One of the great uses of Xero, and a fun way to get started, is to manage your investment properties in Xero.
We’ve observed that many property investors are way behind with their property accounting and then have a huge job at the end of the year. Or they deluge their accountant with a shoebox containing a year’s receipts for them to untangle. There is a better way!
Rental properties are largely cash businesses, most transactions appear on your bank statements. As Xero allows you to import historical bank transactions you can go back and retrospectively catch up. Even a few hundred transactions you can quickly process to get back up to date and in control.
Our repeating invoices allow you to create rent schedules for all the people that are paying rent. These can also be set up retrospectively so when you process your last 6 months of bank transactions you can match payments off what was due. I’ve set up a few friends’ investment properties on Xero and every time we’ve discovered missing rent. And each time the amount has been more than a year’s subscription to Xero. Instant ROI!
Once you have caught up, the repeating invoices automatically create rent transactions as they are due. This means you can match payments off and see immediately if anyone is late.
You track expenses and rent in the Profit and Loss report and use Tracking Codes to have separate reports by property.
In the Balance Sheet you can see what each property is worth, your mortgages and the amount of top up funding you are putting into your properties.
We’ve developed a guide to setting up rental properties correctly and would love your feedback. If enough of you want a hand to get set up we’d be happy to run some workshops. Either contact your accountant or let us know.