(Upbeat professional music) – [Voiceover] Hey investors,
this is Bill Kearney with AssetRover. We’re going to show you how
to save time tracking rental property expenses, along with
your rent and other income. Well, it’s been almost a
month since we finished our taxes this year, and if
you didn’t have a good way to organize your finances,
it was one of the worst days of your life. If are on top of things, you
found a way to do it via paper, basic spreadsheet or maybe
even an accounting or personal finance tool with
software you may have downloaded or accessed online. So why would we track expenses anyway? There’s really two main reasons
why we track rental property expenses. Number one, is taxes, and
then number two is just for budget purposes. How should you track
expenses on your computer? You have three different
options out there, that are some of the
leaders in personal finance. Quicken being one of
them, also you have Mint, and you have Quickbooks. Now at one point you could
have used Microsoft Money, But since that is now
discontinued, you aren’t left with that option anymore. So let’s compare the three side by side. Quicken, is comprehensive
software that is good for small businesses, for your own personal finance, and more recently rental
property management. Mint is an online
personal finance solution. It’s free, it has good
automation, it links to all of your bank accounts seamlessly except, it really is
limited to personal finance. The third one is Quickbooks. That’s a powerful full
featured small business accounting tool and it’s very scale-able. The only issue we’ve seen with that, is it may be a little too
much for new investors just starting out with maybe only
a few rental properties. So we still feel that a desktop
solution is the way to go for tracking your expenses and your income from rental properties at this time. Now here at AssetRover, we
don’t have any affiliation with Quicken or anything like that. We are not receiving any
endorsements from the company. I just offer this suggestion
solely because it is extremely helpful to me and many others
out there who do real estate investing and need to track
their income and expenses. Truthfully, any financial
tracking software will work if you use it and you keep up with it. Quicken has been around for many years, so it has had a lot of
time to develop into the full featured program
that it currently is. Quicken’s rental property manager. It is easy to use and it’s
designed for real estate investing businesses. One thing we like about
it, is that you can set up an unlimited number of
properties via tags. So what we’ll show you in this video, is we’ll show you how to
track income and expenses, in Quicken, we’ll show
you how to tag income and expenses for each property and we’ll also show you how
to set up your rental property and mortgage if applicable. So here’s Quicken 2014
Rental Property Manager. There is a version of 2015 out there, but we’ll go ahead and show
you 2014 because that’s the version we’re currently using. What we’ll do is we will
go ahead and enter in a new expense. Let’s just put in 1001 as a
dummy entry for a check number. Now we will go in and select our payee. Let’s just say Jim’s Cleaners for example. Let’s say we had to get some cleaning done on our new rental property
that we just purchased. So now you can select the
category that you want to assign this to. You can see that there’s a
number of different options under “Rental Property Expenses.” So let’s go ahead and select
“Cleaning and Maintenance. ” Now here’s the magic part with
the Rental Property Manager. What you can do here, is
you can tag the property, and then assign all income
and expenses to that particular property. Let’s setup a new tag and
we’ll call it “Property One.” We’ll go ahead and hit OK. Let’s just say it’s a payment of 50 bucks. Then we can go ahead and
either click Save or hit Enter, and then we’ll go down to
the next line and register. Let’s enter in another expense. We’ll do check 1002 for example. Let’s just setup a mortgage payment here for Wells Fargo bank. We’ll have categories
again an a whole list of rental property expenses. What we’ll see here is
that we don’t have any expense categories for mortgages. The nice thing about Quicken
is that we can just go ahead and add the category
that we want here. Now we are actually going
to go back later and setup a mortgage for the property, I did want to show you at
least this feature for now. Let’s setup a category
called “Mortgage.” What you’ll notice here in this drop-down, is that you can make this
subcategory of another main category if you like. In this case, none of the
main categories fit for what we need to do for a mortgage. We will just go ahead and
create this as a completely new category for now. You can see how to create
an entirely new expense, in a new category. We’ll go ahead and label
this ” Property One ” so it stays under the same
exact property listing. As an example, let’s just
say $500 for a payment here. Let’s throw a rent in
here while we are at it. We will do a deposit, “DEP” let’s say, “Jane Tenant” paid us. We’ll say monthly rent received as a memo and you’ll see that in the
rental property income, there is a rents receipt. Let’s tag it “Property One”
again and let’s give ourselves a nice $1000 deposit. Now we have income
coming into our property, and a couple of expenses for example. What I want to show you
is how this can be used for tax benefits. Go into your category and
look at all of your categories on a list. If you go down say ” Show full list “, you can see the entire
list of categories under rental property expenses. Look to the right and see how they all say ” Schedule E for your tax form. ” You can see that the
rental property income is in the same way. Schedule E, this is a form from the IRS. If we just slide through
here and check out this form, you’ll see down here that
we have all the expenses from line three all the
way down to line 19. Line 19 being reserved for other
if you happen to have that. All of those match perfectly with Quicken, so that means if you set
everything up correctly, in the right categories it
will be very easy for you to export this give it to your accountant, and have that form filled
out automatically for you. Now it’s time to add an
