Some people think becoming a landlord is the easiest way to earn passive income. They might not know that without the right resources, it can be more of a headache than it is worth.
First, you must find a suitable property, prepare it, find good tenants, maintain it, and collect rent. In some cases, you may need to remove tenants, which can be quite an expensive process.
All these tasks involve money, and, of course, when money's involved, you need a rental property accounting system. Luckily for you, here are some tips that can help make accounting easier.
Rental Property Accounting Tip #1: Stay On Top of Your Bookkeeping
Recording all transactions and expenses is bookkeeping while interpreting data so you can make better business and cash flow decisions is accounting. Both are essential to managing a rental property.
By accurately keeping accounting records, you or your accountant can pinpoint which expenses are eating into your profits. It's also super important to keep your personal and business finances separate. Not only does this make accounting easier, but it also makes things clearer when getting audited by the IRS.
Tip #2: Consider Using a Rental Property Accounting App
Tracking rental income may be easy for you, especially if you're only doing it for one property, but what if you own multiple properties?
Here's where technology can help. There is indeed an app for everything, including digitizing receipts, collecting rent, managing your property's financials, etc.
Still, if the technical bits and bobs are challenging for you, you can always hire a property management company. You can also work with a professional for the tax stuff.
Tip #3: Automate What You Can
A robust property accounting software can help you automate accounting tasks. The more processes you automate, the less you have to worry about manual data entry errors.
If you can't automate everything, start with payments and withdrawals. You can also automate reminders. Focusing on these can help free up your time or at least make it easier for your accountant come tax season.
Tip #4: Work With an Experienced Property Manager
Part of a property manager's duties is to track an owner's expenses, income, and assets. They also help owners implement accounting strategies that maximize a property's profitability.
That means after evaluating financial performance, they can recommend areas for development. They can also advise property owners about rent adjustments, budget allocation, cost-cutting measures, etc.
Don't Let the Numbers Faze You
While rental property accounting can be challenging, there are ways to streamline related processes through apps, automation, sheer diligence, and working with a property manager.
We can help you with the last one. PMI residential property managers follow a tried and tested process to help you maximize your profits. Whether you're a real estate investor, a newbie landlord, or an accidental one, let's find a solution for your property management needs.
Start earning with your Smyrna, Georgia property. Call us at 770.628.0753 or take advantage of our free rental analysis to see how much your rental is worth.
