Tuesday Tip: Ditch the Spreadsheets
This week's Tuesday Tip is for anyone still doing their bookkeeping on a Google Sheet or Excel file. Bookkeeping is an essential function to any real estate investor's business, the reason being is that when done right they can save you money on taxes and increase your profitability.
Because this is such a high impact function, storing all of this data in a spreadsheet is too inefficient. It is time consuming, usually is missing some data, and lacks reporting power. Using software like Quickbooks Online, Xero, Stessa (which is free), or a professional bookkeeper who provides these applications for you, you'll be able to pull much more value out of your financial data.
In fact, last month at my local meetup an investor in large multifamily properties spoke about how a good trailing 12 months Profit & Loss statement, Rent Roll, and Balance Sheet with CapEx details helped boost the value of his property when he went to sell.
The best way to achieve your marketing goals is to understand the data behind what is working and what is not. When you wear a blue shirt do you sell more than when you wear red? What common questions do your clients ask? Just like in marketing, to achieve our financial goals we need to understand the data... aka our books.
A couple weeks ago we talked about "being like the best" and I can assure you that the best investors and their advisors are using bookkeeping data to make meaningful decisions that will help achieve the investors goals.
- Investor
- Greer, SC
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Maybe.
I have an extremely detailed spreadsheet with lots of extra data. I can quickly sort and find and data I need by any category.
It makes it fast to get my accountant the data he needs at tax time.
I already have the software and don't have to pay extra.
I use Quicken for my personal finances, but love Excel for my RE empire.
One size doesn't fit all.
Great tip! The other added benefit to using property management software (rather than general accounting software like Xero or QB) is that you can take advantage of additional features like online rent collection, tenant screening, maintenance, etc. This, along with the ability to scan receipts, track income and expenses by property and generate reports is a game-changer!
Instead of using (and paying for) different programs, you can streamline your processes by using one software.
- Property Manager
- Royal Oak, MI
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@Matthew Cervoni depends on how big a portfolio is and how big they plan to grow it.
@John Underwood sounds like your excel skills are sharp! This is a general tip for people who want more reporting power from their bookkeeping but they don't have the excel knowledge you do. In my business we see clients who use accounting software saving the most on taxes and showing the best YoY results. It doesn't mean it is impossible, if you have the skills and the time.
@Jasmine Delves I'm certified in Xero and QB but as we start working with real estate investors exclusively, I'd be interested in a similar program so I can learn Landlord Studio. Does such a program exist for accountants who want to partner?
@Matthew Cervoni yes, there is a partner program for accountants!