Tracking Rental Property Expenses 10111/22/2021
While many things have changed in the housing market over the last few years, one thing that hasn't changed is that landlords have expenses for their rental properties. What has changed is how we track rental property expenses. Handwritten expense tracking is mostly behind us, except for a few investors who hang on to it because it's what they know.
If you're new to real estate investing, you might be wondering what expenses you might incur or what tools to use to track your rental property expenses. Read on to learn more.
What expenses should you expect from your real estate investments?
Business formation fees
As you set up your rental property business, you’ll likely want to take advantage of the benefits that come with forming an LLC -- e.g., the ability to open a business bank account. To form an LLC, you’ll need to determine your business name, designate a registered agent, apply for an EIN number and put together an operating agreement. You can save time and money by using a formation service like ZenBusiness to register your LLC.
One expense that every landlord can count on is property taxes. You will pay for property taxes minus any deductions you can legally claim.
Tax Deductible Expenses
- Auto and travel expense
- Office space
- Professional services
- Property insurance
- Property management fees
- Leasing fees
- Property supplies
- Sales taxes
- Alarm system
- Utility bills
- HOA dues
Tools for Tracking Rental Property Expenses
Expense tracking software has improved by leaps and bounds over the last several years. You can do so much within these platforms that it can sometimes be hard to choose one. Pro tip: Look for a platform that offers automatic payroll scheduling, automatic calculating and tax filing, and same-day direct deposit.
Another consideration is opting to minimize your paper trail. While you will probably want to keep some hard copies of important documents, most landlord "paperwork" can be performed digitally. This enables you to keep your office a bit tidier while making your information easily accessible and minimizing time spent looking for files.
Cloud Computing lets you work from anywhere. Instead of storing information on your platform, cloud-based computing stores data in the cloud. Also referred to as Cloud as a Service (CaaS), using cloud-based computing allows users to work and maintain access to necessary data from anywhere. This is specifically useful in remote teams, which, when using CaaS, can work together within the cloud.
Cybersecurity is a huge concern in 2021. Hackers are becoming better at what they do. Thankfully, so have cybersecurity professionals. No matter what platform you choose for your rental property expense tracking, protect your data with encryption, authentication, and systems that continually monitor for malware.
The key takeaway is to choose an expense tracking software that matches your business goals and needs. One way to make the choice simple is to opt for a suite of products with proven reliability like those listed above. That way, everything is linked, and you aren't constantly performing repetitive tasks.
And yet another way to simplify your rental property business is to work with a professional property management service. Just keep in mind that this typically costs anywhere from 9% to 12% of your rental income. Whatever you choose, find a method that works for you so you can keep your expenses on track and your rental business moving forward.
Are you looking for a new investment property in Central New York? Turn to the expert team at Acropolis Realty Group! 315.396.0493