Yearly Planning, Year-End Planning
Yearly Planning – this should be done before the new year begins. It should also be reviewed quarterly. Again, this is your business, your investment. What should be part of your yearly-planning? Any turnovers coming up, what maintenance needs to be done this year? Have a budget? Taxes, Insurance, Mortgage, Utilities – what are your fixed expenses and how much are they going to be? If you have a vacancy do you have the reserves set aside for turnover, and the return of the security deposit? Review insurance, mortgage to see if you need to make adjustments. You’d hate to find out after a fire that you didn’t have enough insurance. Review the lease to see if there are any new legal addendums that need to be included with the lease, are there any changes to occupants – birth of a child, new roommate etc.? Compare your new year budget with actual budget from prior year? Were you on track, over budget, under budget etc?
Year-End Planning – this is where you gather all your files, prepare for tax time, review the budget and see how you did. What changes were anticipated and unanticipated? This will help with the new year planning. Set up new accounting spreadsheets, and new file system for the coming year. I have set files, and I pull out all the docs in the files and put them in a large envelop with the property address on it and then I print my spreadsheet for the entire year of my accounting and staple it to the front of the envelope. Then I give the envelope to my accountant. I now have empty files and folders ready for the new year. I go to my computer files and create new ones for the new year.
This planning is vital and so important to do. If you just hate it then hire a bookkeeper to do this for you. It is well worth the money to have someone organize this accounting. Remember this is your business. Get help where needed. Just like I don’t expect all owners to be able to do plumbing, electrical or general contracting work you shouldn’t expect that you can do the accounting if it isn’t your thing. You can write off the expense for taxes and this way you get all your due write offs.
I can’t stress the importance of doing your year-end and new year planning. If you don’t do this crucial part of property management then you might end up like my next and last topic of property management: Z for zombie, have your energy zapped and lose your zest for life by being burdened with your rental property.
Please check out my website at www.PortolaRentals.com if you are interested in properties in Santa Cruz or have rentals in Santa Cruz, CA.
Kathleen Richards
