Scaling a real estate portfolio can feel like a never-ending task; sometimes, the most important steps can slip through the cracks. The last thing you want is a massive bill from a bookkeeper or tax professional once you have decided that writing down your expenses on a napkin won’t work.
But don’t worry: With the right tools in your financial toolbox, you can add properties to your empire without letting your bookkeeping become a horror show.
Investors have many reasons for starting to build their portfolios, but a common one is to obtain financial freedom. So, let’s talk about scaling—specifically, without losing track of your finances. Because, honestly, what good is owning 10 properties if you have no clue whether you’re financially free or handcuffed to a sinking asset?
Spoiler alert: You can’t rely on a spreadsheet from 2012 to save you. That’s where real estate investor-specific banking, bookkeeping, and accounting software comes in.
Keep Your Eyes on the Landlord Prize
When scaling, getting caught up in the excitement of buying your next big property is easy. After all, you’ve got momentum, and maybe you’ve even hit that sweet spot where deals practically find you (OK, I might be exaggerating that one).
When I started my real estate investing journey, I did my own bookkeeping on QuickBooks and thought I was on Wolf of Wall Street. I realized this quickly when I brought my books to a CPA and was told the news that even Jordan Belfort would have been shaking at: I was going to owe double because not only did I do the books wrong, I also made it harder for them to fix it. They now had to go back in and rework transactions when, if I had done nothing, it would have been even easier for them. This taught me how vital proper bookkeeping is throughout the year as a real estate professional, and I never looked back.
Let’s be honest: Keeping track of all those expenses, rent, mortgage payments, and repair costs is a full-time job. But unless you’re planning to retire as the king or queen of late-night accounting marathons, you need a solution that works as hard as you do. Having the right software that can automate and track your expenses, help you be prepared when tax season comes, and let you sleep easier at night is invaluable to saving your most valuable asset: time. Using the right platform is like having a personal assistant for your money—minus the awkward small talk and extra coffee breaks.
Say Goodbye to Mystery Expenses
Do you know what’s scarier than a leaking roof? Mystery expenses. You know, the ones that sneak into your monthly statements, almost floating from the ceiling like Tom Cruise. Suddenly, you’ve got $1,000 that’s “just missing,” and you’re on the phone with your contractor, wondering if gold-plated faucets were part of the deal.
With the right software, you can automate your expense tracking and get real-time updates on where every penny is going. This means you’ll never have to wonder why your balance sheet looks like a tornado of receipts hit it. Plus, having organized financials is a lifesaver when you need to pull reports for taxes or have a quick chat with your lender.
And guess what? No more manila folders stuffed with invoices in a file cabinet that pulls a muscle in my back just looking at it. You’re welcome.
What Features Are Needed for Investors?
That’s where our partners at Baselane come in. They offer an all-in-one banking, bookkeeping, and rent collection platform built specifically for real estate investors and landlords. Here are some of the key features.
Simplified financial management
Investors can streamline their financial processes using software integrating banking, bookkeeping, and rent collection. This platform allows you to manage multiple properties from one dashboard and automatically track income and expenses to give you a real-time snapshot of your portfolio’s performance.
Automated accounting and reporting
Finding software that offers real estate investors an all-in-one accounting solution for managing rental property finances is key. For example, Baselane syncs all your transactions, automates tax reporting, and categorizes expenses with over 120 real estate-specific categories. This platform helps investors save time, generate accurate financial reports, and prepare for tax season efficiently.
Tax preparation and deduction tracking
Keeping track of deductions and preparing for tax season is a breeze with a system that automatically categorizes expenses and generates year-end reports. With Baselane, you will have Schedule E reporting, as well as income statements and account tax packages per property. This helps ensure investors don’t miss out on tax-saving opportunities, like depreciation and maintenance deductions while staying organized for tax filing.
The Magic of Automating Your Finances
Imagine a world where you’re not scrambling to calculate ROI for each property or trying to figure out which property is your top performer. Instead, your software is doing it for you—automatically. It’s almost like having a crystal ball. Still, instead of predicting the future, it’s telling you exactly where your profits are, which properties are bleeding cash, and how to optimize your entire portfolio.
Now, I’m not saying this kind of software will make you rich overnight—but it might keep you from losing your shirt (or sanity) as you grow your empire. After all, scaling without a solid grasp on your finances is like driving blindfolded—you might get somewhere, but it may not be where you planned. Trust me, your future self will thank you when you enjoy a nice dinner with your family instead of spending that time hunting down stray receipts during tax season.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
