Apartment Profit and Loss Software/Excel Sheet

8 Replies

Hello All!

I'm currently under contract for a 45 unit apartment building in Central California. This has been a goal for mine for some time now and although I do have experience with rentals, my portfolio up until now is made up of SFR, duplex, triplex and fourplex. It has been easier to tract profits and losses for smaller units but I'm now looking for a more sophisticated process than mostly paper and pen.

Can anyone recommend a software program or excel sheet that helps me keep track of profit and losses for apartment buildings.  The property will be managed by a property manager and of course they will keep those data on their end but I would like one that I can use separately.  

Thanks,

Gustavo

@Gustavo Gonzalez   Normally, the property management company uses software that has owner access to all the reports you'll need.  Otherwise, you can use one of the same software systems which can import financial data from each property into your system to see the financial performances.  It sounds like you are building a nice portfolio and should keep the bigger picture in mind.  That said, Appfolio and Yardi are two of the bigger names in property management software.  Here is a page from a Google search I did that lists 10 systems you can evaluate: https://butterflymx.com/blog/m...

We've used Resman, Appfolio, and Yardi and each has differences that make your personal preferences important.

@Gustavo Gonzalez Personally I build my own excel spreadsheet if I want something like this. Since the PM will be giving you everything you will be able to just plug it in. And doing it this way you know all the formulas and how it works so you can make tweaks if you need to. Kinda along the lines of "you have to really know the material to teach it" this will force you to make sure you understand it.

@Gustavo Gonzalez if your property manager manages the property with the 45 units, he will likely enter all incomes and all expenses anyway. Your property manager should share that P&L report with you. Ideally as a excel report so that you can add additional expenses in case there are expenses your property manager doesn't track for you. If you have to key in all your income and expenses into your own tool, that you track separately that might be cumbersome. I would ask if your property manager to share the P&L (Income statement) in excel and not in PDF as they usually do.

Originally posted by @Gustavo Gonzalez :

Hello All!

I'm currently under contract for a 45 unit apartment building in Central California. This has been a goal for mine for some time now and although I do have experience with rentals, my portfolio up until now is made up of SFR, duplex, triplex and fourplex. It has been easier to tract profits and losses for smaller units but I'm now looking for a more sophisticated process than mostly paper and pen.

Can anyone recommend a software program or excel sheet that helps me keep track of profit and losses for apartment buildings.  The property will be managed by a property manager and of course they will keep those data on their end but I would like one that I can use separately.  

Thanks,

Gustavo

 Before you purchase the property we look at the potential profit as in the image below. After you own the property we do very simple recordkeeping that consists of money in, money out and the balance. Not much to it. Owning a 45-unit property with a management company at the helm is not my ideal situation since a building that size require an enormous amount of time to manage, to get to know the tenants, to get the tenants to understand how how the late rents will be handled and that is a huge undertaking to let the tenants know they have to pay the rent and how the late rents and eviction process will be handled and there are so many things that need to be organized and taken care of there is no management company on this planet that will spend the time necessary because the can't. Period! A management company will not and cannot do the equivalent to what an the property owner should do because it is not there property and you cannot pay them enough money.

You will inherit significant losses when you hire a management company and the management company could possibly put your investment into bankruptcy. I've seen it happen many times where management companies bankrupted large apartment buildings and if you go back and read my posts with my horror stories, the 25-unit apartment next door to my office was purchased by a dentist. The building was bringing in $48,000 per month. Three years after the dentist purchased the building I don't know the exact reasons why the building went into foreclosure, but I know for a fact that three of the large buildings the management company was managing went into foreclosure and were sold for about 70 cents on the dollar.

Actually, I am not trying to scare you, but you put yourself in a position where you will pay a significant price for having a management company and that will either dig deep into your profits, or bankrupt you. I've seen it many many times and if you purchase 45 units in the central valley I am guessing that you did not get a great deal because the rents are probably to low to pay the high costs to paint, clean and make repairs to apartment when tenant move.

Below is the very minimum I would expect a 45-unit building to achieve for profits when the property is managed by someone who is experience AND HAD THE MASSIVE AMOUNT OF TIME and not a hokey management company that tells you how huge and great they are because the more number of clients and units they have the less time they have to properly manage your property.

If you can increase your rents the first year you will make a total profit of $540,000 your first year and raising rents every year for 5 years will give you a profit of $2,462,400 and this is what makes owning 45 units so exciting, powerful and profitable, but even a decent management company can bankrupt you because a 45-unit building requires a massive amount of maintenance. We own several apartment buildings and we gutted every apartment in every building to the 2 x 4's and spent no less than $25,000 remodeling every unit, but there is still not one day that goes buy where a garbage disposer breaks, or a water heater leaks, or a faucet leaks, or a bathtub faucet drips and we have at least one repair at every building every day.

One thing we did was we removed every garbage disposer, every dishwasher and every swimming pool and no tenants ever complained. We used to get an average of 2 garbage disposers that clogged every week and one week we had 5 garbage disposers that had problems. So, we removed all of them, never had one complaint and we save a lot of money not having to repair disposer and install new dishwashers.

It is great that you purchased 45 units. Now, your goal has to be to be very hands-on even if you hire a management company. One more thing we never do is we never ever have an on-site manager because most on-site manager are a-hoes who know absolutely nothing about real world management for apartment units. Once you have an on-site manager you are usually stuck with some idiot who is often worse than the tenants. The very first thing we do is terminate the on-site managers and we do not let them become tenants. We get rid of them and force them to move. Then, we give one tenant a set of keys to all the apartments and we show that tenant where the water main shut-off valve is and we pay that tenant $100 to $150 per month to be the on-side manager as far as having someone on the property who can turn off the water and give tenants a temporary key to get into their rental unit. Then, we earn an extra (in your case) approximately $10,000 every years and in 10 years you earn an additional $120,000 and that is not a small amount of money