When it comes to property management and bookkeeping, many independent landlords and property managers still rely on rental property spreadsheets. Undoubtedly, Excel is a powerful and flexible tool that can be tailored to match the requirements of individual landlords or property managers. It’s also widely available and familiar to many people, which is why it is often a go-to solution for those who manage a small number of properties or who are just starting the real estate business.
However, as technology improves and property management software becomes more advanced and accessible, more landlords and property managers are switching from Excel to these software solutions. Let’s take a look at why landlords should use property management software instead of Excel for rental property accounting.
Can I Use a Rental Property Excel Spreadsheet for Property Management?
Yes, you can use a rental property Excel spreadsheet to manage your property. Excel is a great tool to track and manage your rental property income, expenditures, taxes, as well as tenant details. However, keep in mind that it may not be as comprehensive as a dedicated property management platform.
Rental Property Spreadsheets vs Property Management Software: Which is Better for Rental Property Accounting?
Deciding between rental property spreadsheets and property management software depends on numerous factors such as the number of rental properties you manage, your budget, and your personal preference. Let’s take a look at the benefits of each so you can make a well-informed decision.
Benefits of Property Spreadsheets for Rental Property Accounting
Here are some of the benefits of using rental property spreadsheets:
1. Tracking rental income and expenses
You can use Excel to keep an eye on rent payments, maintenance overheads, and other costs associated with managing your rental property.
2. Tenant information management
Excel also helps you to keep track of tenant information, such as lease agreements, contact details, move-in and move-out dates, and security deposits.
3. Maintenance scheduling
You can create a maintenance schedule for your rental property to keep track of when routine maintenance tasks are needed.
4. Budgeting and forecasting
You can create budgets and forecasts for your rental property to see how your income and expenses are likely to change over time.
5. Convenient data visualization
You can easily visualize data using basic charts and graphs. Excel offers a wide range of chart types, such as bar charts, line charts, and pie charts. It also allows for easy manipulation of chart elements such as axes, labels, and titles.
Benefits of Property Management Software for Rental Property Accounting
Here are some of the benefits of using property management software instead of rental property spreadsheets:
1. More organized records
A property management tool provides the convenience of having all your property-related information in one centralized location. By allowing tenants to pay rent electronically, the tool automatically records rent payments, eliminating the need for landlords to manually input or classify these transactions
2. Simplified expense tracking
Property management tools come equipped with pre-set expense categories that apply to rental property investment. As a result, managing your income and expense data in a way that aligns with tax preparation requirements becomes a hassle-free task.
3. Better reporting
Using a property management tool, you can effortlessly generate customized reports. These reports enable landlords to stay informed about the financial well-being of their rental properties.
4. Tracking and storing receipts
You can attach receipts as scanned images or photographs and even assign them to a specific property or repair job. Many property management tools offer the ability to link invoices and receipts directly to the maintenance management feature. They provide a complete record of the repair process, including communication details and unit information.
5. Rental property accounting for an individual unit’s performance
Property management software links your rental units and tenants by storing property and tenant data in a single location. This allows for quick and easy access to unit and occupant performance information. Moreover, some property management tools allow you to filter transactions by active, complete, in transit, or incomplete.
6. Sync with bank accounts
Advanced property management tools automatically synchronize transactions from your bank accounts. This streamlines the process of reconciling income and expenses for each property. Linking property information and bank accounts provides a real-time view of your portfolio’s performance, offering valuable insights to facilitate informed decision-making.
7. Comprehensive property management
A dedicated rental property tool also offers several other features that streamline property management such as rent collection, advertising, state-specific leases, and electronic signatures that can’t be done in Excel.
Best Property Management Software for Accounting and Bookkeeping
We’ve listed out some of the best property management tools that you can choose to manage your rental properties.
Stessa is a cloud-based property management software that enables landlords to track income and expenses, generate reports, and streamline the accounting process. The platform also offers features for rental property analysis, tenant communication, and maintenance management. Stessa offers smart money management, automated income and expense tracking, personalized reporting, real-time dashboards, and more. It imports, categorizes, and indexes all your expenses seamlessly.
TurboTenant is a cloud-based property management tool that offers robust features such as online rent collection, tenant screening, applications, property listings, and lease generation. Renters can submit rental applications, pay rent online, and communicate with landlords through the platform. You can securely sync transactions from your bank account to record expenses quickly and accurately. Moreover, rent payments automatically book as revenue on the right property.
