How do you track whether your rental properties are performing the way you expected?

Question

When I bought my properties I calculated the expected rent, mortgage, expenses, projected cash flow. But now that I've owned them for a while I realize I have no clean way to look back and see if reality actually matched those projections.  Like I know roughly what comes in and goes out each month, but I don't have a clear picture of my actual cap rate, cash-on-cash return, equity or whether my cash flow is actually what I thought it would be. I end up digging through bank statements and spreadsheets every time I want to answer a basic question.  Curious how other investors handle this. Do you use software, spreadsheets, just gut feel? Is tracking this stuff even something you bother with or do you just focus on whether rent covers the mortgage?

Jason Wray · Answer

As a Banker I typically run the numbers in advance for all of my clients on Market price, Current and Proposed Rents, ARV potential, Equtiy position and what month or timeframe to refinance to pull cash out  for the next BRRR.  Then the investor chooses a rent type LTR, STR, MTR Co-Living and we set it up under a PM or help them set it up and create their own property management company.  You should always know your recouperation period on when you recoup the down payment, closing costs, and any renovations to break even prior to profits.

You can use Quickbooks, Excel, create a spreadsheet or use other software but alwasy track your Gross, Net, and have the numbers ready for your Schedule E or CPA at the end of the year.  Having an investment that only "debt services" itsel (pays the mortgage) is okay but its a long term 20-25 year investment.  Thats is why buying and running the numbers are the most crucial steps to ensure cash flow above PITI and ARV potential.

Maurizio Pisciotta · Answer

Hi Sahil, tracking rental properties properly can get messy unless you have an accountant (which can get expensive).

I used spreadsheets for a while, but eventually switched to Navikoo (navikoo.com). I mainly use it to track my properties, but it also has things like a deal pipeline and a few other tools I use when analyzing properties.

They have a free version as well. I personally ended up subscribing because I use it pretty regularly.

Ashish Acharya · Answer

Sahil, I’d definitely track it. Once you own more than one property, “rent covers the mortgage” is not enough to tell you whether the investment is actually performing well.

I’d keep a simple monthly or quarterly scorecard for each property with the same numbers every time: gross rent collected, vacancy, repairs, CapEx, taxes, insurance, management, debt service, actual cash flow, and reserves. Then compare those numbers against what you originally projected when you bought the property.

The most useful part is usually the variance. If you projected $400/month in cash flow but the property is averaging $150, you want to know why. Maybe repairs are higher than expected, insurance increased, vacancy is worse, or the rent assumption was simply too optimistic.

I’d also track return on equity as the property appreciates and the loan pays down. A property may still be producing positive cash flow but become a weak use of capital if you have a large amount of equity tied up for a relatively small return.

From the tax side, good property-level tracking helps too. Repairs, capital improvements, depreciation, cost segregation, and suspended losses all become much easier to manage when each property has clean records rather than everything being reconstructed at tax time.

You don’t need anything overly complicated. A system you update consistently is much more useful than a perfect dashboard you stop using after three months.

Feel free to DM me, I’d be happy to send over a portfolio-management tool that might help.

JD Martin · Answer

Mostly I look at my bank account and see how good it feels 😛

Drew Sygit · Answer

I have  a template I've used for years that I run for each purchase offer and save them.

So, I can pull them up to track projected vs actual:)

Sahil Faran · Answer

@Jason Wray yeah that's what I thought. I just don't want to manually do all of that on a spreadsheet for every property I own. I'm building something to automate it. That way as my portfolio grows I don't have to actively manage the numbers, I can get my answers right away. I'm sure it'll be time efficient as well

Aaron Zimmerman · Answer

You can't use gut feel. That will not fly. Accounting is pretty objective. I use a spreadsheet for my properties as I only have two. I usually recommend qbo or stessa once you're past a few properties.

feel free to pm me if you'd like my spreadsheet!

Mark Updegraff · Answer

I absolutely think it’s worth tracking.

Your original underwriting should become the baseline you compare the property against, not a spreadsheet you close after buying it.

I’d periodically compare actual collections, vacancy, taxes, insurance, maintenance, management, CapEx and debt service against what you originally assumed. Then recalculate the things you actually care about — cash flow, DSCR, cash-on-cash return and equity.

The variances are often more useful than the return itself.

If insurance is 30% over budget or maintenance is consistently double what you modeled, that tells you something about the property and improves how you underwrite the next one.

“Rent covers the mortgage” is a pretty low bar for determining whether an investment is performing.

How do you track whether your rental properties are performing the way you expected?

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