Salt Lake City, Utah has a thriving rental community with over half of its households on rent. The city rental abundance provides a decent income for landlords as the average rental income is $19,176.
However, managing this amount of money is more difficult than just depositing it in your bank. You need a rental property accounting protocol to ensure that you get a decent ROI.
Start by learning how to organize your accounting below.
Use Separate Bank Accounts
Proper organization begins with separating your bank accounts. You don't want to mix up personal expenses with rental ones. And if you have more than one rental, create a bank account for each one.
You can use this account to deposit rent checks and pay for each unit's expenses.
By keeping separate accounts, you gain specific insight into how each rental is performing. Plus, it is easier to track incoming and outgoing money for each rental unit.
Allocate Your Expenses
Leasing your property means creating a budget to keep your rental in good condition. You need to consider how much money will go toward maintaining your rental as well as other factors including the following:
- Marketing expenses to advertise your rental when vacant.
- Fixing or buying new appliances.
- Performing general maintenance requests.
- Cleaning rentals in between tenants.
Be sure to factor in routine monthly expenses and possible unexpected occurrences into your budget.
Compare Expenses to Income
Being a landlord doesn't guarantee you will gain a profit after rent collection. You have to know how much money is going into the property to understand how much rent to charge and how much to spend on upkeep.
Compare your costs to your income so that you aren't losing money in the long run.
You also want to consider your Salt Lake City location and the median rent there, which increased to $2,157 in 2021 for a 2-bedroom apartment. Keep up with these average rent trends to attract the most tenants and make a profit.
Develop a Record Keeping System
Keeping accurate records of your rental property is necessary to avoid mistakes in budgeting. It also serves as an archive in case you need to access past records.
Develop a filing system to keep digital and paper backups of lease agreements, copies of rent checks, utility bills, and maintenance expenses.
You also need to consider accounting software or a manual data entry bookkeeping method to record all transactions. If there ever is a disagreement or conflict involving a tenant, then you have the data to back yourself.
Outsource Your Accounting
Another great option for organizing your accounting is to hire a property management company to do it for you. They can be in charge of collecting rent, managing maintenance requests, and even handling property inspections.
These tasks are tracked and recorded in their database to secure your finances and offer reporting to help you understand where your money is coming and going.
Getting Started With Rental Property Accounting
It is never too late or too earlier to start managing your rental property accounting. Getting your paperwork, statements, and bills in order will help you save time and money.
Get started by contacting us today to speak with a representative.