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General

Rental Property Profit and Loss Statement

Profit and Loss Statement
The P&L shows how well or poorly the business is doing.

The rental property profit and loss statement is a report that summarizes revenues received and expenses incurred. Also known as a P&L or income statement, it shows how well or poorly the business is doing by its net income or loss. The majority of income is reflected by the rent landlords collect from tenants. As for expenses, they can vary and can range from general maintenance such as lawn care to property taxes. With the profit and loss report, landlords can identify areas to reduce expenses or make improvements to strengthen the business.

How do you create a an income statement? The easiest way is with landlord accounting software. There are free templates available, like the Zillow worksheet. Templates and spreadsheets are not the best choice for landlords because they are not powerful enough and can be one dimensional with limited reporting capabilities. Believe it or not, similar to templates, there is free landlord accounting software. For example, RentalIncomeExpense.com is an income and expense tracking tool designed for landlords. It is free and easily generates a rental property profit and loss statement. When using a good tool to generate reports, landlords can quickly determine how their business is doing.

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Landlord Tips

Landlords Letting Tenants Renovate Rental Property

Letting Tenants Renovate
Tenants may want to renovate while renting property.

Over time, any type of property – rental or non rental – will need updating. Building materials will either deteriorate or become outdated. For example, paint peels or fades, carpets stain and wear away, and bathrooms and kitchens become outdated. If the unit is occupied and the tenant wants to make improvements, landlords letting tenants renovate rental property is not a bad idea.

If you’re happy with your tenant, most landlords will not want to displace their tenant in order to renovate. So when a tenant wants to do the renovation, it’s a good idea for landlords to hear them out. For landlords letting tenants renovate rental property, here are a few things to consider:

  1. Agree to the renovations: As the owner of the rental property, you should be in agreement to the requested changes. Should the tenant vacate in the future, you are left with the renovations. Ideally, you will want renovations that increase the value and attractiveness of your rental property.
  2. Decide who will pay for the renovations: There are a few possibilities when it comes to who will pay for the renovations. The tenant can pay for it entirely, the landlord can pay for it entirely, or both can split the cost. Usually, if the improvement will add value, most landlords may cover the cost since they ultimately own the rental property. If the landlord covers the bill, he/she can track renovation-related expenses in their landlord income expense tracking software such as RentalIncomeExpense.com.
  3. Put everything in writing: Landlords letting tenants renovate rental property is a driver for a lease addendum. It is important to address items such as what improvements will be made and who will pay for them clearly and in writing.
Categories
Landlord Tips

Appfolio is Not a Fit For Small Landlords

Appfolio is not a great fit for the small landlord
Appfolio is not a great fit for the small landlord. But there are good options!

Appfolio is a leader in online property management software. Often times, when small landlords search online for property management tools, they encounter links to Appfolio. With some research, however, a landlord quickly learns that Appfolio is not for the small landlord.

Appfolio’s Pricing Is For Large Commercial Multifamily

As of 2021, Appfolio’s pricing page indicates that their pricing is at least $280/mo (the minimum monthly fee). Additionally, Appfolio’s “Plus” package starts at $1500/mo. Appfolio designates that service for customers with thousands of units. Clearly, small landlords need not apply. Small landlords generally do not have thousands of rental units, and many are on tight budgets, making cost a consideration.

There Is Free Online Software For Small Landlords Better Than AppFolio

Never fear! Appfolio is not the only option out there. For small landlords, there is free online property manager software. For example, RentalIncomeExpense.com (sign up at www.RentalIncomeExpense.com) offers free income and expense tracking with automatically generated profit and loss reports. Better yet, this free landlord software is easy to use and learn; there are none of the complicated features that Appfolio has that appeals to large multifamily customers.

Categories
Landlord Tips

How to Screen Tenants for Rental Property

Screen Tenants
Finding the right tenant will give landlords peace of mind.

Landlords should invest the time to learn how to screen tenants. In the long run, finding the right tenant will give landlords peace of mind. The right tenant will ideally pay the rent on time and keep the rental property in good shape. Here are some simple ways to screen tenants:

Screen Tenants for Rental Property with Online Credit/Background Check

In the past, small landlords had a hard time running a fast credit check on a tenant. Today, online tenant screening makes the process very fast and easy. With TransUnion’s SmartMove partnership with ClearNow, landlords can receive a credit check and criminal and eviction report within seconds. Landlords can specify if he/she or the tenant will pay the screening fee, which is typically paid by credit card. Online credit and background checks is an effective way to screen tenants for rental property.

Check References

As part of the application process, landlords may request information from tenants related to income, employment, and past rental history. Landlords should contact the tenant’s previous landlords to confirm their tenancies. In checking references, landlords can get a sense of the tenant’s rent payment activity and overall condition of the rental property upon departure.

