The Profit and Loss Statement for Real Estate Made Easy

This article explains the Profit and Loss (P&L) Statement for rental property owners, outlining how to effectively generate and analyze these financial reports to monitor and enhance business performance. With Azibo's intuitive tools, property owners can effortlessly manage their financial data, gaining crucial insights to optimize profitability and ensure efficient property management.

Nichole Stohler
Last Updated
April 24, 2024
The Profit and Loss Statement for Real Estate Made Easy

Are you looking to build wealth through rental properties but daunted by financial reports? Mastering the creation and analysis of a profit and loss (P&L) statement is key to successful real estate investing.

A P&L statement offers vital insights into your property's financial health. This guide will cover the complexities of these financial reports and demonstrate how investors can use them to monitor their business performance. With Azibo's intuitive tools, you'll learn how to effortlessly generate, review, and utilize these statements to comprehend your returns fully.

Join us as we simplify the process with Azibo and explore how these documents can drive profits and effectively grow your real estate business.

Understanding the profit and loss statement

A Profit & Loss Statement (P&L), also known as an income statement, is a financial document that outlines your rental business's revenues and expenses over a specific period. This report provides a detailed breakdown of how your property is performing financially by showcasing the primary sources of income and the areas where you are incurring costs.

By analyzing a P&L statement, you can gain deep insights into the main profit drivers of your rental business, such as rental income, fees, and service charges. It also highlights the various expense categories that impact your net income, such as property maintenance, management fees, and marketing costs. 

Understanding these components helps you identify cost reduction and revenue enhancement opportunities, guiding strategic decisions that can boost your overall profitability.

The key components of a profit and loss statement

To learn how a P&L statement works, let's break down four key components: Income, operating expenses, net operating income, and pre tax net income.


This section captures the total revenue generated from property rentals. It includes not only the monthly rent payments but also additional income streams such as late fees, and possible earnings from amenities like laundry facilities and parking. This provides a holistic view of the gross income your properties are generating.


Here, the P&L statement lists all costs associated with managing and maintaining your rental properties. These expenses range from property management fees and repair costs to utility expenses not covered by tenants and property taxes. By tracking these expenses, you can gauge the efficiency of your property management practices and identify potential areas for cost savings.

Common landlord operating expenses include:

  • Advertising and marketing: Costs related to advertising vacancies and marketing the property to find tenants. It may include posting listings on rental platforms, signage, flyers, etc.
  • Technology: Expenses for landlord software, communication services, and other tech tools to manage the property.
  • Staffing: Any salaries, wages, and benefits paid to on-site property managers, maintenance staff, or other team members.
  • Insurance: Premiums for landlord insurance, rent guarantee insurance, and other policies to protect your investment.
  • Office supplies: Administrative expenses for office supplies.
  • Professional services: Fees paid for legal advice, accounting, consulting, and other professional services.
  • Repairs and maintenance: Costs to repair, maintain, and improve the property.
  • Property services: Expenditures for landscaping, pest control, trash removal, etc.
  • Taxes: Property taxes, taxes on rental income, and other taxes specific to your jurisdiction.
  • Utilities: Electricity, water, gas, and other utility costs.

Net Operating Income (NOI)

This metric is derived by subtracting operating expenses (excluding financing costs like mortgage payments, taxes, and depreciation) from the total income. NOI reflects the core profitability of your rental operations, offering a clear picture of how effectively your property is performing independently of financing and tax considerations.

Pre-Tax net income

This figure represents the income remaining after all operating costs, including interest payments but excluding income taxes, have been deducted. It provides insight into the financial health of your business before tax obligations and is important for understanding the cash flow available to property owners.

Example of a rental property profit and loss statement

Let's explore a detailed example to better grasp the mechanics of a profit and loss statement for a rental property. For this scenario, we will use a hypothetical duplex rental property.

Revenue breakdown:

The duplex's primary revenue source is the monthly rent collected from tenants. Properties also might receive income from other sources, such as from pet fees or parking charges. In this example, the duplex generates additional income from parking fees.

Rental income:

  • Tenant A: $1,200/month
  • Tenant B: $1,100/month
  • Additional income from parking fees: $200/month

Operating expenses breakdown:

Operating expenses cover various costs associated with managing and maintaining the property. Our example includes everyday operating expenses to illustrate how to factor these elements into the P L real estate statement.

Property management fees:

  • Monthly management fee: $150.

Maintenance and repairs:

  • Regular maintenance: $75/month.
  • Repairs (non-recurring): $500.


  • Water and sewer: $50/month.
  • Electricity: $80/month.

Insurance and taxes:

  • Property insurance: $60/month.
  • Property taxes: $150/month.

Miscellaneous expenses:

  • Legal fees: $100 (non-recurring).

Net Operating Income (NOI) calculation:

You can now calculate the net operating income by deducting the total operating expenses from the gross income.

Gross income:

  • Rental income: $1,200 + $1,100 = $2,300/month
  • Additional income: $200/month
  • Total gross income: $2,500/month

Total operating expenses:

  • Property management fees: ($150) = $150/month
  • Maintenance and repairs: ($75 + $500) = $575/month
  • Utilities: ($50 + $80) = $130/month
  • Insurance and taxes: ($60 + $150) = $210/month
  • Miscellaneous expenses: $100 (non-recurring)

Total operating expenses: $1,165/month

Net operating income (NOI): $2,500 - $1,165 = $1,335/month

This example showcases how a rental property's profit and loss statement transforms raw financial data into a meaningful representation of the property's financial performance.

