A property management company collects rent it does not own, holds deposits it must return, and earns a management fee that is a fraction of the total. When all of that lands in one bank account and gets coded as revenue, the resulting financial statements describe a business several times larger than the real one, and the owner statements stop reconciling to anything.
Three things that are not revenue
- Rent collected on an owner's behalf. It is a liability until it is remitted.
- Damage and security deposits. Somebody else's money, held, and in several provinces required to be held separately or to accrue interest.
- Reserve fund contributions for a condominium corporation. Restricted, and never operating cash.
Your revenue is the management fee, the leasing fee, and any markup you genuinely earn. That is a much smaller number and a far more useful one, because it is the number your own margin is calculated from.
Per-property, or the reporting is guesswork
Every address needs its own class or property code from the first transaction. Without it, one property's vacancy hides inside another's occupancy, and the question every owner eventually asks, what did my building actually earn last quarter, has no answer that can be defended.
The software gap
Buildium, Yardi Breeze and Yardi Voyager are excellent at running a portfolio and only partly accounting systems. They track leases, rents and work orders; they do not reliably produce a clean set of financial statements for the management company itself. The fix is reconciling what the platform holds into a proper accounting file each month, so the portfolio view and the company's own books agree.