With rents on the rise across the country, landlords find themselves in the middle of a booming business. Cook, Lake, and DuPage counties fall among those in Illinois where it’s cheaper to rent than buy, making the Chicago area a great market right now.
If you’re doing a good job keeping up with the finances of your rental business, you’ve probably been ahead of that curve. But if rental property accounting is a weak spot for you, you might be missing opportunities here because you aren’t tracking the right numbers.
Let’s take a look at accounting tools for landlords and how they help you manage your business profitably.
Features of the Best Tools
When you start looking for tools to help you, just what should you be looking for? Several features should be on your list since they’ll make your life easier as well as keep you on top of your business.
Income and Expense Tracking
This seems like a basic point for accounting tools, but because you might need to track these by the property, you need a tool that can manage that. They’ll also make life easier if they keep up with rent receipts automatically, especially if you’re allowing for online payments.
Improvement and repair expenses have been on the rise, and these should be tracked by property. This gives you insight into your renters as well as an early warning sign that it might be time to sell.
Reporting
Good reports give you a good handle on the big picture of your business as well as the fine detail. These should include a breakdown by property along with your entire portfolio.
More reports aren't necessarily better so consider carefully the quality of the options provided by a specific tool. They should allow you to not just see the past but also forecast out to help you stay on top of market changes like the need to raise the rent.
Bank Account Integration
If you go with a full property management solution, part of the tool should be the ability to collect rent and other payments through a secure system. You’ll need to be able to easily link your bank account to the system to make it easy to reconcile the account and trigger warnings when rent is late.
Tax Prep
No tool would be complete if it didn’t help make tax time easier. Because you likely deal with various contractors to handle repairs and other jobs, you might need to create 1099s for them. This isn’t something personal tax software will be able to help you with.
Need Help With Rental Property Accounting?
As you can see, there’s a lot more to rental property accounting than just keeping up with income for taxes. The best accounting software for landlords includes the ability to break out income and expense types as well as produce reports that give you a picture of your portfolio’s financial health.
If you find keeping up with the finances for your rental properties a chore, contact us to discuss how we can help you manage your Chicago-area property rentals better.
