Not many landlords can say they enjoy keeping track of expenses. Following up on every payment can be draining, especially when you’re the rental property owner. If you have the IRS breathing down your neck for an audit, find yourself trying to secure a loan, or even if it’s time to file your taxes, you need to make sure you have up-to-date documentation.
Here are some tips from Richmond property managers on how to track the expenses of your rental properties.
Have you taken up an insurance policy for the property? If you have, you might want to keep a record of it. Whether you’re paying the mortgage for the property, or there’s a loan you need to honor, even if there’s some credit involved, you’ve got to keep a record.
Even an IOU can stand as evidence of a debt in court, especially if you sign it, so you need to have each obligation on paper, preferably in one place and in an organized fashion.
You cannot ignore deductible expenses, as hard as it may be to monitor them. Every time you’re invoiced for maintenance or repairs, you need to trace the transaction on paper. That money you give to the landscaper every month? That and every other salary must be filed along with additional expenses. Utilities, advertising, legal costs; keeping track of all of these should be a priority for you.
Filing Cabinet for Who?
If you want to get ahead in business today, you must leverage the power of technology. Fintech has gone beyond the old spreadsheet program. Now, some apps will pretty much make your accountant obsolete. You can control everything from your palm these days, so why waste the excellent tools at your disposal?
Property manager apps are a game-changer. You can have them set up so that payments made every single month continue to be paid out automatically. This allows you some room to focus on other important tasks while giving you peace of mind.
If you thought that was impressive, wait until you find out that you can link your bank account to your property manager’s digital interface, making it possible to gain greater insight into your finances. Artificial intelligence accuracy will quickly help you determine if your business is doing well or not and why.
The last thing you want is to forget to pay the maintenance team. Property management apps allow you to store any projects that will require payment, releasing the money when the job is done. It even lets you make multiple payments, which is great if you have many people to pay, whether you want to pay them all at once or at different times.
You are free to put everyone who provides a service to your business on a digital list so that you can better manage payments to them without doing much work. You can’t be relying on envelopes in such a fast-paced business world; you need to take advantage of any digital tool you can get your fingers on.
Making late payments is impossible when you have software doing it for you. Payments are processed at the speed of light, and it’s even possible to share your financial details with your accountant.
You could have a financial expert analyzing your entire business on a document put together by a program. Whenever the system makes a payment on your behalf, you will be notified about it as soon as it happens. An SMS or email will be sent directly to you, informing you of any payments made.
Making Sense of it All.
It doesn’t help to gain all sorts of information without knowing what it means. Tracking your expenses is one thing, but understanding what the records mean for your business is another. Using an app for your rental property’s costs is great because you can get various assessments at the touch of a button.
Cash flow statements and balance sheets don’t have to scare you anymore. Many landlords would rather have someone translate raw financial data for them, so it’s good to have a machine that does it all in an instant.
Ignoring Expenses can be Expensive.
Now that you know how it’s done, it's time to prioritize maintaining consistency. You can’t afford to have a single gap in your records because that can mean having to pay for something you already paid for. Keep in mind that you are an investor, so paying attention to details can mean the difference between losing money and making it.
Be meticulous when it comes to your finances, use the technology available these days, and learning from what the records are telling you. That way you’ll stay one step ahead of debt.
An even easier way to track expenses is to work with a Richmond property manager who will take care of all the headache-inducing tasks and to-do lists so that you don’t have to deal with notifications going off at all hours and handling taxes. A property manager will interface with all aspects of your financial management, leaving you to enjoy peace of mind.