Analyzing Your Data
The best part about putting all of your financial data into a real estate accounting system or software is that you have the ability to analyze it . You can pull various reports and statements to evaluate the success of your property at a glance quickly . The ease at which you can pull these reports will differ based on the software that you use . If you have opted to use Google Sheets or Excel , you ’ ll have to play around a bit and familiarize yourself with the reports features . If you opted to pay for real estate accounting software , you should have an easier time pulling all of this information . If you don ’ t have much experience creating or reading reports , there are tons of online resources to help you . To become proficient in Excel , head over to YouTube and start there . Your paid software should have a support team who can help you get what you need .
These reports are a great asset to see how your business is performing . You can get a glimpse at individual properties or your entire portfolio . Take a look at your income and your expenses and make sure everything is looking good . For more indepth data analysis , you can even look month to month and begin to associate successes with different business strategies and events . These reports are great if you are looking to get a loan or work with an investor . You can pull months and years of data to show them your income history and how well you ’ re doing .
Understanding Basic Real Estate Accounting Terminology
Once you have determined that you are ready to get into real estate accounting , you must first thoroughly understand the terminology . Make sure you know exactly what the terms “ the books ” and “ the supporting documents ” mean before investing in real estate accounting software .
The Books
What does it mean when someone refers to “ the books ” in real estate accounting ? These are the paper and digital records of all the financial transactions that come through your business ’ s bank account . Keeping all of these financial transactions in one place helps you easily keep track of them and pull specific transactions at any given time . You can do this by entering your bank statements and receipts into a spreadsheet that you have created to help organize your finances . Your real estate accounting sheet should contain the following :
• Date of the transaction ;
• Check number ( if applicable );
• Who the money went to ;
• The amount of money paid ;
• The account the money came from ;
• A brief description explaining the transaction and what it was for ;
• The property associated with the transaction .
Having all of this information as columns on your spreadsheet allows you to easily search for any of this information and quickly get an answer . Make sure never to skip the memo section , as it ’ s essential to know the purpose behind every single transaction .
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