KORVEN
Written by Azhar Jaffri, Co-Founder and Finance Lead · Published · Updated
CASE STUDY · OUTSOURCED CFO

Real Estate Holdings: A $186K Swing to Profitability

The situation

A real-estate holding company with negative equity and no clear view of what was driving it. Property-level performance was buried inside a consolidated set of books, which is what happens when bookkeeping treats a portfolio as one entity instead of several. The owner knew the portfolio was underwater. He did not know which asset was doing it, or whether the trend was improving.

What outsourced CFO services delivered

A full-year dashboard that is honest about the negative equity rather than presenting around it, with commentary explaining the why behind each number rather than restating the what. Property-level P&L. Balance sheet with the equity position shown plainly. Cash flow forecasting layered on top, because a holding company with debt service lives and dies on timing, not on annual profit. Fractional CFO services are how a portfolio this size gets financial reporting a lender will actually accept.

What changed

A $186K swing to profitability across the year. More usefully, the owner could finally read his own balance sheet and see which properties were carrying the portfolio and which were bleeding it.

What we would look at in yours

Debt service coverage week by week, not year by year. Annual profitability tells you nothing about whether you can make March.

KORVEN
CONSULTING · AMAZON · FINANCE
Client Portfolio · Financial Services
Real Estate Holdings LLC
Financial Dashboard — FY 2024
Year Ended December 31, 2024  ·  Cash Basis  ·  Real Estate Holdings
FY 2024 ⚠ Negative Equity
Total Revenue
$1.031M
↑ 5.53% vs 2023
Net Operating Income
$225.9K
↑ 15.79% vs 2023
Net Income
$49.2K
vs –$137.4K 2023
Total Assets
$6.598M
↑ 28.42% YoY
Total Liabilities
$7.117M
↑ 25.26% YoY
Total Equity
–$519K
Improved $25.3K
Rental Income
$969.3K
↑ 5.14% YoY
Total Expenses
$809.1K
↑ 4.2% YoY
AIExecutive Summary
+Real Estate Holdings returned to profitability in FY 2024 with net income of $49,219 — a $186,648 swing from the prior year loss of $137,428. This was driven by a 5.53% revenue increase to $1.031M and a 51.4% reduction in depreciation ($161K vs $312K in 2023).
+Cash position surged to $1.675M (+246.5% YoY), largely from a new $1.5M partner loan (Loan from E). The Schwab investment account also grew to $305.5K, indicating available capital deployment.
~Total liabilities of $7.117M exceed total assets of $6.598M, resulting in persistent negative equity of –$519K. The primary driver is the CBRE mortgage ($5.333M) plus the new $1.5M partner loan. Equity improved $25.3K YoY but remains structurally weak.
!Operating expenses rose 37.3% ($336K vs $245K) with insurance doubling (+103%), payroll up 19%, and taxes spiking +57% driven by a one-time supplemental property tax of $64,880. These pressures eroded gross margin and require monitoring in 2025.
Revenue vs Expenses vs NOI
FY 2024 vs FY 2023 ($K)
20242023
Income Breakdown — FY 2024
$1.035M total income
Rental 93.7%RUBS 5.5%Other 0.8%
Asset vs Liability vs Equity Comparison
FY 2024 vs FY 2023 ($M)
20242023
Total Income
$1.035M
↑ 6.54% vs 2023
Total Expenses
$809.1K
↑ 4.22% vs 2023
Net Operating Income
$225.9K
↑ 15.79%
Net Income
$49.2K
vs –$137.4K
AIP&L Analysis
