We are going to talk about financial reporting or how to handle your cash, keep accurate accounting records, and tax issues.

Financial Reporting

The whole accounting issue is an important area. It's one that if you make some mistakes it can really cost you, particularly if you were to do something wrong in terms of tax returns. There could be some real implications here if not done properly.

What I want to do - what the whole course is designed to do - is to upgrade you guys. If you're already managing a few small properties, I want to upgrade you to a more professional standard.

One of the things you may want to look at is you may be doing your books on Excel, maybe just in your checking account in a draw, or maybe literally on a pad of paper. All of those systems work, but they have limitations.

One of the things we talk about is considering going up to a software package. There are several out there. There is Microsoft Quicken, which is a package you can use. It has a special version that's for rental properties. I haven't bought it in a while but it was generally around $39 to about $79 if you want to get the real fancy version.

You can use Quick Books. I don't personally use Quick Books. My maintenance company does. We have a sister company for maintenance and they use Quick Books and they love it. I know they work well, but I personally have never used it. That doesn't mean it's not an excellent product. I've certainly heard very good things.

Web Based Software Products

I use in my business a software package called Buildium. It's a web-based package. It is not very expensive. It might be $50 to $100 to get it going. It then charges you by the amount of properties you have.

If you've got fair to modest properties is probably going to do less than $30 or $40 a month. It is a complete web-based software package. It certainly has all kinds of accounting issues there. You can upload documents and save leases and all that stuff if you're not real good at organizing that stuff.

The nice thing about this software package is your tenants can come in and they can get their lease if they want it. They can download it. They can pay their rent online and put their maintenance requests in online. There are a lot of nice advantages of using this software package.

There are a number of competitive products out there. You simply have to test a few of them and try one ultimately. A lot of them will give you like 30 days free. Try a couple of these if you want. I think in the long run they'll make your life much easier.

There is some startup time. You obviously have to get your properties uploaded and get use to the software. Once you do it will make your life a lot easier. Your accounting is far easier. You can have all different kinds of accounts. You can track your money by property, by tenant and kinds of different ways. Definitely consider that.

Within Buildium, Quicken, or even Quick Books, all these have a general package. That is how you track your various accounts. We're going to talk about that a little bit later. You can track expense accounts, income accounts, your asset accounts, and liability account. Your typical general package will have all of that.