Rental property accounting doesn’t have to be complicated, but it does have to be precise. When you’re earning income from your rental properties and spending money on things like maintenance, marketing, and tenant screening, you need to have an accounting of all that.
Most rental property owners don’t get into the real estate business because they love bookkeeping. But, it’s important. Not only do you need to keep close track of your finances for legal reasons, you also need to know where you stand so you have a good chance of increasing your ROI. You can’t make smart investment decisions if you don’t know where you’re earning and losing money.
As Macon property managers, we include professional accounting services in everything we do for our owners. Our detailed, accurate, and transparent reporting system keeps you informed. Here are some things for you to think about if you’re managing your own property.
Organize Income and Expenses
At the simplest possible level, you’ll need to track your income and expenses. When it’s time to file your taxes, you’re going to need to demonstrate how much you earned on your rental property and how much you spent maintaining it. This has to be clear, accurate, and transparent. Even if you work with an accountant or a CPA, you’re likely the one who will be collecting the checks and paying for repairs. Make sure you can clearly see what you’re earning and what you’re spending on a monthly, quarterly, and annual basis.
Budgeting and Forecasting for Macon Rental Homes
Budgeting is incredibly important, especially when it comes to things like maintenance, vacancy, and tenant turnovers. It’s a good idea to set aside a maintenance reserve, which will help you prepare for large expenses. Save a portion of your monthly rent in case a new water heater is needed or the air conditioning goes out.
You should also set up a budget for ongoing expenses like pest control, landscaping, and HVAC seasonal services.
Invest in Innovative Technology
If you’re still using a legal pad and a pencil to keep track of your accounts, it’s time to modernize. There are a lot of great software programs out there, even for individual landlords who only have one property or a handful of homes. If you keep everything digital, you can access it from anywhere in the world, and that can be extremely helpful when emergencies pop up. It should be accessible, clear, and transparent.
If you find yourself having to go to court, for example, you’ll want to be able to share an accounting breakdown for a tenant you’re evicting for nonpayment of rent. Dragging your paper ledger into the court room is not as convenient as printing a spreadsheet.
Our team uses the best property management software that’s available, and it leads to more efficient and more detailed accounting.
Consider Professional Macon Property Management
There are a lot of excellent reasons to use a professional property management company, and accounting services are one of them. A good Macon property management company will provide accounting and keep you in the loop. You should expect monthly financial statements, reports when you need them, and an online portal that allows you to view maintenance invoices, lease documents, and security deposit funds at any time.
We would be happy to talk more about our accounting practices or share additional tips about how to stay organized financially. If you have any questions, please contact us at Fickling & Company Property Management.