How to Track Your Income and Expenses for your Investment Property

In many ways, getting the most from your property portfolio is really a matter of good administration. This is particularly true when it comes to tracking your finances, which can directly impact the returns you receive. But keeping across all your incomings and outgoings takes work, especially if you own multiple investment properties.

This begs a few important questions – like, which numbers do you really need to record? How much detail do you need to go into? And what are the best ways to keep track of this information?

Tracking your income

Generally speaking, recording the income produced by your investments should be fairly easy. For most properties, you will only receive one regular payment, which represents the entirety of the ongoing income it produces. And, if you engage a professional property manager, they should track this for you and provide a regular summary statement.

All going well, you should also see some additional income when you sell a property. This is the realisation of the capital growth achieved and needs to be recorded for tax purposes. This data is also crucial for calculating the total returns you received and could help you refine your investment approach.

Income tracking gets a little more complicated if you own multiple investment properties, as you will have multiple income sources. While you can easily roll this into one “total income” figure, you should also track your income from each property. This will allow you to assess the performance of individual investments and monitor the balance of your whole property portfolio.

Tracking your expenses

Recording all the expenses incurred by your properties is a little harder, as they tend to be quite varied. To get a full picture of what you are regularly spending on your investments, you need to account for your:

• Finance and insurance costs: This includes your bank fees and mortgage repayments, as well as the cost of your landlord’s insurance, building insurance, etc.
• Management and maintenance fees: This includes your advertising, letting, and property manager’s fees, as well as any maintenance costs – whether once-off (replacements, repairs, etc.) or ongoing (gardening, cleaning, etc.).
• Administrative expenses: This includes your body corporate fees, council rates, and utilities charges, as well as any legal or accounting costs.

If you use a professional property manager, they may look after several key expenses for you. For example, many property managers deduct their fees, as well as most maintenance costs, directly from the rent they collect. If they do, their regular statements should include an itemised list of the amounts they have paid on your behalf.

Expense tracking tips and tricks

If you are administratively minded, keeping on top of your income and expenses should not be too difficult. If you are not, here are a few simple things you can do to make this process easier:

• Use a separate bank account: We recommend having your income paid into, and most of your expenses paid from, a dedicated investment account. This keeps everything in one place, separate from your personal finances, making it easier to see your exact financial position. Some investors go a step further by having one account per investment property – though this usually means additional bank fees.
• Set up a tracking tool: While you may not be a fan of spreadsheets, they can make recording and tracking your finances much easier. Best of all, a quick Google search should provide multiple preformatted options, complete with automatic calculations already built in. Alternatively, there is now a range of expense tracking apps, including several designed specifically for property investors.
• Establishing a routine: One of the best ways to make income and expense tracking easier is to make a habit of it. For example, you could have a dedicated time each month where you review your records and update your tracking documents. You could also take this time to review your portfolio performance and investment strategy, and consider your next move.
• Consult the professionals: You do not need to be a financial genius to succeed in property investment – you just need one on your team. In addition to tracking your finances, a good accountant should be able to recommend ways to maximise your returns. This is particularly important as your portfolio grows, and your financial arrangements and tax obligations become more complex.

Want to discuss this further?

If you need help getting, and staying, on top of your finances, contact Search Party Property. As property investment specialists, we understand what you need to track and can recommend ways to make this easier. We also regularly work with a range of financial experts and can connect you with the professional support you require.