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Forums » Starting Out » Start Up Property Management/Beginner Landlord

Start Up Property Management/Beginner Landlord

8 posts by 6 users

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Well I close in a few weeks on my first rental. It is a duplex with a current tenant and I will occupy the other side (owner occupy). I have tons of books all of which I have read cover to cover, however I would like some been in the trenches feed back from the members of the forum. I have a few questions but please feel free to give any other tips and suggestions in reguards to landlording and property management. sorry if any of my questions are no brainers, I am a super newbie :oops:

1). In order to start off on the right foot, should I open a checking account separate from my personal checking account? And should it be a business checking account?

2) I can’t afford an accountant right now and have very little to no bookkeeping experience, so I was thinking about purchasing Dr. Landlord Real Estate Software http://www.dr-landlord.com/gold-cd-rom.htm to help me run the property. Does anyone suggest otherwise?

Thank you



· Loveland, CO


Well I've always operated on the theory that SPENDING any money reduces my PROFITS, so I'd be pretty careful before BUYING anything, even about spending the extra money, or keeping an extra balance in a seperate checking account.

I have no idea what the software costs, but this site offers as much or more and it's FREE! So definitely hold off on that. I had 8 rentals before I had a seperate checking account, and the only reason I did it then was because my 9th, 10th, and 11th ppties I bought with other parties and it made the check writing "cleaner", not easier, just "cleaner".

First thing I would do though is review my LEASE that applies to my new NEXT DOOR NEIGHBOR. Is all in order? Are all payments current? Review the amount of his SECURITY DEPOSIT and make sure you receive an OFFSETTING CREDIT at closing!

Find out from your local courthouse (at whatever levels does the function) what steps and procedures you need to follow to evict in the case of NON-COMPLIANCE or NON-PAYMENT. Both are legitimate reasons for eviction.

Other than that, keep you wallet in your pocket and just post your questions here.

all cash




Awesome, thank you so much I will use your advice. In regards to my current tenant other than reviewing the docs from the previous owner should I conduct my own criminal & credit check and call the tenants references? The tenant signed a year lease in Aug '05. I saw some web sites where I can run various checks on tenants, can anyone recommend a particular site.

Originally posted by "all cash":
Well I've always operated on the theory that SPENDING any money reduces my PROFITS, so I'd be pretty careful before BUYING anything, even about spending the extra money, or keeping an extra balance in a seperate checking account.

I have no idea what the software costs, but this site offers as much or more and it's FREE! So definitely hold off on that. I had 8 rentals before I had a seperate checking account, and the only reason I did it then was because my 9th, 10th, and 11th ppties I bought with other parties and it made the check writing "cleaner", not easier, just "cleaner".

First thing I would do though is review my LEASE that applies to my new NEXT DOOR NEIGHBOR. Is all in order? Are all payments current? Review the amount of his SECURITY DEPOSIT and make sure you receive an OFFSETTING CREDIT at closing!

Find out from your local courthouse (at whatever levels does the function) what steps and procedures you need to follow to evict in the case of NON-COMPLIANCE or NON-PAYMENT. Both are legitimate reasons for eviction.

Other than that, keep you wallet in your pocket and just post your questions here.

all cash



· Loveland, CO


If everything on the documents seems OK, I'd rely more on my own EYES, EARS, AND NOSE to indicate any problems. The guy lives RIGHT NEXT DOOR! If anything is amiss you'll detect something soon enough.

On duplexes; "the good news is that your tenant is right next door, the bad news is that your tenant is right next door." quote from all cash's brother, also a very experienced investor!

all cash




I am still considering purchasing PM software.

This is my first house/rental, and I have no bookkeeping experience. There is so much information I need to keep track of, from tenant info, to expenses, tax info, rents and more. I would like to streamline and keep organized as much as possible and the PM software seems to offer that. Most seem to be user friendly and get you up and running quickly.

I have MS Office Suite and use excel, word and access at work everyday, but I do not know how to use it to run my business.

I want to avoid costly mistakes. I want to be accurate, organized and as prepared as possible.

In regards to bookkeeping and such does anyone have any ideas? Or can recommend a complete, organized, user friendly inexpensive way to manage my rental (software, freeware or other)? Or does anyone have a spreadsheet or database they would like to share?



Real Estate Consultant · Somerville, Massachusetts


Tasigurl,

I'd add in a few things. First, spending a little money to get set up right can often greatly reduce the amount of time you have to spend on your properties. If a $40 piece of software saves you 1 hour over your lifetime, it's probably paid for itself. If it saves an hour a month, it's definitely worth it.

Second, I disagree with all cash's thoughts on the separate checking account. While it's great to watch margins and not to overspend where unnecessary, you will find it much more difficult to survive an audit if you commingle all your personal funds with your rental property expenses. It will also make it considerably more difficult for you to understand exactly how much money you are spending on the property, when it's being spent, and what owning the property is doing to your bottom line cash flows. In addition, it will probably make it much more complicated during tax time. This will likely either result in you paying an accountant $1,000+ to do your taxes each year (large, unnecessary expense) or spending many hours reassembling your records to do your own taxes. In addition, you are MUCH more likely to overlook potential write-offs without keeping your finances separate. My recommendations:

-Get a separate checking account for each property. They're free and if you keep them all with the same bank, online banking should keep it relatively simple.

-Deposit all rent received directly into the specific property's account.

-Have your mortgage(s) for each property drawn directly from this new checking account (instead of from your personal account).

-Use the debit card for a property account to buy all your repair materials, painting supplies, gas when you drive to visit the property, credit checks for the tenants, etc. All you income and expenses will be recorded in a single, simple place.

This will justify to the IRS that you are running your rental properties like a business, are reporting your deductions properly, and are not trying to hide anything. It will also provide you clarity on what your money is doing. Without this knowledge, all your "ROI" calculations are pretty useless since you're essentially sketching out a budget but then never checking to see if your spending looks anything like what you budgeted.

In terms of what software is out there to help...It is difficult because many of them are complex and expensive, I would recommend trying one with a free trial period that allows you full use of the product without having to yet fully commit or spend. Without being self-serving too much, I think I can help you out on that front or at least point you in the right direction--please PM me and we'll talk on the side.

Credit checks will range between $5-$35 each and you may also want to consider doing criminal checks and landlord registry checks. There are hundreds of vendors online. RentGrow, Equifax, AMS Ties, Mr.Landlord, SafeRent are all big. Or find a software package that does the rent collection, notifications, invoicing, maintenance requests, AND credit checks online for you!!! :D

Jeff



Residential Real Estate Agent · Billerica, Massachusetts


One thing you could do to help with bookkeeping and such is to take an accounting class at your local community college. It's pretty cheap and will give u tons of info. Plus you could set the classes around your schedule for nightime,weekends, or online.



Landlord · Seattle, Washington


Whitney this is a very old thread. I do agree that there are a number of ways to learn bookkeeping as well as a number of relatively cheap ways to track your income and expenses especially when you are just starting out.

I agree with Jeff that a business should set up a separate bank account. Co-mingling business and personal income and expenses is a bad idea. It only takes one audit to make one wish that they had kept their business and personal dealing separated.

Even if you choose not to become a business and investments activity like this should be kept separate. It makes it far easier to prove that all your rental expenses are truly investment expenses.





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