Tracking and organizing expenses is an important part of owning a rental property. It helps you understand finances, maintain a record of rental payments, and make wise decisions to increase income and reduce operating expenses. Keep reading to learn how to track rental property expenses and keep real estate taxes low.
Types of Rental Property Records to Track
Rental property records can be divided into two broad categories: a report or list of expenses, income, and documents or receipts to prove those expenses. Here is a list of different types of receipts that can help in justifying the financial statement of your multi-family residential property:
Copies of state and federal tax returns.
Advertising bills that explain the cost of listing an apartment on rent, conducting tenant interviews, and preparing a lease.
Leases of past and current tenants and all-related documents such as court fees or leasing commissions that were paid.
Statement of all real estate taxes that you have paid until today.
Mortgage documents and loan payment receipts.
Fee statements of outsourced services from property managers, accountants, lawyers, and handymen.
Salary slips of labor.
Invoices of all supplies that are used for property maintenance.
Copies of rental payments.
Bank statements from your accountant to justify the cash flow and proof that you are not mixing personal and business funds.
If you have hired employees for property management, keep a record of their benefits, salaries, and employee taxes paid by you.
3 Ways to Track Your Rental Property Expenses
Here are some ideas to track the expenses of your rental property like a pro:
1. Maintain an Expense and Income Worksheet
Create a spreadsheet using online platforms such as Zillow. The easy-to-use and free tool allows users to customize spreadsheets tailored to their rental property needs. You can also use Microsoft Excel to keep records of only one or two rental properties.
2. Use a Business or Personal Accounting Program
To maintain personal accounting records, use programs like Tiller Money, TurboTax, and Quicken. While Tiller Money can automatically feed the transactions to Google or Excel Sheets, Quickens has pre-selected categories, making it the ideal choice for first-time real estate investors.
Furthermore, you can use QuickBooks Online, Wave, FreshBooks, and Xero to record business and real estate taxes. Because these programs are paid, try the free trial version to ensure the program best suits your needs.
3. Incorporate a Property Management Software System
Use property management softwares like Stessa, TenantCloud, and Cozy to create paper trails and track finances and property performance. The automated system will provide a clear picture of the expenses and help you lower real estate taxes.
Rental Properties PA, DE, MD, FL, NY, NJ
Since its establishment in the 1930s, Milbrook Properties Ltd. manages real estate properties, including multi-family residential complexes and commercial real estate projects. Whether you require property management services for the CAM or the entire rental property, we’ve got your back. Contact us today!