Real estate remains a very solid investment. On average, property appreciates anywhere from 3 to 5 percent a year. It consistently outpaces inflation and many other investment vehicles.
Managing rental properties and tenants can be a lot of work, though. It requires meticulous accounting and bookkeeping to ensure you have a good sense of how your business is doing, including any beneficial changes that could be made.
Below are four rental property accounting tips for landlords in Phoenix, Arizona. Keep reading to find out if you are getting the most out of your investment properties.
1. Keep Properties Separate
If you own multiple properties or rental units, it is important to keep things separate. Having distinct accounts for investments may seem like a hassle, but it is the opposite.
It allows you to more easily prepare profit and loss statements and file taxes. It also will give you a clearer picture of the financial health of each investment property.
2. Leverage Digital Tools
If you have not already gone digital with your real estate accounting and bookkeeping, you should do so immediately. It is seamless to scan and digitize applications, invoices, receipts, and more. It also will allow you to share files or other information with staff, professional accountants, financial advisers, or tenants themselves.
3. Make It a Part of Your Weekly Routine
You don't have to do accounting every day, but you also do not want to get behind either. Tracking expenses regularly, for instance, has many advantages.
First, it will give you information that lets you plan for the future. It will help you make smarter decisions about existing or new investments.
It will let you better anticipate what to expect on a monthly or quarterly basis. The same goes for rental income.
Being prepared also will help limit stress when it is time to file your personal and property taxes. You will not be scrambling to pull together information that could be at your fingertips.
4. Hire a Professional
Hiring a property management company to handle your rental property accounting is an easy way to make sure all t's get crossed and all i's dotted. Professionals can not only keep up with all income and expenses, but they can put together reports that give you a clearer picture of performance.
This has the added benefit of being able to bundle accounting with other services. If you already need help with tenant screening, rent collection, or grounds maintenance, a property management company can get you more bang for your buck.
Learn More About Rental Property Accounting
Now that you have some landlord advice on rental property accounting, you can have a better sense of how your real estate endeavor is performing. Employing the advice above will ensure you are getting the most out of your investment property.
PMI Real Estate Services provides comprehensive residential and commercial property management resources to Phoenix and the surrounding areas. In addition to rental property bookkeeping and accounting services, we offer marketing, tenant screening, rent collection, and more. Reach out to us today to schedule a free consultation.
