Quick Bookkeeping question

[Nick Causa]

Received our first rent check. Feels good. I have certain amounts that i want to divy up to go towards future expenses (capex etc). We also set up a competely separate account for the house. Do we leave that excess in the account after paying the mortgage? So if rent is $1500, the mortgage is $800, and all future expenses (capex, vacancy, maintnance) are $500 (these arent real numbers im just making them up) do we just keep leaving $500 every month in the account until we need it?

[David Hildebrandt]

What has worked best for me is to leave the excess in the account, take a spread sheet and divide it up into columns. So one for cap ex, one for maintenance, one for vacancy. Divide your excess up among those three columns as a positive entry with a date next to it in an adjacent column. Then any time you spend from a column you enter that as a negative.

For clarity sake I also found that this go to be a lot of extra work as you are essentially creating a budget and then tracking your spending relative to that budget. You are performing a lot of accounting for one rental property. What I do now is just track my spending as normal. I spent about 4 months building a buffer of $10k on my 10 unit deal, mostly for taxes, but also for incidentals. If i get to the point I need to replenish because I dipped below that level, I stop taking a monthly check and refill the buffer.

I use this spreadsheet to account, it came from BP library but I corrected a lot of the formulas and look up tables and added several lines for income. Inbox me if you would like to check it out.