this strategy also helps to identify the months which has lowest value and the months which have the highest value so that the business can prepare accordingly and have the required resources at their disposal. This also ensures that the business is able to take better decisions and based on it will be able to deal with the situation in the most efficient manner. Annual Income of Properties The annual income from Bellbird Property is $15,750 The annual income from Parakeet Property is $29,070 The annual income from Swansneck Cresent Property is $24,180 This makes the annual income from all property to be 15,750 + 29070 + 24180 = $69,000 Highest contributor of income The property which has ensured the highest contributor of income for the year is Parakeet as the annual contribution is $24,070 Expenses on Each Category The average expenses made the three properties on the different heads are as under     Average Annual Rental Income 23000.00 Annual Expenses   Material 381.67 Advertising 73.33 Cable 900.00 Water Rates 298.33 Appliances 2205.00 Property Rates 1300.00 Insurance 2333.33 Routine Maintenance & Labour Charges 1460.00 Management fees (8% of total rent) 1840.00 Area where Belinda & Steve incurred highest expenses The highest expenses that was made by Belinda & Steve was $6,615 for the entire year and was made on appliances Property which had the highest cash flow The property which showed the highest cash flow was Swansneck Cresent where the total cash flow for the year was $15,598.10 Annual Expenses on Rental Property The total annual expenses on rented property is as follows   Houses and Unit Bellbird Parakeet Swansneck Crescent Total Annual Expenses 6512.50 17280.60 8581.90 Annual Income on Rental Property The total annual income on rented property is as follows   Houses and Unit Bellbird Parakeet Swansneck Crescent Annual Rental Income 15750.00 29070.00 24180.00 Best Performing & Worst Performing Property The best performing property for Belinda & Steve is Swansneck Cresent and the worst performing property is Bellbird. This is primarily on the fact that Swansneck Cresent has helped to ensure that the highest income after all the expenses are met and has ensured a net income of $15598.10 whereas the worst performing property is Bellbird because of the fact that the contribution of the property is the minimum i.e. $9237.5 after meeting all the expenses. The different income and expenses of all the property has been chosen as the main indicator in determining the best and the worst performing property as it helps to determine the manner in which the different rented property were used. This will thereby help to identify the contribution of the different properties towards the long term growth and potential. This has helped to identify the fact that the maximum profit has been attributed from Swansneck Cresent has helped to ensure that the highest income after all the expenses are met and has ensured a net income of $15598.10 whereas the worst performing property is Bellbird because of the fact that the contribution of the property is the minimum i.e. $9237.5 after meeting all the expenses Should Belinda & Steve raise the rent on property Belinda & Steve have to be very careful while looking towards taking a decision regarding the raising of rent on different properties. An analysis of the individual properties will help to understand it better. A look at the Bellbird property shows that the property was not rented for a period of 3 months and was rented for 9 months. The monthly rent for the property was $1750 for each month. There could be a reason that the property was not rented for 3 months which could be due to lack of facilities or rent. Raising the rent further could lead towards increasing the period when the property is not rented and might not result in reducing the total income further. This will thereby result in decreasing the total income and would not be a wise strategy to increase the rent as it might backfire for the company. A look at the Parakeet property shows that the property was not rented for the entire period as there were gaps where certain months were packed but certain months were vacant. The monthly rent for the property was different for the different units that the property had which increases the complexity as raising the rent would create huge differences between the three units. There could be a reason that the property was not rented which could be due to lack of facilities or rent. Raising the rent further could lead towards increasing the period when the property is not rented and might not result in reducing the rent further. This will thereby result in decreasing the total income and would not be a wise strategy to increase the rent as it might backfire for the company. A look at the Swasneck Cresent property shows that the property was rented for the entire period of 12 months. The monthly rent for the property was $2015 for each month. The reason for the property being rented on all the months could be the facilities that the users were able to get at the price paid by them. The fact that the place was rented for all the months provides an opportunity where the rent for the premise can be increased. This will have little or no effect on the consumers using it because facilities and service is the main consideration here and people will be willing to spend even higher. Thus, out of the 3 property Belinda & Steve can look towards raising the rent of Swasneck Cresent in comparison to the other properties that are present because of the opportunity the property has and will have little or no effect on the number of visitors renting the premise. Conclusion The report thereby analyzes the different aspects of the 3 properties that Belinda & Steve has and helps to bring forward conclusive facts regarding the properties which were performing better in comparison to others. This also highlights the different areas which the 3 properties have to look at and look towards improving so that overall effectiveness is gained and the management of the properties further improves. Recommendations The analysis of the different property of Belinda & Steve shows that the best performing property is Swasneck Cresent in comparison to the other properties. The contribution is highest from this property and will require that steps are taken to improve the facilities at the other properties so that improved rent can be bargained and at the same time steps can be taken through which better cash flow develops for the business. Read More