Sometimes, the only difference between a profitable rental property and an unprofitable one is the owner’s ability to track, manage, and anticipate expenses. It’s not uncommon for landlords and rental property owners to inadvertently mismanage the various costs involved with rental ownership.
As we head toward 2021, you may feel your bookkeeping and expense management process could use some improvement. Today, we’ll offer six invaluable tips to ensure you’re able to stay on top of routine and potential surprise rental property expenses. Doing so can not only help you keep a handle on your budgets. But it can also increase your rental property’s ROI if managed properly.
Consider Hiring a Bookkeeper
To really know if you’re overspending or missing opportunities for expense savings, consider hiring a bookkeeper. Having a bookkeeping professional keep an eye on your day-to-day rental property expenses can help keep your operations organized. You can then identify trends or areas of improvement. Sometimes seeing how often and how much you spend on a particular service in a given month or quarter can be an eye-opener. Great bookkeepers can help you keep your finger on the pulse of spending, and help carve out realistic, cost-saving budgets, too.
Scheduling Activities to Track Operations
As a rental property owner, you sometimes feel there are too few hours in a day to get things done. And as a result, you don’t prioritize time to review your books. Consider scheduling time in your planner to sit down with the numbers and review. Keep that appointment and force yourself to analyze your revenue, expenses, and trends. Keeping this appointment with your books will help you realize if your costs could be trimmed or benefit from better expense management.
Allocate Time Daily
You might agree with the point above and wonder why in the world you would need to review your expenses and operations on a daily basis. But, having the discipline to at least check your numbers for the day is just smart business. Some days might be busier than others. However, taking a moment to review revenues, expenses, and upcoming invoices can help you prepare and stick with your budgets. It will also allow you to make real-time decisions and avoid overspending in some cases.
Explore Opportunities to Reduce Property Taxes
You may have always heard the old saying about the only two constants in life; one of them is paying taxes. Don’t let that adage keep you from exploring options to reduce your rental property taxes. Most rental property owners don’t realize there are some opportunities to enact reductions. There are third-party companies that specialize in doing just that, and it can be a game-changer. Consider reviewing your current rates and look into potentially reducing your tax burdens with one of these companies.
Mortgage Payment Reviews
Reducing your mortgage payments might seem like an impossible feat. But in today’s market, it’s worth exploring your interest rate options. If you have a reliable mortgage brokerage partner and lender, you can make an educated decision on moving forward with steps to reduce your interest rates and potential your mortgage payments in general. A minor reduction in monthly mortgage payments could translate to substantial bottom-line savings.
Rental Property Insurance Reviews
How much are you paying for rental property insurance coverage right now? If you don’t know offhand, or if it’s been a while since you last reviewed your policy, you could be spending too much. Consider revisiting your insurance plans and rates annually or semi-annually. Your coverage needs may change, and you could be missing out on more affordable rates. It’s a rental property expense everyone needs, but you certainly don’t need to overpay for it.
Managing your rental property expenses means also being prepared for the unexpected. Consider creating a separate fund of savings to use in the event of an unprecedented cost. Maybe it’s a significant maintenance replacement, like a heating and air conditioning unit or a hot water heater. Having a separate budget for these types of incidentals can help alleviate a disruption in your routine expense management efforts.
Marcus Lemonis always says, “if you don’t know your numbers, you don’t know your business.” And for rental property owners, these words couldn’t be more relevant. Take advantage of these expense management tips and as always, for more insights to streamlining your rental operations, contact us! Or, you can visit our Facebook group as well as tune into our free webinar for more ideas and best practices.