Whether you have one rental property or a hundred, successfully managing your business finances can be a tough code to crack. There’s no secret bookkeeping recipe, but there are a few tried-and-true helpful ingredients to set you on the right course.
Start Fresh
First things first: open a brand-new bank account for all rental property income and transactions. The debit card for that account is only to be used for expenses related to the property. The pros and cons of accepting rent electronically are up for debate, but regardless, all rental income should be going into this business account as well.
Similarly, create a new folder in your email for e-receipts and confirmations, and a real folder somewhere for physical receipts. Studying some guides on MTD for landlords is also helpful. This will make your life much easier when tax season comes around and staying organized year-round also just keeps you more efficient and focused in general.
Be Loyal to your Books
As with so many things in life, a lot of the stress can be handled by simply establishing a routine. Schedule regular bookkeeping dates with just you and your spreadsheets (and I don’t mean just penciling it in; set those appointments in stone). If you have an accountant doing your books for you, great, but the rule still applies. You’ve got to be taking that time to review and revisit exactly where your finances are at. This is one reason a month-to-month rental agreement can be extremely beneficial. It flows seamlessly with your good bookkeeping habits, and it gives both you and your renters some extra flexibility.
Software Saves
If you’re doing everything yourself, especially if you have more than one or two properties, consider looking to the gods of modern technology for some help. Different systems work for different landlords. You might be fine with a handful of spreadsheet templates and a fancy calculator. Or, if you’re like the rest of us plebeians, actual bookkeeping software may be your savior. Choose a program that suits the needs of your specific properties and won’t break the bank. Some great features to look for are tax prep presets, property expense tracking, and customizable itemization.
Tags, Filters, Sorting, Oh My!
Creating the extra organization layers is more work initially, but it will save you so much down the road. Categorize all your properties, all expense types, etc. with whatever system works best for you. Colors, keywords, whatever. If you go the software route, most programs will come with built-in filtering features (if you use them). Take advantage! Having the ability to track and sort your finances in different ways becomes invaluable as your rental business grows.
Hire a Manager
Although it sounds obvious, don’t overlook outsourcing as a real solution. The investment pays off relatively quickly in most cases—not to mention the countless sweat equity hours you’d save. If you keep finding yourself hunched over your books, pulling your hair out, with steam coming out of your ears month after month, it’s probably time to hire a property manager. They will take the blue-collar work off your hands when it comes to repairs, emergencies, and most tenant interaction. And, yes, they can even help with the finances.
If you want to furnish some or all your apartments, a property manager is a great person to assign the task to—if they have an artistic eye. If your properties are small enough, a manager may also be able to take on the task of maintaining the exterior of your properties as well. Keep in mind, you only get one chance to make a first impression and the front yard is the first thing a potential move-in sees.
Be a Stickler for Punctuality
No one likes to be the landlord that’s always nagging for timely rent checks. But no one likes to have messy books all the time, either. So, pick your poison, collect your late penalties, and grind it out. When you’re getting your income on time, you can get all the associated work done on time, too.
Running the financial operations in any business is a big job and carries a lot of weight. Your rental properties are no different. Take the time and do the research needed to ensure that you’re functioning at your highest potential. Money management becomes so simple it feels almost like plug-and-play if you’re doing it right. So, either get scheduling, get hired, get filtering, or get presetting! Your books are about to get the makeover of a lifetime.
