Rental property accounting is the key to real estate investment success.
The average American landlord brings in just under $90,000 per year. If you're going to reach a level where your real estate portfolio is your entire source of income, you need to prioritize bookkeeping.
In today's post, we'll discuss the importance of rental property accounting for your Salt Lake City rental property. Being diligent with your money sets you up for success as an investor, so keep reading and you'll have a guide that covers all you need to know about managing your funds.
Tracking Rental Income Properly
Rental property bookkeeping allows you to keep accurate tabs on your rental income. Having a strong sense of your financial health is how you measure your success as a real estate investor.
By tracking your income and expenses, you can make important decisions about individual properties. If any major changes need to be made, such as renovations or even selling a hemorrhaging rental property, your financial records will tell you.
Budget for Future Expenses
When you have strong accounting methods, you can budget more effectively. All rental properties go through more wear and tear than owner-occupied properties. You need to be able to set aside money for routine maintenance, as well as repairs when needed.
Accounting gives you a clear picture of your property's finances over time, so you can understand how much you need to budget for future expenses. A good budget will account for short and long-term expenses. It'll also tell you when it's feasible to tackle certain larger projects, such as roofing or a new HVAC system.
Prepare for Tax Season
It's important for landlords, especially new ones, to understand that a rental property must be treated like a business. You need to open separate bank accounts for each property you own and perform bookkeeping duties for all of them individually.
When it comes time to pay taxes, you'll be glad you did things the right way. Rental tax law is strict but also allows you to write off several expenses. If you're careful and knowledgeable of the law, you'll be able to keep more of your rental income.
Expand Your Portfolio
Lastly, proper rental property accounting allows you to work your way up in real estate investing. You may start with one property, but if your money is well-managed, you can continue to expand your portfolio and rental income.
If you have lackluster accounting practices, you'll have trouble moving beyond your current property.
Get Professional Rental Property Accounting Help
Rental property accounting will make success as a property investor more attainable. It's not easy to do, however, which is why many landlords will hire a property manager to deal with accounting for them. A good full-service property manager can handle much more, as well.
At Utah Property Solutions, we're one of Salt Lake City's top property management companies. Our services include everything from accounting to property marketing to maintenance and tenant screening. To learn more about how we can help you run a thriving rental property, contact us today.
