Research states that the average real estate investor makes between $70,000-$124,000 per year. If you're not coming close to that number, it's time to figure out why.
Being a successful real estate investor in Memphis is all about being business-like with your property. Making a lucrative living from your investments is possible, but you need to prioritize property accounting. Doing so will give you a thorough understanding of what's making money and what isn't.
In this post, we're going to give you a few property accounting tips. Whether you're just starting your journey as a property investor or you're a seasoned veteran, this accounting guide will help you maximize your investments and set you up for a long fruitful career.
1. Keep Property and Personal Accounts Separate
As a young property investor, you might not realize how important it is to separate your money. Your personal money should be in your personal bank account. Any income from your properties should be kept in their own accounts.
Furthermore, each real estate investment that you have should really have its own bank account. The more you're mixing money, the more difficult it is to track income and expenses. This is only going to get you into financial trouble the more investments you own.
2. Track and Categorize Income and Expenses
Keeping track of your investment's income and expenses is essential to property accounting. The key to tracking real estate expenses is to categorize them meticulously.
For instance, if you've got a single-family rental home, rental income is the money you're bringing in. Expenses might include anything from marketing the property to potential renters to routine maintenance, such as hiring landscapers or paying your property manager.
The better you keep track of this, the easier it is to determine how your investments are doing.
3. Understand the Important Metrics
To analyze your property finances, you need to understand the key performance metrics. For rental properties, this would include things like vacancy rate, cash flow, gross income, and operating expenses.
Understanding these will help you make your properties more profitable. It'll also help you adjust your investment strategy in the future so that you're always improving your portfolio.
4. Hire Professionals When Appropriate
Doing your own accounting can be time-consuming, especially if property investing is just a side gig for now. Even when you're bringing in lots of money from your investments, it's going to be helpful to hire professionals to help you manage and account for the properties.
A good property management company will be able to help you with bookkeeping, in addition to dealing with the logistics of owning investment properties. At Home River Group, we're a full-service property manager, so by hiring us, you can take a more hands-off approach to property accounting and management.
Good Property Accounting Means the World
These property accounting tips will help you come closer to the goal of earning a living wage from your investments. It's a long road to the top, but being meticulous and hiring professionals to help with the logistics will make it easier.
At Home River Group, we've helped countless property owners in Memphis maximize their investments. Contact us today and we'll work with you to come up with the best property management plan for your needs.