asset account for your house. Once you do this, you’ll be
able to set your house up and you’ll also be able to
setup the mortgage later. As a nickname we’ll call
it P1 and then also put the address after it. This let’s you look at each
individual rental property that you have, and look at
it as P1, P2, P3 and so on. As you set this account up,
you’ll be able to choose if it’s a personal, business
or rental property transaction. Since we are just tracking our
rental properties right now, let’s pick ” Rental
Property Transactions. ” Now you can choose when
you pick the house up, Let’s just select Five – One of 2015. You can enter the purchase
price, which we will just put $100,000 for now and then
we will also estimate, $100,000 to make things simpler. Hopefully your purchase price will be less than what it’s worth. Now is there a mortgage on this house? This is where you can actually
pick if you have a mortgage, and also select the bank that
you have a mortgage with. Now you can make the loan
the same name if you want, but we like to make it
something different. Now the details will be P1 Mortgage. Now you can look on your balance sheet, and see which one is the mortgage, and which one is your
property without having to do a whole lot of thought. We’ll select loan type, mortgage. Opening date we’ll say May First of 2015. Now usually when you have a
20 or 25 percent down payment, chances are that your
opening balance may be 80,000 or 75,000, we’ll
just make the numbers easier by putting 100,000 in here. You can also setup a loan
payment reminder if you’d like To make sure that every month
you at least have a reminder that tells you ” Hey, go
ahead and pay your mortgage. ” If you have Billpay, you
might even be able to set Quicken up to have it pay the
mortgage automatically for you But most banks have automatic
deductions from your checking account. Now that you’ve added your mortgage, It will ask you if you
want to link this to one of your properties. Go ahead and select the
property that we setup already on 742 Evergreen Terrace,
and now it’s linked. Your account has been added. What you’ll see here on the main screen, is that you’ll have bill
and income reminders. Where you see the bill
and income reminders, you can right click and
select 30, 60, 90 days or you can show no reminders at all. What’s nice here is you can see
the reminders that we set up for the P1 mortgage. It actually comes up and
tells us about reminders that we can do in the register itself. If you go up to the right
hand corner and click on the blue clock you’ll see
that you can setup reminders within your account register. Now that we see that
the mortgage payment is actually scheduled for
June and that’s our first mortgage payment, let’s go
ahead and delete out that dummy entry we had for the mortgage. Then what we’ll do is once
the mortgage becomes due on June first it will
automatically send us a reminder, accept the transaction and put it in our checking register. Let’s go into the future
transaction and see what Quicken already automatically did for us. It went and set this up
as a split transaction. Which means, it will split
the mortgage and the interest and allow you to look at both of those. Then the interest will get
recorded under the interest category and then the
actual mortgage itself, the principal will deduct
your P1 mortgage balance. Let’s turn off our reminders
within the register. Another nice thing is you
can actually go into the P1 mortgage itself and see how
much you owe on the property. You’ll see that we can show a
whole year’s worth of mortgage payments in the future. That doesn’t look too good
for us because, where’s our income? All we see now is a whole
slew of mortgage payments that will certainly drive us
into the red as shown here. Don’t worry about that because
we can also add reminders for income and the
deposits that we receive. This is going to help us
forecast into the future what our balance will look
like in the checking account. You just right click and
pick ” income reminder “, and it will all be filled
out automatically for you. You can double check
and make sure it’s setup on the day of the month that you prefer. In this example of course,
we’ll set 6/1 as the next due date. We don’t want to do it now,
we’ve already entered one for this month in May. Alright, so there we go now
we have all of the income and all of the expenses. At least the mortgage
payment and the monthly rent income monthly. We will go ahead and clear that away. One nice thing of course is
now that you’re doing all of these tags you’re able
to do reports on your income and expense for each property. You can see here our itemized
tags for year to date there’s the income and there
is the expense for property. Let’s make this interesting
now and let’s go ahead and enter more income and more
expenses for a second property. Let’s throw our buddy Jim’s
Cleaners back in again now. We’ll do a new check number
and now we’ll tag this as property two. Let’s get some income in for
this second property as well. Now we’ll have a new tenant. We will have Joe Tenant
come in here and we’ll put a similar memo in here. Let’s go to our rental property income and pick Rents Received again
and tag it Property Two. We’ll do another $1000
deposit in this case. Now let’s go back to our schedule E report and check this out now. You get to see everything
in that Schedule E in a list in your report. We have it setup in tags so
you can see each property. You can also go into itemized tags and look at your year
to date expenses there and see how the income
and expenses are setup and broken out per property. That’s going to go perfectly
into your schedule E where you have A, B and C for
Property One, Two and Three. You can sort these any way you like. Let us know what you think! How do you save time tracking
rental property expenses? Do you even track your
income and expenses? Do you do it in the old paper format, or have you graduated to
software like Quicken or maybe something else online
that at least gets you some of the basic income
and expense tracking? Do you have any tips that
might make tax time low maintenance and simple? Is it just a total nightmare for you? Please go ahead and
leave us a comment below. This is Bill from AssetRover
hoping you have a great day. (Cheerful music plays)