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

Presented below is a practical guide for preparing those financial statements, from essential inclusions to the subtleties of tax and regulatory compliance

1. Know Your Audience

The first step is to consider who will read the statements

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

Even though the core information is unchanged, the depth and format might differ

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

Adapt the presentation to satisfy the expectations of your target buyer group

2. Collect Essential Data

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 名古屋市東区 不動産売却 相談 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 any claims history

Any pending litigation or zoning concerns

Having a complete data set reduces 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 – Provides a snapshot of assets, liabilities, and equity at a point in time

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

In addition, consider 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. Build the Income Statement

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

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)

Reach Net Income: the figure that reflects profitability after all costs

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

Add 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: 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

Include a brief narrative explaining significant items, such as pending appraisals or lease renewals

6. Build the Cash Flow Statement

Segment 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: mortgage payments, new debt issuance, or equity injections

Display how cash balances shift over the reporting period and spotlight any periods of negative cash flow that could alarm 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

Highlights:

The 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. Create the CapEx Log

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

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

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

9. Provide a Tax Summary

Provide 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. Check Accuracy and Consistency

Check all figures across the statements

For instance, the net cash inflow from the cash flow statement should reconcile with changes in the balance sheet’s cash account

Employ a spreadsheet to automate these checks and flag discrepancies

11. Add Narrative Explanations

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

Explain:

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

Any lease renegotiations that changed rent schedules

- Market trends influencing rental rates

A clear narrative can anticipate buyer questions and show transparency

12. Ensure Readable Formatting

Use a simple, professional layout