+Interest expense fell 4.9% to $218K (CBRE mortgage) as the loan balance reduced, and SBA interest dropped 39.7% to $9.9K — together saving $17.7K vs 2023. Depreciation fell 48.3% ($161K vs $312K), the key driver of the swing to profit.
!Supplemental Tax of $64,880 is a one-time item — 95.5% of the total Taxes & Licenses spike. Normalised operating expenses excluding this item would be ~$744K, implying underlying NOI of ~$291K.
~HVAC costs jumped 162% to $15,111 and Repair Turns fell 49.6% to $24,789 — together suggesting deferred maintenance from 2023 converted to capital/HVAC replacements in 2024. Monitor for further capital needs in 2025.
+Management fees of $62.1K (6.01% of rental income) are in line with market rates. Advertising & Marketing spend of $3,775 is minimal — occupancy appears strong given the revenue growth.
P&L — Full Line-by-Line Detail
FY 2024 vs FY 2023
Line Item20242023Change $% Chg
Income
Rental Income$969,283$921,934+$47,349+5.1%
RUBS (Utility Billing)$56,814$48,199+$8,614+17.9%
Damages Recovered$9,654$11,515–$1,861–16.2%
Month to Month Fee$4,136$605+$3,530+583%
Laundry Income$4,840$4,541+$298+6.6%
Late Fee$3,329$4,470–$1,141–25.5%
Pet Rent$1,505$680+$824+121.3%
Application Fees$2,522$2,913–$391–13.4%
NSF Fees$759$520+$239+45.9%
Miscellaneous Income$727$2,246–$1,519–67.6%
Concessions (contra)–$18,575–$26,189+$7,614+29.1%
Total Income$1,034,993$971,435+$63,558+6.5%
Operating Expenses
Payroll – Manager$68,679$57,679+$11,001+19.1%
Management Fees$62,103$56,121+$5,982+10.7%
Water / Sewer$66,649$59,929+$6,720+11.2%
Gardening / Landscaping$24,515$21,248+$3,267+15.4%
Trash Service$24,458$18,012+$6,446+35.8%
Repair Turns (Unit Turnover)$24,789$49,163–$24,374–49.6%
Insurance$20,451$10,079+$10,372+102.9%
HVAC Repairs$15,111$5,765+$9,347+162.1%
Accounting Fee$15,082$8,877+$6,205+69.9%
Electricity$13,026$21,966–$8,940–40.7%
Pool Maintenance$8,086$9,050–$964–10.7%
Payroll Taxes$7,391$3,862+$3,529+91.4%
Office Supplies & Software$9,290$17,215–$7,925–46.0%
Legal & Professional$4,855$24,272–$19,417–80.0%
Meals & Entertainment$4,826$5,569–$742–13.3%
Job Supplies$4,006$4,132–$126–3.1%
Data Analytics$3,384$2,073+$1,311+63.2%
Advertising & Marketing$3,775$4,028–$252–6.3%
Auto / Fuel$2,993$671+$2,322+345.9%
Internet / Telephone$3,181$368+$2,813+765.4%
Repair & Maintenance$11,724$9,215+$2,509+27.2%
Pest Control$1,897$1,448+$449+31.0%
Plumbing$1,459$2,429–$969–39.9%
Bank Charges & Fees$1,179–$286+$1,465+512%
Miscellaneous & Other$6,186$5,455+$731+13.4%
Total Operating Expenses$544,659$581,120–$36,461–6.3%
Taxes & Licenses
Property Tax$100,991$97,766+$3,225+3.3%
Supplemental Tax (one-time)$64,880$110+$64,769+58739%
State Tax$1,365$9,482–$8,117–85.6%
Taxes & Other Licenses$5,908$2,587+$3,321+128.4%
Total Taxes & Licenses$173,143$109,944+$63,199+57.5%
Total Expenses$809,072$776,329+$32,744+4.2%
Net Operating Income$225,920$195,106+$30,814+15.8%
Below the Line
Other Income (Interest etc.)$5,585–$746+$6,332
Asset Management Fee–$21,193–$20,149–$1,044+5.2%
Depreciation–$161,094–$311,639+$150,546–48.3%
Net Income$49,219–$137,428+$186,648+135.8%
Top 10 Expense Categories
FY 2024 ($K)
Expense Mix — FY 2024
$809K total
Interest 28%Tax/Lic 21%Payroll+Mgmt 16%Deprec 20%Other 15%
Total Assets
$6.598M
↑ 28.42% YoY
Total Liabilities
$7.117M
↑ 25.26% YoY
Total Equity
–$519K
Improved $25.3K
Cash & Bank
$1.675M
↑ 246.5% YoY
CBRE Mortgage
$5.333M
↓ $98.2K paid down
Partner Loan (E)
$1.500M
New in 2024
X Property Value
$4.576M
Net of depreciation
Schwab Investment
$305.5K
New in 2024

