Budget vs actual for a rental property: how to read the variance
A budget vs actual report puts each line of the budget next to what really happened and shows the difference, called the variance. Read it monthly. Ignore small misses and look for lines that are off by both a meaningful dollar amount and a meaningful percentage, because a big percentage on a tiny line, or a small percentage on rent, usually means nothing.
What the report looks like
Each row is an account from your books. The columns are budget, actual, dollar variance and percent variance, for the month and for the year so far. For income, an actual above budget is good. For expenses, an actual above budget is bad. Keep the sign rule consistent so nobody misreads it.
Example a made-up 8-unit building budgets $12,800 of rent for March and collects $12,100. Repairs are budgeted at $900 and come in at $1,640. Variance is $700 below on rent (12,100 less 12,800), which is 5.5% under ($700 divided by $12,800), and $740 above on repairs (1,640 less 900), which is 82% over.
| Line | Budget | Actual | Variance | % |
|---|---|---|---|---|
| Rent | $12,800 | $12,100 | -$700 | -5.5% |
| Repairs | $900 | $1,640 | $740 over | 82% |
| Insurance | $450 | $450 | $0 | 0% |
Which variances deserve attention
Set two thresholds, for example 10% and $300, and investigate a line only when it breaks both. The numbers are yours to pick. They stop you from chasing a $15 miss on supplies and from ignoring a $700 miss on rent that looks small as a percentage.
- Rent below budget: vacancy, a concession, a late tenant, or a budget that assumed an increase that has not started.
- Repairs above budget: one big job, or a pattern in one unit. See repair or improvement before treating a large bill as a repair.
- Utilities above budget: a leak, a vacant unit with the heat on, or a rate change.
- A line that is exactly on budget every month: check whether it is real or was copied from the budget.
Timing variances vs real ones
Some misses fix themselves. A yearly insurance premium paid in March will look like a big overspend in March and underspend later if the budget spread it evenly. Under cash-basis books, annual bills and property tax installments land in one month. Budget them in the month they are paid, or compare year to date.
For the tax side of how these items are treated, ask your preparer. The IRS recordkeeping page is a reminder to keep the documents behind each actual number.
Turn the variance into an action
- Write one sentence on each flagged line: what happened and why.
- Decide whether it repeats. A one-time roof repair does not change next month. A rent shortfall may.
- Change something: a vendor, a rent, a reserve, or the budget itself if it was wrong.
- Update the forecast. If rent will run 5% under for three more months, the year will end lower than the original budget.
Keep the original budget and add a revised forecast next to it. Rewriting the budget to match actuals hides what you learned.
Make it part of the close
Run the report after the books are reconciled, not before. A bank line that is not yet matched will distort the variance. The month-end close checklist puts the review in the right place.
How DoorKeeping handles it
DoorKeeping keeps a budget for each property and compares it to the ledger in a budget vs actual report, on screen, as a download, or by asking Claude or ChatGPT which lines are over and why. Because the report reads the same ledger as the profit and loss, it matches your books. Budgets are your numbers, so DoorKeeping does not set them for you without your approval.
Sources
- IRS, Recordkeeping, read Oct 30, 2026
Questions
- What is variance in a budget vs actual report?
- The difference between what you budgeted and what actually happened for a line, shown in dollars and as a percentage.
- How big a variance should I investigate?
- Choose a dollar amount and a percentage and investigate lines that exceed both. For example 10% and $300.
- Should I change the budget when actuals miss?
- Keep the original and add a revised forecast. The gap between them shows what you learned.