Maintaining a property as part of your financial portfolio is a lot of work. There are many easy mistakes a landlord can make when renting out a property. One of those areas that could easily deter how well you manage it is the rental invoice.
If done incorrectly, it can cause a lot of stress and aggravation to you, your tenants, the leasing management, and any vendors you hire for property maintenance.
Here are three mistakes you can avoid when you issue rental invoices to the tenants on your property.
1. Not Using Accounting Software to Keep Track
It can be assuring to know there is money coming in and you have a written record of how much you are spending for your property. Yet if you do not have an easy and efficient way to keep track of them, you can lose out on a lot of money and wasted time.
Having accounting software on your computer at your disposal will give you an accurate representation of
- How well your property is doing
- What maintenance expenses you have purchased
- If any income from contractors or tenants has arrived
Similar to a manager from a property management company, it will take care of the day-to-day aspects of running your income property for you as you explore other potential properties.
2. Not Paying Attention to Accrued Rental Income
For those who don't know, accrued rental income is when there is a certain amount of rent that's been earned by the landlord in a specific period, yet it hasn't gotten received from the tenant. But accrued rent cannot occur if the tenant always pays the designated rent on the first day of every month.
If you as the landlord see that accrued rental income has occurred, you should account for that inside your rental invoice. To account for this, you have to record a debit to your property's account and an offsetting credit to the unearned rent account (which is now a liability account). Doing this will make the invoice for the next month more accurate.
3. Not Noting Any Increases in the Rental Price or Other Charges
The landlord should always make sure the price for the rental unit in question is correct or have a recorded note of a price increase. On the other hand, if there are ongoing maintenance costs that will affect most of the tenants in the building, that should be noted as well.
Remember: any increases in charges for the rental unit have to be reasonable enough for your tenant to want to stay.
Don't Make Mistakes on Your Rental Invoices
Getting the information on your rental invoices correct is crucial to maintaining your finances regarding your property while also balancing your relationship with your tenants. Don't let the three mistakes above derail you from keeping good track of your finances. A rental invoice may be a small part of managing a property, but it is still important to make it as professional as possible.
Are you looking for more advice on property management, especially in the Washington, D.C. area? Consider talking to an agent at HomeRiver Group for your needs. Contact us today to discuss what needs or concerns you have about your rental property.
