I am a new real estate investor that just closed on my first single family house two days ago. I am trying to get everything in order before I start renting it out.
That being said, should I use an excel sheet to track my income and expenses or is there a better way or better software?
I want to keep my expenses as low as possible because this is my first property, therefore I need any software I use to be free or very low cost. I have heard of Stessa but have not looked into it yet..
Any help or advice would be greatly appreciated! Thanks!
I would keep it simple to start with.
I have multiple properties and track this in Excel. It is very powerful and highly configure. I use this to easily have the data to give to my CPA.
You can likely Google a good Excel template that you can use to customize as time goes on.
I keep tenant info, AC filter sizes, trash pickup days, Magistrate info for potential evictions, Section login info in addition to the normal income and expense info. I have a tab for each property and a summary tab that collects all the data from the individual tabs. I can easily track rent as it comes in and know if I need to enforce a late fee.
It works great for me!
I have three properties (working on 4th) and I use Stessa (which is free). Imports my transactions to save time; stores all of my documents (closing, insurance, leases - whatever you want really). It is web based but does have an app. They are adding new features all the time.
Excel is fine but there are free systems that will make it even better. Do a search of "property management software" in the forums and read upon Cozy.co or Tenantcloud or RentTec. There are other examples. These systems are free for a certain number of units (I think 75 for TenantCloud) that allow you to market your rentals, screen applications, keep tenants and leases straight, auto email reminders, track maintenance, and more. For a very cheap fee, you can even accept online payments.
@Tyler Eastman I used an excel spreadsheet to track income and expenses when I first started investing in rental properties. I customized it over time and it worked fine. When I got to 4 properties I switched to QuickBooks (the software, not the app with monthly fee). It cost me $200 but has saved me a ton of time keeping the books and providing my CPA all of the info he needs to do taxes. I can also produce financial reports needed for loan applications, etc. at the click of a mouse. I know there are other less expensive options and some apps are free, but I’m old school and prefer to keep my financials on my computer vs the cloud (with backup of course!). Hope this helps.
A spreadsheet should suffice for one property (unless you are planning to scale up quickly).
Once you get to 3-4 properties, that’s when software starts to become highly useful.
@Tyler Eastman the above recommendations are spot on. One thing I want to ad is you need a consistent routine for storing your receipts and also make notes as to why that transaction was a business purpose. Do not assume all expenses are seen as business purpose, get it straight with your CPA as to what write off.
Spend about $5 on an a Iphone-app (like Turboscan) that can scan to PDF, pay apple for the Cloud (or the Turboscan app will not be real reliable when it comes time to storing or emailing your images ) I been audited 2 of the last 4 years and the only thing they ever got me on was missing or losing receipts
@Tyler Eastman I've been using Stessa for about a year and really like it!