With the US rental property management industry bringing in $99 billion every year, landlords and property managers with short-term, mid-term, or long-term rentals are shifting away from manual spreadsheets to keep up with cash flow. This article will be your guide for the pros and cons of switching from a rental property spreadsheet to landlord software and tips for a smooth transition.
Pros & Cons of Using Spreadsheets
Excel and Google rental property spreadsheets have been a staple for independent landlords, property managers, and rental property owners. But how do they really stack up in smart money management?
- Familiar Setup: The format of a Google Sheet and Excel spreadsheet for rental properties has been relatively the same for decades, making it easy to get up and running.
- Customization: Spreadsheets allow for a high degree of personalization. From color coding to creating complex formulas, you can modify your system per your requirements.
- Financial Reports: Using a rental properties spreadsheet to track income and expenses can help with financial reporting for rental income and taxes.
- Data Errors: Even a small typo can cause a domino effect, leading to costly mistakes and compliance issues when tax time rolls around.
- Manual Updates: Spreadsheets require manual double-entry bookkeeping to reconcile rental income with bank accounts and rental property ledgers.
- Security Risks: Data loss or theft is always a risk when using rental property spreadsheets that don’t have built-in network security.
- Requires Expertise: Managing complex formulas and pivot tables can be daunting, especially for portfolios with multiple properties.
Excel for Property Management
- Advanced features for cells and formulas.
- No storage limits.
- Multiple data visualization options.
- Certain charts require a paid subscription.
- Finding and fixing errors can be challenging.
- Different versions can create collaboration hurdles.
Google Sheets for Rental Bookkeeping
- Teams can collaborate in real time.
- Accessible from a smartphone, tablet, or computer.
- User-Friendly design and revision history.
- Adding data can delay loading times.
- Limited data visualization options.
- Fewer formulas and customizations.
Despite their long history, spreadsheets come with inherent drawbacks for rental property accounting, especially when juggling multiple properties and tenants.
Landlord Software for Bookkeeping
Transitioning from a spreadsheet to landlord software can feel like a big step. However, it’s a necessary leap for most property managers and owners to get a handle on rental property accounting and bookkeeping for income and expenses.
- Accurate Records: Automating tasks for income and expenses, like rental payment records, expense posting, and bank account integrations, significantly reduces the risk of human error.
- Audit Trails: Search tools and transaction audit histories make it easier to identify and fix any errors that slip through the cracks.
- Data Security: Property management software systems generally use strict security protocols to protect sensitive expense data and rental property information.
- Accounting Compliance: Landlord accounting software complies with tax regulations and accounting best practices to keep rental property bookkeeping within legal parameters.
- Less Charts: Property management software may not offer custom charts and graphs, limiting data visualization to a handful of options.
- Learning Curve: New software solutions always have a bit of a learning curve, but most rental property management platforms are designed to be user-friendly and intuitive.
- Subscription Costs: Property management software often has subscription fees, but the time saved on tracking expenses and tax reports generally offset these costs.
Landlord Software vs. Spreadsheets
Compared to spreadsheets, landlord software offers several advantages, including real-time access, automated tracking, and streamlined financial reporting.
Benefits of Using Landlord Software Over Spreadsheets
Landlord software is a web-based platform that automatically stores and updates data online, providing easy access to online rent collection and property management accounting. Using spreadsheets can limit your access to information and requires manual updates and storage.
Landlord software uses bank account integrations for automated income and expense tracking, saving time on manual data entry. Some property management software platforms also sync with credit cards to account for every rental business transaction. Spreadsheets only update when you punch in the numbers, making it easy to miss incoming and outgoing payments.
Cash Flow Insights
Landlord software analyzes rental property metrics and puts them into real-time dashboards for a single location or an entire portfolio to measure returns and identify cost-saving opportunities. Spreadsheets need manual calculations to produce charts and graphs for data visualization.
Landlord Tax Reporting
Landlord software can generate accurate financial reports in a couple of clicks to help simplify tax time and ensure that you don’t miss any deductions. Filing taxes with spreadsheets reports for each rental property is time-consuming and prone to errors.
Landlord software enables receipt uploads to securely store and digitize receipts. This feature helps track property management expenses and maintain a clear record of financial transactions. Spreadsheets only record expenses as line items, with no digital backup of receipts.
Who Should Use Landlord Software?
Choosing rental property management software or Excel spreadsheets comes down to the problems you’re trying to solve. Landlords with one or two rental properties can likely get away with income and expense tracking on spreadsheets. However, reducing errors and manual data entry in rental property accounting is a common challenge across the board.
Here are the main factors to consider as a rental property manager, owner, or landlord looking into property management software solutions.
Manage Multiple Properties
Tracking income and expenses with spreadsheets gets tricky when you’re managing multiple properties. Property management software will automatically track income, expenses, and security deposits across all properties, saving you time and reducing errors.
Charge Late Fees
Staying on top of late rent payments isn’t easy when you have to search through multiple rows and columns. Property management software can track rent payments, send reminders, and apply late fees automatically to make sure you get paid on time.
Accept Online Rent Payments
Switching to online rent collection eliminates the hassle of logging rent payments and recurring fees on a spreadsheet every month. Baselane online rent collection is free to use for tenants and landlords, and payments are deposited directly into your landlord bank account in as little as two days.
Tips for Transitioning to Landlord Software
As a property manager, you are responsible for tenant screening and lease agreements, so transitioning from rental property spreadsheets to landlord software can significantly simplify your tasks.
Gather Rental Property Details
- Lease agreements
- Rent payment schedules
- Income and expenses
- Maintenance requests
- Tenant information
Choose Landlord Software Features
- Rental property accounting and bookkeeping
- Automated income and expense tracking
- Split transactions across properties
- Auto-tag expense categorization
- Generate reports by property and portfolio
- Bank account and credit card integrations
Complete the Transition
- Bulk import expenses
- Upload receipts
- Connect bank accounts
Follow these tips for a swift transition from manual spreadsheets to saving 20+ hours a month with an automated property management software system that puts all your finances in one place.
Making the switch from spreadsheets to landlord software can save 20+ every month by replacing manual labor with automatic income and expense tracking, tagging, and reporting on one consolidated ledger.
Watch this Webinar to see how Baselane property management software can help you say goodbye to complicated spreadsheets and hello to modern property management.