For small-time real estate investors, managing the “behind the scenes” aspect of the property investments can become a hectic mess. Often, the small investor does most of their property management tasks themselves, making it easy to get behind, lose receipts, forget about a ledger, and have leases spread out among their home office. To help one get organized, below is a list of five tools that every small-time real estate investor should consider to efficiently operate their small empire.
1.) Home Office – First, every investor should have an office in their residence. A home office is indispensable for concentrating on the business when one wants to without being disturbed by their surroundings. It serves as not only a place for concentration and thinking, but also for a means of organization and the feeling that one actually does have a business.
2.) Spreadsheet Software – This is not a must, but can make a property owner’s life so much easier. Microsoft Excel is by far the most popular spreadsheet software and allows the user to automate powerful calculations, keep a computerized ledger, and easily calculate small ratios and income figures. Plus, it makes backing up one’s data (ledger) extremely easy. To back up one’s spreadsheets, simply copy them to disk, CD, or another hard drive (try backing up an actual ledger that easy, it isn’t going to happen).
3.) Ledger – If one isn’t going to computerize their ledger, than they must carry an actual ledger. This is the book that all debits and credits are posted in, and becomes a key in figuring out tax deductions at the end of the year. These books cost about $10.00, and are worth their weight in gold during tax time.
4.) Lockbox/Safe – A lock box and safe obviously helps safeguard important documents, but the real reason that this is a necessity for one’s real estate business/investments is that it is a great place to store keys to the properties that one owns. After acquiring more than a few properties, keys can become a real hassle to organize and safeguard, so label the key rings and throw those babies in the safe.
5.) Filing cabinet- This is beside ledger in level of importance, a real “must have” for any real estate investor. As much as we love computers; leases, deposit forms, rental applications, and other vital property management forms are not going to be stored on a computer; at least yet. It is often recommended that one get a filing cabinet and man it with two folders for each property they own. One for tenant info and another for property financial information. Also, in addition to those folders, keep one folder for storing all info of previous tenants.
With the above five tools, there is no doubt that the small-time real estate investor/owner will be successful in efficiently running their business while making their life less stressful.
By Robert Charlson