If a property owner chooses to sell, the financial statements provided with the listing frequently serve as the link between the seller’s goals and the buyer’s trust

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

Below is a practical guide to preparing those financial statements, from the basics of what to include to the nuances of tax and regulatory compliance

1. Understand the Audience

The first step involves determining who will view the statements

Potential buyers range from individual investors and homebuyers to institutional lenders and real‑estate investment trusts (REITs)

Although the core information stays consistent, the depth and format can vary

For instance, a real‑estate developer seeks detailed cash‑flow projections, while a private buyer may concentrate on historic rent rolls and maintenance costs

Tailor the presentation to meet the expectations of your target buyer group

2. Assemble Core Information

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

Purchase price history along with major capital improvements

Current and historic rent rolls, including tenant names, lease start

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

- Mortgage statements and loan amortization schedules, if applicable

Tax returns—both property and income—for the last few years

Insurance policies and any claims history

Any pending litigation or zoning concerns

A full data set mitigates the risk of surprises during due diligence

3. Choose the Right Statement Types

You must create at least three essential statements for a property sale

- Income Statement (Profit & Loss) – Shows operating income, expenses, and net operating income (NOI)

Balance Sheet – Offers a snapshot of assets, liabilities, and equity at a specific moment

Cash Flow Statement – Depicts cash inflows and outflows, particularly useful for buyers assessing financing options

Also, think about adding a Rent Roll Summary, a Capital Expenditure (CapEx) Log, and a Tax Summary

These additional documents enable buyers to explore further without overloading them with raw data

4. Create the Income Statement

1. Start with gross rental income: total rent collected over the period

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

3. Deduct operating expenses: utilities, taxes, insurance, maintenance, property management, marketing, and any other recurring costs

Compute Net Operating Income (NOI): the figure remaining after operating expenses but before debt service and taxes

Subtract any debt service (principal and interest payments)

Include or exclude any non‑operating income or expenses (for example, sale of equipment, one‑time legal fees)

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

Display 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, and security deposits held in escrow

- Fixed assets: property's fair market value, less accumulated depreciation (show 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 and deferred tax liabilities

Equity:

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

Make sure 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 名古屋市東区 空き家 売却 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. Create the Rent Roll Summary

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

Highlight:

Current occupancy rate

- Proximity to lease expirations

Rent growth trend over time

A clean rent roll can reassure buyers about the stability of income streams

8. Prepare the CapEx Log

Provide a chronological list of all major capital expenditures in recent years: roof replacements, HVAC upgrades, parking lot resurfacing, etc.

Record the cost, date, and purpose for each entry

Buyers frequently use this to evaluate future maintenance needs and compute the replacement reserve

9. Provide a Tax Summary

Offer a concise tax summary

Property tax assessments plus payment history

- Income tax returns (if the property is held in a corporate structure)

Any tax credits or incentives, for example low‑income housing credits or energy‑efficiency rebates

If the property is expected to be sold at a gain, include an estimate of capital gains taxes

This helps buyers factor potential tax liabilities into their offer

10. Verify 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. Include Narrative Explanations

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

Explanation:

- Why certain expenses spiked (e.g., a costly roof replacement)

Any lease renegotiations that changed rent schedules

Market trends that affect rental rates

A clear narrative can anticipate buyer questions and show transparency

12. Format for Readability

Use a simple, professional layout