Calculating CAP rate

The capitalization rate, or CAP rate, is another useful metric real estate investors calculate from the P&L statement. The CAP rate measures the rate of return based on the income generated by the property.

To calculate, divide the NOI by the property's total value or purchase price:

CAP Rate = Net Operating Income / Property Value

For example, based on the $1,335 NOI calculated for our duplex, if the purchase price is $300,000, the CAP rate would be:

CAP Rate = $1,335 NOI / $300,000 Property Value = 0.0445 or 4.45%

The CAP rate helps investors evaluate the potential return from a property based on its price and income-generating ability. The higher the CAP rate, the better the expected return on investment.

When should you run a profit and loss statement?

Regularly reviewing a profit and loss statement is key to effective financial management of your rental property. Analyzing income and expenses provides insights into making decisions to increase your property's net operating income.

Here are some recommendations for when to run a P&L statement:


A monthly P&L gives a snapshot of the property's finances for that specific month. It helps spot trends, cash flow changes, or irregularities quickly so you can take timely action if needed. For example, you may adjust rents, address excessive costs, or find new revenue sources.


A year-to-date (YTD) statement summarizes financial performance from January 1st through the current date. The extended timeframe allows you to identify long-term patterns and evaluate the effectiveness of strategies implemented during the year.


An end-of-year P&L is an important document to have handy when tax season arrives. It provides comprehensive details on rental income and expenses to file taxes accurately. The statement captures annual income, deductions, and depreciation for tax reporting purposes.

Beyond taxes, the year-end statement also allows for a bigger-picture analysis. Reviewing the full 12 months helps you evaluate the property's overall financial health and ROI. It guides strategic decisions for the new year ahead, such as adjustments to rental rates, budgets, or investment plans to maximize returns.

So, the annual P&L serves two needs: accurate tax filing and assessing the property's performance to guide future financial plans. This year-end overview is valuable for rental property owners as a compliance tool and financial planning resource.

Profit and loss statement with Azibo

Azibo simplifies the process of creating a P&L statement, offering tools tailored for rental property owners to gain a comprehensive understanding of their financial health.

How to generate a P&L statement in Azibo

  1. Import transactions: Start by linking your bank or credit card accounts to Azibo. This integration allows for automatic importation of all rental business transactions. You can also manually record transactions if needed, ensuring all financial activities are captured.
  2. Categorize transactions: Utilize Azibo's bookkeeping tools to assign each transaction to a specific property and category based on the Chart of Accounts. This categorization is crucial for accurate financial reporting and analysis.
  3. Generate the report: Navigate to the 'Reports' section and click on 'P&L Statement'. Here, you can select individual properties, a portfolio, or all your properties and specify the time period for which you want the report generated. Azibo provides a dynamic interface where you can see the live results of your P&L statement.

Components of Azibo's P&L Statement

To ensure clarity, let's outline again the essential components featured in Azibo's P&L reports:

  • Income: This captures the total revenue generated from property rentals. It includes consistent streams like monthly rents and additional earnings from amenities such as laundry services and parking.
  • Expenses: These are the comprehensive costs related to the management and upkeep of your properties, encompassing everything from property management fees to repairs, and utilities not covered by tenants, to property taxes.
  • Net Operating Income (NOI): Calculated by deducting operating expenses (not including financing costs and taxes) from your total income, this figure provides a snapshot of your properties' operational profitability.
  • Pre-tax net income: This figure represents the remaining income after all operating costs and interest expenses have been subtracted, but before tax liabilities. It offers insight into the cash flow available to property owners.

Azibo’s P&L statement provides a level of detail and structure not typically found in standard accounting reports like Schedule E. While Schedule E is important for tax reporting, Azibo's P&L gives a more comprehensive view of your business's cash flow and operational efficiency.

This detailed financial insight helps property owners make informed decisions to enhance profitability and manage cash flows effectively.

Real estate profit and loss statement

A profit and loss statement helps rental property owners evaluate the financial performance of their investments. By tracking key components like income, expenses, and net operating income, P&Ls provide visibility into the health and profitability of your real estate business.

Regularly reviewing your rental property's financial calculations uncovers opportunities to optimize returns through strategic adjustments to rental rates, cost controls, or new revenue streams. It also serves as the foundation for tax planning and compliance. 

The payoff is gaining metrics, trends, and insights to make smart financial decisions that maximize rental income.  Whether you run your P&L monthly, annually, or on other schedules, it delivers the information you need to take your real estate business to the next level.

Profit and loss statement FAQs

What role does a profit and loss statement play in tax planning for real estate?

the profit and loss statement is a critical tool for real estate investors and owners to effectively plan and manage their tax obligations, maximize deductions, and ensure compliance with tax laws and regulations.

What should I do if my profit and loss statement shows a loss?

If your profit and loss statement shows a loss, you can evaluate your expenses and revenue strategies to identify areas for improvement. Consider adjusting rental rates, reducing operating costs, or exploring new sources of income to optimize profitability.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of, a blog dedicated to real estate investing.

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