⚠ Negative equity position: Total liabilities ($7.117M) exceed total assets ($6.598M) by $519K. This is primarily structural — driven by the CBRE mortgage ($5.333M) against a property valued at cost. Equity has improved $25K YoY and the $1.5M partner loan is subordinate debt.

AIBalance Sheet Analysis
+Cash surged to $1.675M (+246.5%) from the $1.5M Loan from E (partner injection). The Schwab account ($305.5K) represents new investable capital. Together, liquid assets of ~$1.98M are the highest in the entity's recent history.
~Security deposits held by management jumped from $9.2K to $63K (+581%) — likely reflecting new leases signed in 2024. These are matched liabilities (deposits payable) and are correctly offset on the balance sheet.
~The CBRE loan ($5.333M) paid down only $98.2K in principal in 2024 — roughly 1.8% of balance. At this pace, the loan won't amortise materially for many years. Refinancing risk at maturity is a key strategic consideration.
!Partner draws totalled $457.5K (both partners combined) while net income was only $49.2K — the draws are being funded by the new partner loan, not operations. This increases leverage and should be governed carefully in 2025.
Assets Detail
Dec 31, 2024 vs Dec 31, 2023
Account20242023% Chg
Bank Accounts
Business Checking (Main)$1,546,474$355,411+335%
FRB Operating Cash$32,010$36,985–13.5%
FRB Savings / Capex$34,537$89,112–61.2%
FRB Security Deposit$61,858$1,759+3417%
ABC Credit Card–$206$—
Total Bank$1,674,673$483,268+247%
Other Current Assets
Tax & Insurance Impound Deposit$8,334$8,3340%
Escrow with CBRE (New)$8,513$8,5130%
Money with Asset Preservation$1,321$1,3210%
Loan to C (repaid)$—$6,500–100%
Total Current Assets$1,692,840$507,935+233%
Fixed Assets
X Property (71% interest)$6,116,052$6,116,0520%
Accumulated Depreciation–$1,540,437–$1,510,329–2.0%
Investment – Charles Schwab$305,521$—New
Total Fixed Assets$4,881,135$4,605,723+6.0%
Other Assets
Prepaid Interest$2,204$2,2040%
Property Tax Escrow$21,665$21,6650%
Total Other Assets$23,869$23,8690%
TOTAL ASSETS$6,597,844$5,137,527+28.4%
Liabilities & Equity Detail
Dec 31, 2024 vs Dec 31, 2023
Account20242023% Chg
Current Liabilities
CBRE Mortgage (New Loan)$5,333,452$5,431,672–1.8%
Loan from E (Partner Loan)$1,500,000$—New
SBA Loan (SBAD)$202,047$205,200–1.5%
Mgt Held Security Deposits$62,954$9,242+581%
Prepaid Rent$17,265$31,364–45.0%
Additional Deposit$2,111$—New
Mgmt Held Pet Deposits$2,738$—New
Loan from D$150$—New
Loan from F (repaid)$—$6,825–100%
Clearing Account–$3,671–$2,302–59.5%
TOTAL LIABILITIES$7,117,046$5,682,001+25.3%
Equity
Partner Capital (combined)$1,878,308$1,878,3080%
Owner's Draw – Partner 1–$228,750–$138,750–65.0%
Owner's Draw – Partner 2–$228,750–$138,750–65.0%
Retained Earnings–$1,989,229–$2,007,854+0.9%
Net Income$49,219–$137,428+135.8%
TOTAL EQUITY–$519,202–$544,474+4.6%
TOTAL LIAB. & EQUITY$6,597,844$5,137,527+28.4%
Liability Composition — 2024
$7.117M total
CBRE Mortgage 74.9%Partner Loan 21.1%SBA 2.8%Other 1.2%
Rental Income
$969.3K
↑ 5.14%
RUBS Revenue
$56.8K
↑ 17.87%
Concessions
–$18.6K
↓ 29% (improvement)
Interest Paid
$218K
↓ 4.87% YoY
Water / Sewer
$66.6K
↑ 11.2%
Payroll (incl. taxes)
$76.1K
↑ 20.8%
AIOperating Metrics & Observations
+Concessions reduced to –$18,575 (vs –$26,189 in 2023, a 29% improvement), suggesting higher occupancy quality and less need for rent incentives. Month-to-Month fee income jumped 583% to $4,136 — indicates more tenants staying on flexible terms.
+Repair Turns fell 49.6% to $24,789 (vs $49,163) — fewer unit turnovers in 2024, pointing to stronger tenant retention. This is a significant operational efficiency gain.
~Water/Sewer at $66.6K (+11.2%) and Trash at $24.5K (+35.8%) are rising sharply — likely driven by utility rate increases. RUBS billing growth of 17.9% is partially recovering this, but consider reviewing the RUBS recovery ratio.
!Auto/Fuel costs surged 346% to $2,993 and Internet/Telephone +765% to $3,181 — while small in absolute terms, these patterns suggest operational changes (new vendor, service addition) that should be reviewed for recurring necessity.
~Legal & Professional fell 80% to $4,855 (vs $24,272) — a large positive swing likely reflecting resolved disputes or litigation from 2023. Confirm this is not a deferral into 2025.
Revenue Trend — Key Lines
2024 vs 2023 ($K)
20242023
Notable Expense Movements
2024 vs 2023 ($K) — Key lines only
20242023
NOI Waterfall — FY 2024
From Revenue to Net Income