Landlords incur a tangible cost when they screen tenants for rental property. They should keep track of the expenses related to screening tenants whether it be telephone, travel, or online screening fees for example. RentalIncomeExpense.com is a free income and expense tracking tool designed for landlords. They can easily record their expenses while finding the right tenant for their rental property.

Categories
Landlord Tips

Landlord Accounting Software

Accounting Software
Landlords have a choice for tracking rental income and expenses.

Tracking income and expenses for rental property is a task most landlords do not enjoy. Without a doubt, record keeping can be time consuming and often mind-numbingly boring. However, maintaining good records makes tax time easier and provides peace of mind. Therefore, it is important to understand how the rental property business is doing, and good landlord accounting software makes this task easy.

There is a lot of choice among landlord accounting software. The primary differences relate to cost, ease of use, and features (like reports). With the aid of the chart below, we take a look at some common ways, from the simplest to the most complicated, for tracking rental property income and expenses.

Tracking MethodPros & Cons
Spreadsheet* Free
* Create your own with Google Docs or Microsoft Excel
* Download free rental income and expense worksheet
*Cannot easily generate reports
Free Accounting Software* Free
* Simple and intuitive
* Easily generate reports like a Schedule E Helper and Profit & Loss statement
* RentalIncomeExpense.com
Paid Accounting Software* Expensive
* Can be overkill for a small landlord
* Complex and challenging to understand
* QuickBooks, Buildium, RentecDirect
Landlord Services * Provides benefits in addition to record keeping such as online rent payments, tenant screening, credit reporting, and vacancy listings
* Many times income and expense tracking is included as a free feature
* ClearNow, Zillow Rental Manager

Final Thoughts

Landlords have choice, and they range from simple spreadsheets to free landlord accounting software to paid accounting software. Find a solutions, as the important task of tracking income and expenses becomes easier with software for landlords!

Categories
General

The Landlord Cell Phone Expense

landlord cell phone expense
Are you expensing your cell phone usage for your rental properties?

Ever since some company named for a fruit unveiled the iPhone, the cell phone has changed from an important part of daily life to an essential part. From texts to emails to even (gasp! old school!) calls, most landlords today manage their rental property using their pint-sized touchscreen sidekick. Because it is so critical, cell phone related costs are a legitimate expense for a landlord.

What Phone Expenses Count For a Landlord?

There are two main components to cell phone expense.

  • The phone itself
  • The cellular plan (talk, text, and data) that allows you to use the phone on the go

Fortunately, both your purchase of a cell phone and the monthly cellular plan are legitimate landlord expenses. If you run your rental property business as a “pass thru” entity that shows up on your personal taxes (as many landlords do), these expenses will show up on the Schedule E of your IRS tax return.

Additionally, if you use just one phone for both business and personal, you’ll want to calculate roughly how much of your use of your smartphone is split between your landlording business and your personal use of the phone and allocate the expense appropriately (example, if 30% of the usage was for property management, expense 30%).

You may want to talk to a CPA about the expense also, as there are some advisors who suggest you can deduct the full cost of your line if you already have another line you use for your personal use.

Where On the Tax Return Does Cell Phone Expenses Appear?

If your rental property activities are as a ‘pass thru entity’ (aka appear on your personal return), then your landlord cell phone expense can appear on the ‘Other’ line of Schedule E.

Does tracking rental property expenses seem daunting? Never fear! Look into a free online tool like RentalIncomeExpense.com. With this software, you can easily record property expenses and generate a Schedule E Helper report at tax time.

Categories
Landlord Tips

Smart Technology in Rental Property

Smart Technology
Landlords benefit from installing smart devices in rental property.

Smart technology is a term that describes devices that automate or communicate information to make life easier. It’s been around longer than we probably realize in items such as programmable coffee pots or thermostats. Most of today’s smart technology rely on the internet and smartphones (and even some voice commands!) making devices easier to operate (pretty smart, eh?). There are pros landlords should consider when investing smart technology in rental property.

Savings with Smart Technology in Rental Property

Smart technology commands an initial upfront cost. The devices themselves and installation are expenses landlords incur when up fitting rental property with these devices. In the long run, though, landlords will achieve savings with smart technology while attracting tenants looking to rent a smart home. An Entrata survey concluded tenants are willing to pay higher rents for a “smarter” home. These higher rents will offset the initial cost of the devices and provide savings for landlords.

Further savings can come directly from the devices. For example, installing cameras or a security system to the exterior of the rental property can give tenants peace of mind (and a desire to rent your property!). At the same time, landlords may realize some savings if insurance companies reduce premiums because of the security systems. Another example of savings can be from smart door locks. They eliminate the cost of locksmiths for new tenants or lost keys.

