Over 70% of the people in the US would rather rent a home than buy one. This means it's the perfect time to get into the real estate business and expand your property portfolio. But managing a property portfolio can be tricky if you're just starting out.
So, keep reading to find out more about five accounting tips to help you manage your property portfolio.
1. Open a Verified Trust Bank Account
You'll need a verified trust bank account to hold the security deposits you receive from your tenants. Deposits are paid when tenants move in, but the tenants get these funds back when they move out (if there are no damages!).
When you use a verified trust account, the money is safeguarded from a potential takeover. This is incredibly useful in the case of bankruptcy or if you're experiencing problems with your personal bank account.
2. Establish a Chart of Accounts
If you want to properly manage your property portfolio, you'll need to create a chart of accounts. The chart of accounts will list all the different forms of accounts you use in your business, including assets, income, and expenses.
When you use a chart of accounts, you'll be able to properly monitor your business performance. These charts can be incredibly comprehensive, so you don't have to worry if you have a lot of accounts to deal with. The main goal of these charts is to clearly see how money flows in and out of your business.
The form these charts take will depend on you. You can use anything from Excel to bookkeeping software.
If you use a property management service, their statements and portals will be able to help you set up your chart of accounts.
3. Plan For Unexpected Expenses
The worst thing you can do is get caught unaware when unexpected expenses pop up. Instead of panicking when this happens, you need to plan ahead.
The easiest way to do this is to go over your expenses for the previous year to get an estimate of how much money you need to set aside. If you don't end up needing these funds, you can simply put them away for the year after that. It's better to have the money and do nothing with it, than to need the money but not have it.
Use These Accounting Tips to Manage Your Property Portfolio
When it comes to managing your property portfolio, having a few accounting tips in your back pocket will always be useful. Dealing with real estate management can be stressful enough on its own, so you don't need to pile on more responsibilities. Luckily, property management services exist to help you out.
If you have any questions regarding managing your property portfolio, feel free to contact us today! At Utah Property Solutions, our success is due to our responsive service, professional approach, and outstanding client interactions. We proudly service the Salt Lake City, Utah area.