When you buy your first rental property, you become a business owner.
And running a business requires a lot of time and effort to do it properly.
Many people think when they purchase an investment property, they can sit back and watch the money roll in.
But guess what?
It takes more than that.
If you want to be successful, the first thing you need to do is keep a close eye on your finances.
Managing the finances for your property investment business shouldn’t be an afterthought.
It should be a core part of your strategy.
It is important to plan ahead and always have money set aside for unexpected expenses that may pop up.
Try forecasting for six months and then adjust your plan if necessary.
Have a separate bank account
Like all businesses, you should try to keep your personal expenses separate from your business ones. It makes it much easier to organise come tax season. Open another account with your bank, or even a different bank, to ensure your finances are kept entirely separate.
Keep a record of all your expenses
This can include things like:
- Advertising to find a tenant
- Hiring a property manager.
You can create a simple spreadsheet for this or use an accounting software like Xero. Remember to keep all of your receipts too.
Manage your Income
The best way to collect rent is by automatic payment. The same amount on the same day of the week or month makes it easy to keep track of. You have a digital footprint of every dollar you receive and you know instantly if a payment is late. When you are in business, you are there to make money and owning rental properties is no different. You need to know what income you have received to the cent.
Hire an Accountant
While you may be able to handle your finances yourself, is it always a good idea to get an accountant to look over things too. They can deal with the taxes and deducible expenses. You may be able to claim things you never even thought of. Hiring an accountant is a good idea if you have multiple income streams.
How have you organised the finances for your property investment business? Contact True Property Management to find out how we can help you manage your finances better.