Next to unclogging a clogged toilet, tracking your expenditures as a rental property owner in the Sarasota area might be one of the most unglamorous parts of the job. While it lacks pizzazz, it's actually one of the more crucial elements of successful long-term and short-term rental property ownership that Sarasota property management helps keep track of for you.
While it may feel like there's always something more important to do than chase down receipts if you operate your properties alone, the gravity of poor bookkeeping skills quickly becomes apparent at tax time. An IRS audit or unnecessary stress during a loan application is the last thing you need when you're already trying to keep up with the demands of rental property maintenance and rent collection.
- Keeping great records doesn't just boost your peace of mind when filing tax returns; it also ensures you don't overpay more than you need to.
- Excellent bookkeeping also gives you an easily accessed record of every on-time payment you've ever made to a vendor or contractor.
- Plus, keeping track of your finances is another way to watch out for renter payments as well. If a renter says they made a payment, you'll be able to look up exactly when it was made.
What Paperwork Do You Need to Keep Track of as an Investor?
Limiting your stress during a potential 'surprise audit' is great—but it only helps if you know which documents to keep track of.
That said, what kind of paperwork is worth adding to the record when you're a rental property owner in the Sarasota rental market? Here are some of the most common documents we suggest you track as a Sarasota property management company.
You should be keeping copies of both your past and present leases. This allows you to reflect on what didn't work in the past when addressing issues with your current lease agreements. Plus, if something comes up for debate, you have proof of whatever you actually have written down if you need to use it for evidence.
With that in mind, if you've ever found yourself in a courtroom, you should also have copies of any court appearances, eviction paperwork, inspection reports, or fines you've levied in the past.
You should also keep track of any communication you've had with your renters at any point in the past. Typically, when you work with property management services, they'll keep track of this for you using online portals. However, when you're on your own, keeping track of conversations is crucial. This makes email a very powerful tool for investors to use consistently.
Aside from cataloging paperwork that's important for working with your renters, there are some additional documents you'll want to have a record of as an investor.
- Depending on what type of business entity you chose to form as a property owner, you should have specific records that will need to be stored to keep your business on the level.
- If you have insurance on your properties as an investor (and you should), you'll want to keep track of your policies just like you do with your renters' insurance.
- You should always have copies of any of your mortgage or loan paperwork, and backups concerning your financial profile (like your credit history).
- Physical (and digital) copies of property deeds should be kept in a secure location, along with taxes filed across previous years.
You never know when you'll need access to these kinds of crucial documents, so having them on hand is essential if you want to successfully run a rental business.
If you haven't been keeping track of expenses that you can deduct from your taxes, you're missing out on some serious savings! Be sure to keep track of details like:
- The cost of advertising your Sarasota rental homes
- The cost of rental property maintenance and repairs
- The cost of your office (if you have one) and any supplies you use
- Any Sarasota property management services you pay for (yes, we're a deduction!)
- Any legal fees you've paid to your attorney or lawyer (these count as professional services).
What's the Easiest Way to Keep Track of Your Expenses?
You can certainly keep housing all your information as a paper copy, but going digital will make it easier than ever for you to keep track of crucial documents. Plus, it'll make it easy for you as a property investor to integrate with mobile apps designed for the job.
That said, an app for tracking your rental expenses still isn't the best way to go about it. You should be working with Sarasota property management services! Most of those management apps aren't cheap—so why settle for one service when you could have it all with a full-service property management company?
The right property manager handles so much more than fiscal paperwork. Here at Gulf Coast Property Management, we also help investors tackle rental property maintenance, timely rent collection, inspections, marketing and advertising, and so much more. There's no reason to spend more for less service!
What else can property management do for you? Learn more with our free resources, or send us a message any time!