A consistent, best-practices approach to property management accounting is key to your business success. However, for many landlords, keeping on top of the books is their least favorite part of the job. Here are some bookkeeping tips to ensure that your property business runs as efficiently and profitably as possible.
1. Anticipate Fluctuations
All companies have peaks and valleys in their sales cycles, but the property business is known for its fluctuations, especially for smaller landlords who may have a handful of properties. If you have four rental units and one of them is vacant – boom! – that’s 25% of your incoming cash flow gone. Factor in a few unexpected surprises like having to buy a new water heater, or one of your tenants letting you know they will be a week late with their rent, and suddenly you’re taking another hit to your cash flow. Yet, you still need to pay your bills.
Landlords need to set aside money in a savings account for those little emergencies and to ensure that they can keep paying invoices when times are a little tougher. You can also apply for a line of credit to help you as well. Figure out your worst-case scenario, for instance if a property sat vacant for three months, or you had to go through a lengthy eviction process. For good measure, research the cost of replacing an appliance, and add that in to the amount you need to set aside.
2. Forecast Purchases and Negotiate Deals
New landlords are often surprised at the number of small repairs and general upkeep that are needed over the period of a year per property. From leaky taps to broken tiles, you will have an array of maintenance needs.
By reviewing inspection reports, repairs completed over the last year, as well as your records of things like your list of appliances per property that contains warranty info, serial numbers and repair history, you can more accurately predict what you will need to set aside for future purchases. Research appliances and other home systems to look for the best price as well as compare things like reviews and energy efficiency ratings.
As well, if you have a handful of properties, create a list of preferred contractor so you always know who to call for each maintenance issue. Negotiate a better rate or a volume discount with local landscapers, electricians and plumbers.
3. Use Landlord Bookkeeping Software
Up to your eyes in paperwork and filing? Are your docs and spreadsheets stored on your desktop where they aren’t accessible and not very secure? By moving to landlord bookkeeping software, you can store data securely and have it accessible from anywhere on any device. Not only is landlord bookkeeping software environmentally friendly, it makes tenant information easier to find and gives you financial dashboards to instantly see the financial health of your business.
4. Make Paying Rent Easy
When tenants pay their rent by check, it’s a hassle for everyone. Your renters want to pay their rent the way they pay all of their bills, through their bank account or by credit card. And, for you – the landlord – checks take time to collect, deposit and clear, slowing down your cash flow.
Giving tenants online options makes it more convenient for them and can help streamline the accounting process for you.
5. Watch Your Collections
Late rent payments and collections are problems faced by nearly every landlord. A huge benefit of online landlord bookkeeping software is that it allows you to keep a sharp eye on collections. You can pull reports to see your rent roll and who is delinquent. It allows you to keep tabs on folks who have repeated incidents of late payments. You can also automate reminders. To help reduce late payments, landlords can take a “message early and often” approach. Using automation, landlords can send tenants escalating reminders. For example, 5 days prior to due date, the due day, 7 days past due, etc.
At Property Vista, we offer a suite of products, including landlord bookkeeping software and a tenant communication portal. With all the data verified and centralized, you’ll be able to measure the health of your properties and make the necessary changes to spark interest, secure better tenants and raise the profile of both your properties and your business. if you need help running your business more efficiently through technology, be sure to check out our pricing and book a demo.