If you’ve been managing your own rental property or properties in Woodstock, you likely have a well-established and detailed leasing process in place and a consistent system for managing maintenance and renewals. At least, we hope you do!
What about your financial statements and reporting? Are those as detailed, accurate, and transparent as they could be? You need to be carefully tracking income and expenses, preparing yourself for tax time, and ensuring that you have easy and immediate access to all of the financial data that will help you make better decisions about your investment portfolio.
Whether you’re trying to determine what your expenses are likely to be before you invest in a property or you’re tracking what you spend on existing investments, there are a few things that require your attention.
Good documentation will help you have a better and more profitable investment experience.
Monthly owner statements are a big part of the service and value we provide as Woodstock property managers. When we’re sending out our owner statements, we’re sure that they’re detailed and accurate. We’re quick to raise any alarms if we see something that should concern one of our owners.
You’re trusting us with your properties, and you’re also trusting us with your money. We take that financial stewardship very seriously.
Today, we’re talking about what your monthly financial statements should look like, and how you can benefit from receiving owner statements from a property management team like ours. Managing your money and tracking your progress requires a lot of resources and expertise. If you don’t have that immediately available to you, a Woodstock property management partner is absolutely necessary.
Tracking Income and Expenses for Woodstock Investment Properties
Good rental property accounting starts with two things:
A separate bank account so your private funds aren’t mingling with your business funds. You’ll find it’s a lot easier to keep yourself organized and less liable for spending money that you shouldn’t.
A reliable and user-friendly platform on which you can track and analyze your monthly income and expenses.
There is no single way to generate an income and expense report; you’ll likely need to seek out the system that works best for you. Possibly, you’ll need to create something unique and customized to your properties and your style of financial management.
Several software programs exist, even for independent landlords, and you can also use an app or a system that is specific to property management, where everything is transparent and well-organized. The goal is to show how much money was earned on your rental property in a given time period and how much was spent.
When it’s time to file your taxes, the IRS will require documentation that demonstrates what you earned on your rental property and how much you spent maintaining it.
This has to be clear, accurate, and transparent. Even if you work with an accountant or a CPA, you’re likely the one who will be collecting the rent and paying for repairs. Make sure you’re saving and logging receipts.
This system for tracking income and expenses can be as simple as an Excel spreadsheet if you’re only managing one property and there are rarely complications. That won’t cut it for a growing portfolio, however. Make sure you’re working with something that serves you and your investments.
Short Term and Long Term Budgeting and Owner Statements
The owner statements we provide to our clients keep budgeting in mind. We know it’s an important part of your investing process. Before you buy a rental property and as you move through the leasing and management process, you’ll want to know how much it’s going to cost to lease, manage, and maintain the investment.
This is especially important when it comes to variable expenses like vacancy and maintenance. On your owner statement, you’ll see how much you’re spending now and what we expect you’ll spend in the future. If you’re managing your accounting on your own, you’ll want a similar feature so you’re not surprised when it’s time for a new roof or an updated appliance.
Set up a budget for recurring expenses you can plan on, such as landscaping, property management fees, and pest control. Forecast when you’ll have to make big expenditures. Plan for your new furnace, for example, even if you won’t have to worry about it for five or ten years. Estimate the lifespan of your air conditioning unit, your flooring, and your appliances.
Invest in Rental Property Accounting Technology
Professional property managers in Woodstock invest in accounting software that allows for the best possible financial reporting. We have everything integrated and automated.
It’s a great reason to work with a professional; you can leverage all of this technology. Statements are easy to create and access.
If you’re managing on your own, the options may be limited, but they’re still out there.
Look for programs and platforms that are accessible, user-friendly, and transparent. If you find yourself having to go to court, for example, you’ll want to be able to share an accounting breakdown for a tenant you’re evicting for nonpayment of rent.
Talk to us if you need a recommendation on which system to use and how to use it.
Financial Reporting and Taxes
Tax time doesn’t have to be stressful. Whether you have a professional CPA, a smart property management partner, or you’re doing your own taxes, you have a series of deductions you can take that will off-set the tax liability that comes with rental income. These available deductions include:
Mileage if you need to travel to and from the property
Lease cancellation costs
Legal, management, and professional fees
Mortgage interest
Insurance
Taxes won’t always show up in your monthly owner statement, but you’ll need the documentation to determine what you spent on tax-deductible things over the year.
We can help you manage your financial records better and produce accounting statements that keep you informed and motivated to make good decisions for your property or your portfolio. Let’s talk more about owner statements. Contact us at Clients 1st Property Management.