As an owner, do you or your property manager know your numbers?
Accounting is one of the hallmarks of excellent property management and the Achilles heel for many owners with archaic systems in place.
Whenever a new client comes into our office or emails documents to us, we can get a gut feeling about how organized they are in their rental business. When we ask for a rent ledger, many housing providers and their agents do not have proper accounting. They produce handwritten notes or an Excel spreadsheet missing the information we need to get a snapshot of the rental relationship.
This primitive system of scribbling numbers or using clunky spreadsheets may work when the tenant is religiously paying rent on time and there is no acrimony in the rental relationship but when clients come to us, there is usually a problem or challenge to overcome and this is when numbers matter.
Having a modernized accounting system is critical when proceeding with nonpayment of rent cases, when raising rents, and for tax purposes. It also gives you peace of mind knowing exactly what money is coming in and what money is going out, with recurring expenses such as insurance, mortgage payments, HOA dues, and taxes being paid in a timely fashion.
For those of you still using 1950s-era accounting, now is the time to look into software that brings your rental business into 2024, and we are happy to have that dialogue with you.
Are you looking to put your income property on autopilot? It may make sense to talk to a property management company.
We know of many rental property owners who have reached a point in life when they want to be on coast and stop playing landlord. Maybe they want to travel or move closer to the kids. Sadly, California’s regulatory regime may be too maddening for some fed-up owners to deal with and want to invest their money elsewhere. Perhaps the rental property was inherited and the beneficiaries do not want to get bogged down in all of the tasks, responsibilities, and liabilities of renting out the property.
Whatever the motivation, reaching out to a property management company may be economically prudent. Any property management service worth its salt will have the apparatus in place for owners to have monthly reports detailing all income, repairs, and expenses, along with year-end statements and the ability to access custom reports if the need arises.
One of several questions to ask a property manager is whether their accounting system is internal or cloud-based. We have become acclimated to Appfolio but there are Yardi and several other technology providers who can accomplish the goal of streamlining an owner’s rental business and giving owners an easily digestible, 360-degree view of numbers at their fingertips.
The selection of a property manager to protect and optimize your investment is a weighty decision that should be considered carefully. In a recent webinar, attorney Daniel Bornstein discussed several considerations when vetting these companies.