property management tools
As a rental property owner, keeping accurate financial records is critical but can be extremely time-consuming. Relying on spreadsheets and manual tracking of income, expenses, and other financial data leads to what I call “spreadsheet sprawl.” Before you know it, you've got a dozen different Excel files, folders full of paper receipts, and no clear centralized system for making sense of everything.
There's got to be a better way, right? The good news is YES – there are solutions that can help you gain back hours of your week while also improving accuracy and organization. Read on to learn more!
The Problem with Spreadsheets
At first, using Excel to track your rental property finances seems like a logical idea. You can easily create separate spreadsheets to record income and expenses, calculate metrics like cash flow, and slice and dice data however you want.
But as you scale up the number of properties, spreadsheets become unwieldy. You've got to enter every single transaction across multiple sheets manually, keep everything updated, and ensure 100% accuracy with all of your formulas and pivot tables.
It's no wonder that 50% of spreadsheets contain major errors! And good luck trying to find a specific transaction from 6 months ago in your huge data file. Spreadsheet sprawl becomes unmanageable over time.
The Solution? Automation
Rather than relying on manual data entry and tracking, the solution is to use software that AUTOMATES expense tracking, financial reporting, and other rental accounting tasks.
With the right property management software, you can instantly capture income and expenses from bank/credit card feeds and generate real-time financial reports with a single click.
PhocuWire notes, "Property Management Systems are required to manage a multitude of tasks, and they have to flawlessly integrate with a multitude of third-party apps and software: channel managers, booking engines, CRM, Yield Management tools, MICE planning software, self-check-in apps, reputation management systems."
Here are some of the biggest benefits of using automated rental accounting software vs. spreadsheets:
1. Eliminate Data Entry
Automated tracking of all income and expenses means no more manual entry of transactions across multiple sheets. Your data is accurately captured and categorized.
2. Centralized Reporting
At any time, you can log in to your rental property software and view real-time reports on cash flow, profit and loss, balance sheet, rental income, and other key financials. No more scattered Excel files. Rental property solutions like RentPrep can also aid in the tenant screening area.
3. Simplify Tax Prep
Come tax time, you can export all accounting data to your CPA or import it into the tax software. No more digging for paper receipts and financial records.
4. Access Data Anywhere
Since data is stored securely in the cloud, you can instantly view reports and access financial information from your phone, tablet, or laptop, no matter where you are.
To see the power of automation, let's look at two examples of rental property owners who ditched spreadsheets:
Saving 8 Hours Per Week
John spent 8-10 hours daily tracking income and expenses for his 12 single-family rentals. By implementing software, he reduced this to 30 minutes a week – recouping nearly a full workday. He can also understand if he needs to raise the rent in any of the units by analyzing the data.
Tax Time in Under an Hour
With 3 condo units, Kim used to need 2 full days to organize paperwork and spreadsheets before meeting with her accountant. Now, she exports a full tax-ready report from her software in under an hour.
Take Control of Your Finances
As you can see, spreadsheet sprawl can quickly eat up your precious time as a rental property owner or manager while also introducing major accuracy issues.
By leveraging the right software, you can eliminate tedious manual tracking, simplify reporting, and recapture hours each month – without sacrificing the quality of your financial data. It's a win-win!
Frequently Asked Questions
What are some examples of financial metrics I can track?
Some key metrics you can track for your rental property portfolio include cash flow, operating income, profit/loss, rental income, occupancy rates, maintenance costs, capital expenditures, appreciation, and more.
What integrations does the software provide?
Look for software that integrates directly with banks and credit cards to import all transactions automatically. QuickBooks integration is also extremely valuable for accountants.
Does it include mobile access?
Being able to instantly view reports and data from anywhere via iOS and Android apps is extremely convenient for rental property owners and managers on the go.
Can I track income and expenses for multiple properties?
Yes, top solutions allow you to set up unlimited users/accounts to track data across dozens or hundreds of investment properties in one centralized platform.
Is there a trial I can try?
Most software companies offer free trials or demo access so you can test out features and see firsthand how much time and effort can be saved before committing.