How Do You Keep Track Of Income?

Question

Hello BP,What is your recommended way of keeping track of rental income? At the moment, my tenants in my first SFR pay by checks. Am I to keep all of the checks as proof of rental income for a duration of time?I ask because when I approach a bank and want to show this proof of income I want to present it in the best way possible and I feel as though walking in with a manilla folder full of checks isn't very appealing.Thank you in advance for the insight.

Mark Fries · Answer

@Devante Boll I just use a composition notebook that I buy at Dollar Tree and whenever I receive the cash rent I put a check mark next to the address, then I take all the cash and throw it in an old Amazon box and once the box gets full of cash I take a photo of it.... Then I find another empty box and I repeat the process for the next month...

Mark Fries · Answer

@Joshua D. A little bit of both... I was just trying to state the fact that it doesn't have to be over complicated in regards to tracking rental income

Devante Boll · Answer

I appreciate all of your replies and insight. Keeping it simple until it no longer works resonated loudly with me @Lesley Resnick, especially since I just finished reading a book that emphasized on simplicity and much more (Seeking Wisdom by Peter Bevelin).I've shifted all rental income into a separate bank account and will start with Excel spreadsheets for now. Will keep Quickbook and Kitt.io in mind down the road.Lastly, thank you for mentioning how some of you keep track of your documents for specific properties as well. All great information. God Bless and happy investing.

Lesley Resnick · Answer

I have a dedicated account and only use it for rent and expenses for the properties. I am under 50 transactions a year, most of them are deposits. I can track them by who they are from if they are electronic or the amount. Keep it simple, until it no longer works. The challenge I am now facing is managing the acquisition, reno, and depreciation. It is all in paper and needs to be aggregated for taxes. I am going to move to a formal application, just a google drive would not be enough.

Mary M. · Answer

Excel has lots and lots of templates... find one that appeals to you and just log everything in.... it can be as simple as the following: Date Deposits Expenses Description Property01.01.18 200.00 Deposit Ck # 100 rent from xyz 1234 some street01.01.18 -100.00 Repairsetc etc make it however it works for you. Bank will want to see tax returns and rent rolls, leases... not individual rent checks...you can go for quickbooks but it is spendy and to start you can use excel... if you ask folks i am sure someone will have a nice template for you to use.

Jim Adrian · Answer

@Devante BollI use excel to tally up my one rental. Feel free to use what I have uploaded into File Place. Lots of good free stuff there. I am also in the process of converting to quicken. Create a checking account for your rental and run everything thru that account this avoids co-mingling of funds. This is a lot easier to keep track of.https://www.biggerpockets.com/files/user/JimA732/file/rental-expenses-report

David H. · Answer

I use a dedicated account for it so would just show that statement. And can put things in excel quickly if they wanted a breakdown

Nathan Wankel · Answer

@Devante Boll I suggest Excel because it's easy to use once you know how to do all the formulas. Creating templates is also not a hard task in Excel. Another option would be quick books because you can take a picture of the checks on your phone and have them in the app whenever you need them.

Ned Carey · Answer

@Devante Boll I use quick-books but a nicely formatted spreadsheet in Excel is just as good for a small number of units. A bank is not going to want to see checks they will want bank statement and or tax returns. They will also like to see a P&L statement, a Balance sheet, and a per property breakdown of income and expenses.

Kathy Henley · Answer

@Devante Boll When I prepare a bank deposit, I lay the checks on the glass of a copy machine. The checks will be deposited at the bank, the copies are stapled to a copy of the deposit slip. My stapled paperwork is 3-hole punched and put into a binder. End of year, the collection goes into storage and I start a new file folder January 1. The file is good back-up for reconciling the monthly bank statement or untangling a posting error of a tenant's account. Your bank statements show the deposits, one trail of the income. Please keep a set of books for another trail of income and expenses.