U.S. News and World Report ranked Harrisburg as the best place to live in Pennsylvania in 2023, per Harrisburg Regional Chamber & CREDC. It also ranked second in the publication's list of best places to retire in 2023.
So, as a Harrisburg landlord, you should celebrate; such exceptional rankings will likely draw in more renters. And with the correct rental property accounting strategies, you can enjoy a bigger slice of the city's rental market and optimize your income.
Our Hometown Property Management experts have shared the top accounting tactics you should employ, so read on.
1. Record All Operating Expenses
Bankrate says landlords must account for at least six "hidden" costs. Unless you understand and record them all, you're at risk of losses due to inefficient and inaccurate expense tracking for rentals.
Here are the hidden costs you must carefully track as part of your real estate accounting best practices:
- Administration, legal, and marketing fees
- Property insurance
- Utilities
- Property taxes
- Vacancies
- Property maintenance and repairs
Also, consider the cost of extra insurance if you allow pets in your rental.
2. Organize Records
A crucial piece of landlord financial advice to abide by is to keep, organize, and create several backups of all rent-related documents. For example, you should compile tenant screening checks and lease agreements together. In another pile, put together receipts and records related to property inspection and maintenance.
Proper document organization can help make tracking rental income and expenses more manageable. The more organized your records are, the more accurate your accounting and reporting will be.
3. Separate Non-Rent Payments
According to Pennsylvania's Office of the Attorney General, landlords can require payments other than rent. Some examples are:
- Security deposits
- Rental application fee
- Up to a 1% fee for landlord costs taken from the interest of the security deposit
Avoid mixing those non-rent fees with rent, as it can result in accounting errors and confusion. Besides, the law requires you to put any security deposit exceeding $100 in an interest-bearing bank account. You must also return all or a portion of deposits within 30 days of tenants moving out.
4. Use Accounting Software
Rental income tracking and accounting software can automate many rental management tasks. It can help with the following:
- Separating expenses from your gross rental income
- Automatically providing insights into net income
- Generating financial and tax reports
- Managing property and tenant data
From there, you'll find it easier to see which areas you must improve to boost rental income. For example, if many tenants don't renew their lease, it may be time to offer incentives to encourage them to stay.
Follow These Rental Property Accounting Tips
Recording all expenses, separating non-rent payments, organizing documents, and using rental property accounting software are some of the best practices to implement for your rental business. The sooner you do, the sooner you can set the proper budget to boost your Harrisburg property's performance and attract and retain more tenants.
If you need more property management tips or want to delegate your landlord duties to the pros, Hometown Property Management can help. Our full-service solutions, from marketing to tenant placement and accounting, can make your life as a landlord simpler and more profitable.
Drop us a line today to get your free rental analysis!
