Alright let’s face it: bookkeeping is probably one of the least enjoyable activities when it comes to running a successful business or brokerage.
However, it doesn’t matter if you come from an accounting/finance background or just dabble in real estate as a part-time landlord/house flipper, you need to have your accounts in order.
Bookkeeping, therefore, is a necessary part of every successful real estate agent or hustler’s routine, and should not be overlooked!
Here are a few quick tips for bookkeeping for real estate agents or anyone involved in real estate in some form.
Tip 1 – Keep Accounts Separate
It doesn’t matter if you own a single home and operate a small rental operation or run a serious real estate business, you need to diligently track your finances and keep personal expenses separate from business expenses.
Moreover, as BiggerPockets.com suggests, it can be wise to even have separate bank accounts/savings/credit cards for each rental property you own until you reach a certain scale where having one centralized management account makes more sense.
Tip 2 – Itemize & Track Everything
No expense is too small to be tracked if you ask me. Ideally, you should be tracking every single expense you incur as a real estate agent or landlord to paint a truly accurate picture of your business expenses.
Itemizing your income/expenses and properly organizing things into categories is important for a few reasons. Firstly, it will help you keep track in the long run of what categories are costing you the most money, and you can adjust future plans accordingly. Secondly, and more importantly, itemizing your expenses will help keep things more manageable during tax season when you are looking for possible tax deduction opportunities.
Tip 3 – Don’t Be Afraid to go Online or Seek Professional Help
If you run a single rental unit or are just getting started with real estate investing, it might be tempting to do everything yourself and to stray away from digital.
However, there is simply no need to overly complicate your bookkeeping routine, and the myriad of software applications on the market are both affordable and more accurate (generally) than doing everything in your head or on scraps pieces of paper.
Some of the most popular real estate bookkeeping software includes:
I’ve heard great things about all of these software options, but you should always review each one thoroughly to compare price and specific features you might be looking for.
At the end of the day, embarking into real estate investing can be an incredibly rewarding experience.
However, some of the nuts and bolts that will make or break your venture are things like bookkeeping; perhaps not the most exciting topic in the world, but important nevertheless.
I hope these 3 bookkeeping tips and some of the mentioned resources will help out if you are just getting started on your real estate journey!