🟢 Strengths — FY 2024

  • Returned to profitability: Net Income +$186.6K swing
  • Revenue growth: +5.53% to $1.031M
  • Cash position: +246.5% to $1.675M
  • NOI up 15.8% to $225.9K
  • CBRE mortgage being paid down ($98K in 2024)
  • Legal costs fell 80% vs 2023 ($19.4K saving)
  • Repair Turns down 49.6% — strong tenant retention
  • Concessions reduced 29% — better occupancy quality

🔴 Risks & Watch Items

  • Negative equity –$519K; liabilities exceed assets
  • $1.5M partner loan adds significant leverage
  • Partner draws ($457.5K) exceed net income ($49.2K)
  • Supplemental Tax: $64.9K one-time charge — verify non-recurring
  • Insurance doubled: +103% to $20.5K — review coverage
  • HVAC +162% ($15.1K) — potential capital need in 2025
  • Water/Sewer +11.2% ($66.6K) — utility recovery ratio
  • CBRE loan maturity risk — refinancing plan needed

📋 2025 Recommendations

  • Confirm supplemental tax is non-recurring; budget $100K for property tax
  • Review insurance policy — 103% YoY increase needs broker review
  • Formalise Partner Loan (E) terms — interest rate, maturity, repayment
  • Budget HVAC capital plan — 2024 repairs may signal system end of life
  • Review RUBS billing ratio — water/sewer recovery gap widening
  • Reduce partner draws to align with operating cash flow, not loan proceeds
  • Prepare CBRE refinancing strategy well ahead of loan maturity

📈 Financial Outlook

  • If supplemental tax non-recurring: 2025 NOI could reach ~$290K+
  • Rental income trajectory: +5% YoY → ~$1.017M projected 2025
  • Schwab investment ($305.5K) may yield additional other income
  • Partner loan interest (if any) will add to below-the-line costs
  • Equity recovery requires 21+ years at current $25K/year improvement pace
  • CBRE principal at $5.333M — amortisation pace needs acceleration or refi plan
  • Strong cash buffer ($1.675M) provides operational resilience for 2025
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