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Nearly 65% of Virginia Beach homes are owner-occupied. This puts the heat on local renters and can help keep vacancy rates low, but it doesn't take care of all your problems as a Virginia Beach landlord.
Today, we're looking at different methods of accounting for property management including:
- Financial reporting
- Expense and income tracking
- Budgeting and forecasting
- Use of accounting software
- Tax compliance
Read on for a breakdown of each of these five real estate accounting approaches.
1. Basic Financial Reporting
Basic financial reporting involves getting your accounts and paperwork in order. The goal is to have a running assessment of:
- Gross income
- Fixed costs (e.g., mortgage payments)
- Variable costs (e.g, maintenance expenses)
- Owner disbursements
Everyone involved in your investment should have a copy of your financial reports. This includes property managers and stakeholders.
2. Expense and Income Tracking
The bigger your real estate portfolio, the more complex your real estate accounting becomes. Make sure you're tracking all sources of income including:
- Rental payments
- Nonrefundable fees (e.g., pet fees)
- Refundable payments (e.g., security deposits)
In addition, you need to track outgoing expenses such as:
- Maintenance costs
- Insurance premiums
- Mortgage payments
- Property taxes
- Property management fees
- Marketing costs
Proper accounting for property management allows you to assess areas of financial waste.
3. Budgeting and Forecasting
Once you're aware of expenses that are eating into your profits, you can start to forecast expenses and budget for them. Property maintenance is one of the areas that can most use forecasting and budgeting.
For example, how much money are you spending on emergency maintenance? You can predict and reduce spending by taking a proactive approach and finding reliable contractors.
4. Use of Property Accounting Software
The days of Microsoft Excel are over. Now, investors and property managers can take advantage of accounting software that automates many of the steps we've outlined above. For example, accounting software can:
- Track fixed expenses
- Assess variable expenses and produce expense forecasts
- Report rental income accurately
Property accounting software can also provide real-time updates to everyone involved, streamlining financial communications.
5. Tax Compliance
Internal accounting isn't the only thing you need to include in your financial strategy. Tax compliance requires accurate recordkeeping and can impact you at the local, state, and federal level.
For example, your property tax rate will vary based on which Virginia Beach neighborhood your property is located in. YOu'll also need to include your rental income in your state and federal income tax reports. Fortunately, you will not need to pay additional income tax in Virginia Beach.
Need Accounting for Property Management Help?
You may find it easy to locate eager renters here in Virginia Beach, where owner-occupied housing is high. However, that's where the easy part ends for Virginia beach landlords. Use these methods to tackle accounting for property management or call in the professionals to help.
Renters Warehouse is a tenant-focused property management company on the outside and an investor support system on the inside. Since 2007, we've been helping real estate investors build wealth while we take care of the day-to-day work. Contact us to get Virginia Beach property management you can count on.