So should landlords install smart technology? Yes. With the initial cost of these devices, landlords can easily record these expenses and related receipts in RentalIncomeExpense.com – the free income & expense tracking software designed for landlords. Landlords can pocket the savings and continue to invest in their rental properties.

Categories
General

Free Landlord Income & Expense Tracking Software

Free Landlord Accounting Software
Get started with free landlord accounting software at RentalIncomeExpense.com!

Landlords wear a lot of different hats. They are marketers when trying to advertise and find tenants. They are handy people when trying to maintain the physical upkeep of their rental property. And they are accountants who have to keep track of the income earned and expenses made related to their rentals. There is a lot of choice for landlords when it comes to accounting software to help manage rental property. One of the free landlord income & expense tracking software that is easy to learn and designed specifically for landlords is RentalIncomeExpense.com.

Expensive property management software (like Renttec Direct, Tenant Cloud, or Buildium) is overkill for the small landlord – costing more in time and money than it is worth. On the other hand, an Excel spreadsheet isn’t nearly powerful enough.  For example, it cannot easily generate the different reports that a landlord needs.

RentalIncomeExpense.com is the best of all worlds:

  • Simple to setup
  • FREE
  • Designed for landlords
  • Instant reports that matter (such as profit & loss and the 1040 Schedule E helper)
  • Accessible from your smartphone
  • Backed up by ClearNow’s proven online infrastructure (since 2000)

To get started with free landlord income & expense tracking software, set up a free account today at RentalIncomeExpense.com today!

Categories
Landlord Taxes

Understanding Landlord Auto and Travel Expenses

Okay, maybe not the right vehicle for work commutes in terms of mileage expenses!

One of the categories on the IRS Form 1040 Schedule E is for “Auto and Travel” expenses. Here is a quick explanation to understanding this expense category. By tracking and understanding landlord auto and travel expenses, you will increase your expenses and thus lower the taxes you owe.

Do You Have a Home Office?

First, it is important to understand if you have a separate office for your landlording activity or if you work from home. Working from home is more advantageous.

  • If you work from home: You can deduct any travel that you make from your home for activities related to your rental properties. In this situation, your home office must be your principal place of business and be where you do administrative tasks. If this is the case, you can deduct trips from your home office to your rental properties and back.
  • If you work from an office for your rental activity: Unfortunately, if you have an office where you do your day-to-day rental management, you are limited by the “commuting rule.” Commuting expenses are non-deductible expenses. In general, trips from your office or home to and form your rental properties are not deductible due to this rule. So understanding landlord auto and travel expenses can affect deductibility opportunities.

How Much Can You Expense?

You might think it will take a lot of effort to calculate your automobile and travel expenses. Fortunately, the IRS provides a “standard mileage” rate which is a shortcut to calculating this expense.

With the standard mileage rate, you keep track of the miles that you travel (like trips to Home Depot for rental supplies). Once you have your mileage, you multiply it against the “standard mileage” rate for the year.

You can also do the “actual expense” method. With this method, you track the actual cost of using your car. However, most people do not use the “actual expense” method because it requires more work. You would need to track gas, oil, repairs, and depreciation using your own methodology.

Landlord Auto and Travel Expenses Saves You Money at Tax Time

In conclusion, a lot of landlords do not take the time to track auto and travel expenses. However, tracking it is fairly straightforward. Once you’ve calculated your expense for a trip, you can enter it into free landlord software like RentalIncomeExpense.com so it is stored online and a report can be generated at tax time.

Categories
Landlord Tips

Move in Checklist for Landlords and Tenants

Move in Checklist
The move in checklist is a valuable guide for landlords and tenants.

Lists are helpful tools as they serve as reminders. Grocery, cleaning, and “honey do” lists are just a few of the many popular ones to mention. The move in check list for landlords and tenants is a valuable guide for both parties. They can complete the checklist together during the walk through of the rental property so all parties are on the same page.

Checklist Benefits

For landlords, the move in checklist for landlords and tenants keeps track of the condition of the rental property. It also serves as a reference to identify any damage that may have occurred during occupancy beyond normal wear and tear. For tenants, the checklist serves as guidance for what repairs or improvements should be made prior to or during the tenancy. It also gives tenants an understanding of the condition of the rental before move in.

Checklist Contents

The move in checklist for landlords and tenants should include the main components of each room in the rental property. For example, items to check for in the kitchen would be a working refrigerator and clean and empty cabinets. For each room reviewed, there should be an area to identify any needed repairs or improvements. The move in checklist can also inform tenants on items such as setting up utilities, managing pets, and throwing away trash.

There are checklist-related tools available for landlords and tenants. For example, Zillow offers a downloadable check list. And landlords can use RentalIncomeExpense.com to track expenses related to agreed upon repairs and improvements.