Rental Property Accounting 101: 5 Simple Tips for DIY Landlords

While it may seem easier to lump all rental costs into one bank account, this will undoubtedly create headaches down the line. Programs like Excel, Numbers, Google Sheets, and OpenOffice can be used to create a basic real estate bookkeeping system to track income and expenses. However, even with one rental property bookkeeping rental property, keeping information updated manually can become tedious and it’s easy to have something fall through the cracks. Real estate bookkeeping usually isn’t the first thing investors think of when investing in property, but it’s an important part of owning and managing rental property.

These solutions often include handy mobile apps and some excel at helping you track rental property expenses, income, deductions, and other key real estate investing metrics. Once you have set up separate accounts for each of your properties, you will be ready to start tracking your expenses. First, you will need a reliable system for tracking the inflows and outflows of cash for your properties and your business overall. Some business owners might design their own expense worksheets, while others will elect to use rental property accounting software to keep track of their finances. To avoid these common mistakes, be sure to keep meticulous records of all income and expenses related to your rental properties.

RENTAL PROPERTY ACCOUNTING BASICS

It has been great to keep everything in one place and is extremely powerful in allowing me to separate our different income streams, categorize expenses, and run hundreds of different reports. Founded in 2016, tens of thousands of investors use Stessa to monitor over $45 billion in real estate assets. Users can customize the features they use, making it suitable for any experience level.

Rather than scrambling at the last minute, stay on top of your tax prep by categorizing your transactions at least once per month. This will also give you more clarity into your business performance real time and will minimize errors when it comes time to file your return. With accurate transactions and categories, you won’t forget to report any income (which could create trouble with the IRS), or expenses (which will cost you tax savings).

Streamline Your Rental Business with Azibo Accounting!

Regardless of your preference, it’s beneficial to practice on a template so that you can internalize the basics of proper bookkeeping. We’ll start with the fun stuff first, which is the money that we bring in from our rental properties known as income. Rental property income can come in many forms, the most common being rent payments and prepaid or prorated rent payments.