Real Estate Investing Guide: How to Manage Rental Expenses and Income
One of the biggest challenges you will come across as a property owner/manager are the finances. That is, managing the finances that come and go through your rental investment. While keeping track of your money is extremely important when building and managing any type of business, things can get a bit more complicated as you start to diversify your portfolio with multiple properties.
With that said, it is important to build a money management system that will allow you to keep track of your finances and know exactly how much money you’re making or spending at any time of the day. Here are a couple of tips that will help you take your financial management game to the next level!
Manage Finances as a Real Estate Investor/Rental Property Manager
It can be tricky to manage rental expenses and income, especially if you are just starting out and have multiple properties. Here are some quick tips for managing rental expenses and income:
#1 Use Excel and Accounting Apps
What’s great about technology these days is that we have a solution for nearly anything. That includes money management along with a list of other useful things for real estate investors. In this case, a simple tool such as Excel can be a real lifesaver. You don’t have to be a tech savvy person or understand the depths of software to be able to use accounting and money management tools. Excel offers a simple user interface that allows you to track just about anything. However, if you’d like to look into more advanced solutions, there are plenty of accounting apps out there tailored specifically to real estate investors and rental property managers.
#2 Hire an Accountant
If you have the extra cash and would like to save yourself the time and stress that goes into financial management, you can always hire an accountant to handle these things for you. While this does come as an extra expense, it is useful to have a professional on board to make sure your money is going in the right direction. However, don’t think that this is necessary for starting a journey in real estate investing. If you have one or two income properties, you can easily handle money management on your own. As your portfolio starts to grow, you should look into outsourcing these tasks to a trustworthy professional. At this point, your budget will have room for accounting services.
#3 Have a Separate Sheet for Monthly Income
One of the tips I always mention when talking about money management for rental properties is to create separate sheets for everything. There’s nothing worse than losing yourself in an endless excel sheet and scrolling through hundreds of rows of random data. It is much easier to keep track of your finances if you just create a separate sheet for monthly income and one for monthly expenses, as well as a separate sheet for each tenant’s payments.