How to Track Rental Profits and Expenses
Over the years, we have noticed a trend when it comes to landlords and real estate investors — they love making money on rental properties, but don’t want to deal with the meticulous job of tracking the profits. Let’s be honest…we really can’t blame you! Who wants to spend time itemizing expenses on a spreadsheet and reporting on taxable rental income?
With maintenance, tenant concerns and more pressing tasks at the forefront…reporting and accounting only seem to come into play around tax time. However, as an experienced property management company, we understand that tracking your profits and expenses is crucial each year.
What Records to Keep
Having an itemized list of profits, accurate records for taxable income and claimable deductions allows landlords and real estate investors to stay organized. Take a look at the items below to better understand what records to keep each year.
- Tenant Leases for all properties (saving back several years)
- Proof of rental payments for each month
- Bank statements from the account set up for your rental property cash flow (should be separate from personal funds)
- Copies of any receipt for materials, labor, supplies, services and/or actions directly related to the property
- Fees associated with the care of the property (lawyer, accountants, property manager)
- Marketing and advertising materials and fees associated with the property
- Hours and money spent to screen tenants and lease preparation
- Property tax and rental tax statements
- Copies of current (and past) federal and state tax returns
- Salaries paid to any employee working with the property (benefits, taxes withheld, taxes paid)
- Legal documents for each property when dealing with court fees or evictions
Each of these items falls into two categories: 1) itemized list or report of the income and expenses of the property and 2) supporting documents to prove the income and expenses are correct and legitimate.
How to Track
As you can imagine, tracking all of this information can be time-consuming and labor intensive. The best way to tackle these expenses (and gains) is to stay organized and never neglect the clerical aspect of being a landlord. Think about
- Creating an online tracking system using software such as Microsoft Office Excel or Google Sheets
- Investing in a property management software like Landlordy, TenantCloud or SimplifyEM
- Investing in accounting software such as Stessa, TurboTenant or QuickBooks
No matter which option you choose, pick the one that best suits your needs and property management style. At Oak City Properties, we suggest finding a tracking system that is free to use. Once you’ve built up your rental portfolio, consider paying for a more comprehensive platform to help scale your business.
Make Predictions for Following Year
Keeping accurate records helps devise strategies to increase income the following year while also reducing operating expenses. Most systems generate valuable reports to understand
rental histories and track expenses for each property. The systems can also help with bank account integration, identify common maintenance issues and convert work orders into bills for contractors, vendors and tenants.
Over the years, we have helped many landlords and real estate investors keep track of their expenses and better understand ways to improve their business model for the following year. We’ve streamlined the experience of purchasing and owning investment properties through a trusted mindset built on decades of measured success. In addition, our real estate and investment professionals are ready to help you manage your most significant assets through a hands-on approach that focuses on consistently generating results.
At Oak City Properties, we provide custom solutions and competitive quotes that tailor our services to what you really need. In addition, our full property management service will work with you each step of the way when renting and maintaining your property. We believe that hiring a property management company should be a transparent process that is built on trust and doing our absolute best to take care of your investment.
Are you interested in learning more about Oak City Properties? Give us a call at (919) 232-9222 or check out our website at Oak City Properties.
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