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
Edited Jun 26 2010, 02:57