Whether you own one property or multiple communities, property management is a juggling act between the paperwork, vendors, fielding renter questions, and the finances that determine the overall running of your properties.
Financial issues often rank as some of the more challenging for property managers, whether it is collecting rent, planning for capital expenditures, or handling the payment to vendors such as a landscape crew, plumbers, or electricians.
Thankfully there are some tips to the trade for new property managers to assist with the smooth running and financial management of your properties.
Budget for Year-Round Expenses
While it may be easy to anticipate that your property will need a fall or spring clean-up from the landscaping vendor, it may not be as obvious to determine your budget for repairs and unit maintenance.
Tracking past years’ repairs and maintenance can be a huge help in budgeting your year-round expenses. Talking to other property managers can also help you anticipate expenses that happen seasonally. For instance, frozen pipes in the winter, clogged gutters in the fall, and heating/cooling issues all year long.
Anticipate Capital Expenditures
Capital expenditures, also referred to as CapEx, are the improvements to a property that increases its value such as updating the electrical, replacing the roof, upgrading appliances, overhauling the floors, and the list can go on and on.
Capital expenditures tend to be the most costly and need to be budgeted for in the years leading up to the improvements. Savvy property managers know to plan well in advance for these CapEx improvements so they will be financially ready to make the investment. Budgeting and saving for these expenses is a key part of the accounting of rent and other finances throughout the year.
Go Digital
Keeping track of finances can be a time-consuming process. We suggest using software designed for property managers that can help streamline your paperwork as well as allow you to budget for regular repairs and capital expenditures.
Accounting software for rental properties allows you to record daily bookkeeping items, track receipts, create reports, and prepare for tax season in minutes instead of hours (or days). Here is a quick list of some of the more popular software and applications that can help you stay organized and save time when it comes to property management finances.
It isn’t always possible to hire a professional to take care of your books and balance the inflow and outflow of money, but in many cases, that person can help you balance the books, save for larger expenses, and plan for the future of your property as their primary job.