Overseeing maintenance requests, screening rental tenants, and submitting a lease agreement that’s enough stress to keep anyone in the land of renting a place.
But the most challenging and time consuming aspects of owning and managing a rental property can be the money part keeping track of income, grouping expenses, and monitoring taxes.
For a good few years now, many rental property owners have been using an over-the-hill combination of Excel spreadsheets, shoeboxes full of receipts, and their best software for rental property accounting.
It’s not just tedious, it’s all too risky.
Now, thanks to the growth of the internet and the Internet of things, we now have a better option: rental property accounting software.
The right platform can make all of your financial chaos clear, helping you save time, money, and some stress.
The Pitfalls of Manual Financial Management
Before you dive into the software solutions, make sure you understand what you’re switching from.
Running your rental finances yourself is a recipe for error and oversight.
Using a spreadsheet is better than nothing, but again it is static and easy for human error to occur.
A single misshapen decimal point can destroy your entire profit and loss.
Additionally, merging your personal and business expansion is a common issue and will make tax time miserable for both of your parties, as well as creating holes in your legal protections.
You want privacy for all of your business transactions and need a clear audit trail to all of your transactions.
That’s nearly impossible with a disparate system.
The right software will act as a single point of truth for your business finances.
That piece of data does not have to be reconciled to make the whole process a chaotic mess.
What to Look For in a Top Tier Platform
Seamless rent collection is a must-have; look for platforms that offer online portals for tenants to pay via ACH or credit card, automating your most important revenue stream.
Equally important is expense tracking with receipt capture, allowing you to snap a picture of a receipt with your phone and have it automatically categorized.
You also need robust reporting capabilities, generating profit and loss statements, Schedule E summaries, and cash flow analyses at the click of a button.
Finally, integration with your bank accounts for automatic transaction import is a non-negotiable feature that saves countless hours of manual data entry.
A Contender Built Exclusively for Landlords
A standout example of a modern living, purpose-built solution is.
This platform has quickly gained traction by focusing exclusively on the needs of buying property investors.
Baselane isn’t just an accounting tool; it’s a comprehensive financial ecosystem.
One of its most compelling features is the offering of dedicated banking services, including high-yield checking accounts for landlords.
This inherently solves the problem of commingling funds, as you can manage all your rental income and expenses through separate, integrated accounts.
Their accounting dashboard is intuitively designed, automatically categorizing transactions and providing a real-time view of your portfolio’s performance.
For landlords seeking an all-in-one solution that combines banking, accounting, and powerful analytics, presents a very strong and modern argument.
Automating the Lifeblood: Rent Colle
Getting rent check collection is one the primary frustrations for all landlords.
That’s why the best property accounting software takes the pain out of collecting money from tenants to make it easy and effortless! With automated rent collection, you can schedule your tenants to make payments on a recurring basis.
The renters get reminders automatically, and their payments are sent directly to your linked bank account.
Not only does this help improve your cash flow consistency but it also dramatically reduces your administrative burden on you.
Plus, you get a professional, paper trail of every action.
This will come in handy for litigating disputes or when preparing your taxes.
By automating this essential process, you remove your mental and time constraints and concentrate more on the strategic aspects of building your portfolio.
Gaining Financial Clarity with Powerful Reporting
It’s all data unless it’s converted into something useful.
The reporting capabilities of dedicated accounting software give you the biggest lift.
All you have to do is click a few buttons and produce a profit and loss for one property or your entire portfolio, over any customized date range.
You now have access to all the information you need in real time regarding your financial health.
This gives you information for everything from rent increases, maintenance budgets, and even potential new investments.
When it comes time to file taxes, the functionality even gets more important.
When it comes time to produce an instant report with all income (categorize all the expenses according to categories) with exact formatting for your Schedule E is worth the cost of the subscription alone.
Beyond Accounting: Integrated Property Management Features
Many of the best property accounting software for rental properties have actually become full property management suites.
While most of them are mainly focused on finance, they often have features that streamline other operations.
They may include tenant screening services integrated into the software so you can run credit and background checks without switching to multiple websites.
Some also include listing syndication tools so you can advertise your vacant units and even electronic lease signing tools.
While you may be just an owner or an individual landlord with a single or two properties, you may not need to use every bell and whistle available, but having these tools within the same ecosystem you use for accounting can produce an absolutely streamlined and smooth workflow as your business grows.
Making the Switch: A Step by Step Guide
New software can be intimidating.
But the short term benefits far outweigh any potential learning curve.
The first thing to do is get your software to work for you.
Most companies offer free trial versions of their software to get an idea of what it’s like.
Once you’ve got your chosen software to work with, just go ahead and input your property information.
The best software for rental property accounting needs to link up your business bank accounts and credit cards.
This will bring up your recent transactions in this area (they’ll allow you to categorize them). Just don’t expect a huge influx of historical data.
A common strategy is to have it updated at the beginning of a new quarter or fiscal year.
Set up your chart of accounts and have fun with the rent collection aspects to help you get your tenants to adjust to the new system.
Conclusion
Investing in rental property value accounting software specifically designed for your business will not only save you time, increase your scalability, and ensure that your business is secure and efficient, but it’ll also be a gift to you: time. Instant reporting will give you knowledge.
Additional protection is the best way to assure your business that your financial foundation is safe.
By moving away from older methods that are so cumbersome and error-prone, and investing in a centralized digital platform, you’re not just simplifying your finances, you’re building a more resilient, professional, and profitable rental property business.
The money you’ll save, if you set up a system like Baselane or another similar solution, pays for itself multiple times over in the decrease of stress, enhanced tax deductions, and a clearer understanding of what your investment accomplishes.
