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How to Track Rental Property Expenses FOR FREE - YouTube
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how in the world they attract all these
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rental property expenses and can you do
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it for free or do you have to pay an arm
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and a leg that's today's episode
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everyone let's dive into it hey everyone
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I'm Clayton Morris I'm Natali Morris
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we're a long time real estate investors
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and we in the beginning kind of started
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out duct-taping things together figuring
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out how we were gonna do it we had a
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whole bunch of different things things
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on paper things and computer files and
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then finally we got our act together and
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that brings us to today's show because
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John Poston sent in a nice email and
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I'll read it to you here he says hello
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mr. Morris he didn't mention you
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well then I'm gonna I don't have to
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answer this question I'll go take a
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break
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right hello mr. Morris mm-hmm and I'll
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include and mrs. Morris I just finished
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watching your and mrs. Morris's video
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about me oh he did mention you okay
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about preparing for tax time I've been
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doing tons of research and just can't
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decide on a software to use that offers
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the best features to track all expenses
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for rental properties my wife and I are
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very curious as to which program our
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programs you and your wife use okay
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great question John thank you for the
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email so I'll turn it over to mrs.
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Morris okay so here's how we used to do
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it is Clayton went off and bought real
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estate and then he came back and handed
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me the bills all right and I was like
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what is this I I never knew about this
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right and it was like this contractor
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bill and here's the property tax payment
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and all of that stuff here's a furnace
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um and I had no idea how to make sure
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that those were taxable deductions or
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any of that right so what I started to
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do was to track the expenses of the
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property the same way that I did the
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properties that we lived in I just
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created a simple statement of cash flows
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for each property and that worked for us
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for a long time now now we own you know
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several dozens of properties so I don't
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do it that way anymore because it just
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got too tedious to go one by one so we
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do actually use QuickBooks because a lot
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of our different businesses flow through
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our personal social security numbers and
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it gets hard to assign what
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- what thing but when we were getting
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started when we first just had a handful
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of rental properties what I did was keep
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one spreadsheet per property so I think
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for most people this is a great way to
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get started we have this as a free
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download yeah let's take a look at it
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here because again we now use QuickBooks
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because we have a lot of properties and
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we have a bookkeeper that handles a lot
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of things for us but if you're just
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getting started what would you say is
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the threshold like 10 properties you can
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use this spreadsheet 20 properties you
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can use this but I think it was fine to
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have it for 10 properties for 20 it's
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too hard I suppose you could take it and
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duplicate it well one thing you could do
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instead of having one spreadsheet per
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property is have one spreadsheet per
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year and then keep the properties in
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tabs right so 1 2 3 Main Street has its
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own tab and then 4 5 6 John Street has
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its own tab you could do it that way as
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well and I think that makes it makes it
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very easy for me to see that's why I
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really like this sheet it's to see
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what's coming in and what has been paid
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and it's all in one place because for
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any given property there's like a couple
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dozen transactions for the year right
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it's not like your primary residence
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where you're like well I need to pay for
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salt for the water heater or whatever
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yeah let's take a look at this
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spreadsheet here we'll put it up on the
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screen and we'll let's go through
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exactly how this is broken down so in
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the description below we'll have a link
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to get free access to this spreadsheet
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so you can download it use it yourself
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tweak it modify it however you like but
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the free download is available for you
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to grab and to put it into practice
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right so we start with I mean it's
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pretty easy spreadsheet you know it's
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got the formulas built in don't mess up
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my formulas that makes me mad and don't
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change the format either it really
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bothers me I put this on Twitter
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recently what people type numbers into a
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spreadsheet but they don't go through
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the motions of actually making the
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format either a date or a currency or a
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decimal point get back to the
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spreadsheet okay
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stop complaining that makes me bad stop
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it okay get back to this bridge okay so
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you'll see here you start tracking
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rental income right so you just put
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every single
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when your rent comes in put the date
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that you had it you put rental income
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clearly and then the amount and that's
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it so put I always put the gross amount
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because we are we're subtracting the net
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amount later right so put in what
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actually came in this gets a little
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tricky because a lot of times your
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property manager doesn't charge you they
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keep the money back right so you may