RentRedi is a property management software designed for small landlords and property managers. It offers features such as online rent collection, maintenance requests, lease agreements, tenant screening, and financial reports. RentRedi partners with REI Hub to provide accounting designed specifically for real estate investors and rental property owners. Landlords can easily pull a Schedule E report for each property with no additional configuration. You can even prorate overhead expenses across your entire portfolio and track your fixed assets, capital expenses, and accumulated depreciation.
4. Rentec Direct
Rentec Direct is a cloud-based property management tool that offers features such as tenant and lease tracking, online rent payments, maintenance requests, tenant screening, and accounting tools. It also offers a tenant portal and owner portal for easy communication and access to important information. Rentec Direct features full general ledger accounting for every property, renter, owner, and bank account. Therefore, bills and fees can be automatically generated and charged to tenants. Moreover, recurring transactions can be sent to owners automatically.
The Ultimate Landlord Toolkit
Finding the best products, software, and services for your rental properties can be daunting. That’s why we have personally selected the most essential tools for landlords wanting to make their property management processes run smoothly. We’ve searched, compared, and filled our toolkit with what we believe to be the best tool available for virtually every task a landlord is presented with. Pick Your Tools >>
Frequently Asked Questions
Can I Use a Free Rental Property Spreadsheet Template?
Yes, landlords can use a free rental property spreadsheet template to manage their rental properties. Many free templates are available online and can help landlords track income and expenses, create monthly cash flow statements, and calculate important metrics such as net operating income and cap rate. Although free spreadsheet templates can be beneficial, they may not have all the features and capabilities of dedicated property management tools. Moreover, they may need more manual data entry and may not be as efficient or user-friendly as a software tool.
Will Property Management Software Integrate with My Rental Property Excel Spreadsheet?
Many property management tools allow you to import data from your rental property Excel spreadsheet. Likewise, you can export any ledger, report, or dataset from the tool and import it into Excel. You can then sort, arrange, and create pie charts and graphs in Excel to visually represent your datasets.
How Do I Keep Track of Rental Property Expenses?
To keep track of rental property expenses, landlords can follow these steps:
- Collect and organize all receipts and invoices related to the property, including expenses such as property taxes, insurance, repairs, and maintenance.
- Categorize your expenses into relevant categories, such as repairs, maintenance, utilities, and property management fees.
- Keep a spreadsheet or use a property management software tool to record all expenses and payments, including the date, amount, category, and method of payment.
- Reconcile your bank and credit card statements regularly to ensure that you have accurately recorded all expenses.
- Use reports generated by your property management software or spreadsheet to analyze your expenses and identify areas where you can cut costs or make improvements.
How Do Landlords Keep Their Finances Organized?
Here are some of the ways landlords can keep their finances organized:
- Have separate bank accounts and credit cards for your personal and rental finances.
- Consider using accounting software specifically designed for rental property management.
- Accurately record all rental income and expenses.
- Keep receipts and invoices related to rental property expenses.
- Set a budget for your rental property expenses and stick to it to avoid overspending and to ensure you have enough funds to cover unforeseen expenses.
- Reconcile your bank accounts and credit card statements regularly to ensure all transactions are accurate and accounted for.
- Consult with a professional accountant or tax advisor to ensure you are maximizing your deductions and staying compliant with tax laws.
Landlord Gurus Takeaway: Rental Property Spreadsheets vs Property Management Software
Rental property spreadsheets can be useful for landlords with a small number of rental units who prefer a low-tech, budget-friendly option. Spreadsheets allow landlords to track income and expenses, calculate cash flow, and generate basic reports. However, spreadsheets can be time-consuming, prone to mistakes, and lack advanced features like tenant communication, maintenance management, and bank account integration.
Alternatively, property management software is designed to handle the entire rental property management process, including accounting. Property management software automates many tasks, such as rent collection, expense tracking, and report generation, saving landlords’ time and reducing the potential for errors. Additionally, property management software provides advanced features such as bank account integration, maintenance management, and tenant communication tools, making it a more comprehensive solution for rental property accounting.
- Asset management and accounting software for real estate investors, including smart money management, automated income and expense tracking, personalized reporting and more.
- Strength: Accounting and Financial Tracking
- Landlord software that simplifies how you self-manage your rental business
- Rent payments from TurboTenant automatically book as revenue on the right property
- Securely sync transactions from your bank account to record expenses quickly and accurately – with no manual entry
- Strength: Complete Solution
- RentRedi is an all-inclusive landlord-tenant app. Manage vacancies, screening, and rent collection from wherever you are, on any device.
- Strength: Complete Solution
- Designed to address the needs of DIY landlords as well as property management companies, Rentec Direct includes all the tools necessary to manage and rent your properties
- Strength: Complete Solution
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