Real Estate Beginner Bookkeeping

When investing in property, real estate bookkeeping isn’t going to be top of mind, but it’s an important part of owning and managing rental property. With good bookkeeping, you can identify opportunities to increase rental income, reduce expenses without affecting property value, track owner’s equity and easily get approved for future investments.

Hiring a good bookkeeper can help investors identify opportunities to maximize revenues - this is someone who can keep track of money moving in and out of the business on a day-to-day basis as well as recording and organizing expenses. At yearend, you’re able to give your CPA clean, prepared books and optimize tax deductions while not overpaying or underpaying in taxes.

Transactions that are a part of real estate bookkeeping:

  • Rent invoices sent to a tenant

  • Receipt of the monthly rent

  • Charging late fees to a tenant for unpaid rent

  • Posting the tenant security deposit to the balance sheet

  • Paying vendor invoices

  • Making the monthly mortgage payment

  • Apportioning monies to interest and principal loan balance

  • Paying property tax

  • Sending payments to the property Home Owners’ Association (HOA)

  • Reconciling monthly financial statements

  • Correctly classifying payments as deductible or capitalized expenses

  • Properly tracking accrued depreciation on the real estate balance sheet

  • Accurately reporting owner’s equity

Real estate taxes are very different from personal taxes. If you’re just just starting out, the first step is to get a business bank account NOW. If you don’t have a lot coming in and going out of your business yet, setting up a business bank account will at least let you see all of your rental expenses and income in one place. This will also help you get approved for your next property. You want income to be seen coming into your bank account. Financial reports, bank statements, etc. all help with getting approved for future properties.

Wherever you’re at in your real estate business journey, we can support you. Get a free estimate at www.harquinbookkeeping.com/estimate

Real EstateLindsey Sryockreal estate, bookkeeping, bookkeeping basics, taxes, investorComment