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make seven hundred dollars in rent but
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they keep 10% which is seventy dollars
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so you only ever get in your bank
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account let's say six hundred and ten
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dollars right but I still write in there
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the gross amount because and that's that
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in essence I did pay that seventy
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dollars even if I never saw it okay
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right so write down the total amount of
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rent and then below I put in expenses so
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you may pay the insurance company right
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write down the property management fee
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there again even if you never paid it
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you want to account for it
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and then this is where I keep track of
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any other expenses like did it need a
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furnace did it need a roof did it need
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whatever right taxes I track separately
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just because I you don't have to it is
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an expense I like to do it that way
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because it gives me an easier idea of
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what the taxes are also I can see it
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easier because a lot of places charge me
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spring and fall and I want to make sure
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I I have those both there right it
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triggers something if I see that it's
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not been paid it's pretty easy and then
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in the end you just sort of can total of
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what that property made for the year
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boom easy right and you have those tag
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that tax information in there remember
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to check out the video we just did on
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how to you know fight your tax
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assessment if you need to so that can be
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useful to to lower your overall taxes on
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that property so great it's all right
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there in that spreadsheet super simple
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and that's really all we use we also use
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Dropbox and sometimes we use at Google
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Drive you know for sharing files or
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keeping receipts or that sort of thing
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in there but honestly that's really the
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only repository I mean this spreadsheet
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kind of cattle
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everything but then you want to have a
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record of your receipts somewhere
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whether it's digital or whether as Tom
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wheelwright likes to say you better have
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what how many years worth of these
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receipts a number of like three years
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where you say seven for an individual
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and I think four for a corporation
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I might have those flipped but you put
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me on the spot yeah so keep those
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receipts though and if you put them in
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Dropbox or you use iCloud Drive or you
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use Google Drive
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make sure you have digital copies of
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receipts when you buy that furnace when
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you you you pay that roofer keep all of
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those things inside of a folder so the
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way I do it is I keep the name of the
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holding company as a Dropbox folder and
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then a subfolder underneath that is the
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property name and then a sub muddler
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underneath that is the year so then
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everything that I paid that year the
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furnace receipt the tax bill everything
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goes into that year 2018 right and then
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if I'm ever audited I've got it now
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where this she starts to get tough right
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is your tax preparation well obviously
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this property has caused me to have some
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expensive tax preparation the lawyer fee
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right the feed for the LLC if it's
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shared with other properties those
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things got harder for me to track so
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once our estate became too big that's
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when I then sort of handed it over to
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QuickBooks because QuickBooks can sort
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of delegate your expenses a little bit
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easier but this is a very crude way to
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see what each property is doing without
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again taking into account other types of
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like high-level corporate management
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right and that's where you should want
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to be I hope you don't like think it
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rude for her to say our estate but look
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no you know what I mean it might come
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across as a little like our estate like
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we're you know like Richie Rich or
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something
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we're not but you should want to get
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there right you should want to build a
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dynasty for your family and build up to
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an estate level everyone has an estate
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whether you're like oh yeah I guess
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you're right no you see all right I will
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stand corrected it's a word that maybe
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has its stigma right every single person
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has an estate right have something to
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your name but like even if you oh
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nothing
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that is your estate right an estate is
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just sort of the sum total of what you
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as a person lay claim to even if it's
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zero
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that's an estate I stand corrected all
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right don't jump down my throat for
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using the latest words cuz then I'm
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really gonna do it so there you go I
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hope that you found that helpful John
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and you also in created a family dispute
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once again now you're on the investing
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in that was no girl we're about
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yourselves if you take this spreadsheet
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as a download and you break the formulas
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it's really gonna hurt my feelings
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don't hurt Natalie's feelings make her
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happy by subscribing to this channel
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where we try to help you build financial
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intelligence each week with multiple
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shows and you got to join us on our live
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shows as well as we do that once a week
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as well all right we'll see you next
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time everyone now go out there take
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action become a real estate investor and
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don't change
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Natalie's formulas
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