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Updated about 14 years ago on . Most recent reply
Rental Property Balance Sheets
For the single and multi SFR owners,
How do you handle your cash flow? Do you do per property, then overall? Do you use a program (ie quicken?), or stick to the simplest of simples and use excel?
Does anyone have an example of your current balance sheet? How granular do you get with "repairs"? Do you sub divide it out for upgrade / repairs / upkeep etc, or have it all under a generic repairs?
Trying to get a nice template down prior to purchasing first property, so I can have a better game plan on what to offer, and better tracking of profits for taxes :o)
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I think the balance sheet is critical to keep track of your net worth. Watching your net worth grow is a critical and motivating aspect of your investment program.
It's also valuable to continually re-comp (re-value) your properties, not only to compute an accurate net worth, but to optimize decision making in determining which properties to sell for gains, which to dump if trends are moving the wrong way, which to keep for best rental return and cash flow maximization, etc.
You should compute your current returns (ROI, etc.) on a property using current market value, not historical cost, so that you recognize "opportunity cost" of continuing to hold an appreciated property, for instance. In other words, challenge yourself as to why you are holding each property. Another way to say it is, "would you go out and buy that property today at its current price".