How Landlords Can Easily And Accurately Track Their Rental Property Expenses
Careful tracking of incomes & expenses is what every financially diligent person has to do in their life. Not only this is about the correct definition of cash flows they have but also about taxes correctness & calculation of real available resources to plan their life & further business process.
Why & how to track expenses?
When you track rental income, you stay organized, which is crucial for a smart real estate investor. By doing so diligently, legally & continuously, you can reach such goals:
- avoid vagueness in thine tax deductions, which won’t draw unnecessary attention of IRS to you, with their “taking-all-guts-out” audits
- you prove the legitimacy of thine income, also being able to fence off a personal income from a business one (especially you must do so by opening a dedicated bank account for thine business-connected cash flows)
- keeping track of what’s getting in & going out to have a picture of monthly cash flows, profits & ROI of thine assets & business in general
- reduction of risk of tax overpayment, staying within minimal legally allowed taxes.
Below, we’re considering what exactly you have to keep track of.
What records do you need as a landlord to track income & expenses
Keeping track is made based on financial & other types of documents, which prove both incomes & outflows. Here are some examples of what you should keep (preferably, during 5-7 years):
- Documents connected to the purchased property – escrow reports, inspection docs, settlements
- Tenant-related documents: questionnaires, copies of their IDs, requests, payment receipts, eviction or late payment notices, tenant screenings
- All proofs of rental payments: receipts from thine bank & cash-receiving quittances
- Copies of all utility bills, which could include casual expenses for water, gas, electricity, heating (if centralized), fixing & repairs; trash, snow & ice removal; sewer, pest control, cleaning; cable, Internet & TV services…
- Copies of all thine general (asset) expenses, which could include advertising, licensing, mortgage interest payments, insurance, travel & car expenses; finishing, updates & renovations; office supply; property management; telephony, technology & software…
- Invoices & contracts with professional providers: lawyers, plumbers, property mgmt companies
- Copies of property & income tax payments & tax returns – federal, state & local.
What software you could use for rental property record keeping
When it comes to writing down all sums, the choice is vast. Some landlords, less organized, do the entire work to run rental spreadsheets for property managers on paper. But that could only be nice if you’re over 80 years old & principally hate computers. In the rest of the cases, you should be helped by one of the solutions offered below.
- Regular MS Excel. It is a very powerful tool, which can embrace all thine numbers, make graphs & tables, run macros & do serious calculations of cash flows, ROI, taxes & more. The biggest drawback of Excel, however, is that you actually have to KNOW how to build all these by formulas, graphs’ conditions creation & applying other skills. To be honest, not so many people actually know how to do that. So, we could leave it to the most advanced users only. Although, over half of all below-mentioned tools are built on Excel (but they are designed for people NOT in the know, which is such tools’ biggest advantage so far).
- Stessa. It’s a free-of-charge tool, which is not just for a computer/laptop but also offers an app for iOS & Android. Using Stessa, you can build powerful graphs, charts & various analytical tables, which you really don’t need to know how to build by formulas or programming in Excel or elsewhere. This app is number two after Excel in power & #1 in usability & ease as of today – among all other tools. It allows including & tracking into thine datasheets an unlimited number of properties. You can see & personify a dashboard with loads of extremely useful data, upload & store documents, do the automated tracking of multiple indices & timelines, create many reports from operative to global, work through the Internet, collaborate with other users & access the latest news, which Stessa also provides for landlords. With it, you’ll be able to have a view of thine business from all perspectives of time, cash flow & data layers.
- Zillow. Another free & downloadable software, which is a powerful add-on to Excel in its nature, allowing working in it with the strength to those users who aren’t Excel-advanced.
- Quicken. Paid software, which is of roughly the same power as Stessa. It is workable for Windows & Mac, which is designed to offer a more visual part than plain numbers. Here, you will have all finances in one place & the ability to do all graphs & reports to reach various financial goals.
- Turbotax. This is about automation & the improvement of thine tax process. In this tool, you’re offered to do everything from calculation & deduction to payment & filing. Basically, you shall consider it as a rental property tax deductions worksheet, not as a manager for cash flows.
- Tiller. This is another “Excel add-on”, which does various comprehensible graphs, calculations & reports based on the data you enter.
Eventually, with some of these powerful tools in your hands, thine data management & reporting can be fully automated, which is way farther than you’d have with paper & pen. In the overwhelming number of cases, automated tracking of all such things is able to find you ways to save & improve an end financial result even without extra effort from you.
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $85k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.