Try out Kitt, A Portfolio management & analysis software for property investors.

Grow and manange your portfolio with Real Data based on your positioningI'm Interested show me more
Written by Kitt
27 August 2018 4 min read

Using real estate accounting software can really help real estate investors set up and achieve financial goals.

A lot of investors don't have any actual written goals, but every successful person does - without exception.


"If a man does not know to what port he is steering, no wind is favourable to him."
-Seneca (Roman philosopher)

Without goals that underpin your entire strategy; without a clear destination, you are doomed to fail.

Having financial goals means that that you are prepared to make tough financial adjustments and decisions in order achieve them. However, financial goals can only be set out if you have the corrent financial data in front of you.
Thus it becomes critical to keep your books in order. Many new real estate investors tend to do their own accounting without a full grasps of the concepts which usually entails loss of money.

The consequences of having messy accounting

Let's take a look at an example - A real estate investor named Micheal, was in the process of trying to sell his rental property, and the potential buyer wanted to know if the property was profitable.

In reviewing the accounting statement for the previous year, the prospective buyer noted an $11,000 miscellaneous maintenance expense listed and was concerned whether that was a one-time or recurring expense. Unfortunately Micheal was unable to itemize this miscellaneous expense due to poor bookkeeping, causing the buyer to walk away from the deal.

Where to start

When assessing finances, it is best to break down the financial plan into three categories:

Many real estate investors to this day still use outdated methods, such as excel spreadsheets, to do all of this. Manually doing this can lead to inaccurate financial reports that can lead to major ramifications. With real estate accounting software not only are you able to prevent human error, but real estate software can also provide real-time data tracking of your finances, improving accuracy when it comes to forecasting and positioning.

Evaluating expenses and spending

Planning for the future is vital when you are a real estate investor. By setting a long-term budget, investors can avoid unexpected costs during tough financial times.

Capital budgeting and planning are essential when it comes to evaluating expenses and spending.

Your capital expenditure budget should take into account all of the things you will spend capital on in the years to come. It will evaluate the potential expenses and investments you can expect in the future, detailing any replacements or preventative maintenance that might be needed in the future.

Usually, these budgets include big-ticket items like:

  • Lighting
  • External repairs such as roofing
  • HVAC systems
  • Kitchen equipment
  • Furniture

Real estate accounting software like Kitt can help investors quickly identify and track expenses automatically. Allowing investors to figure out how much money you can reinvest in their property business.

Financial goals

Aside from working towards buying another property, having all your finances in order will also assist you when it comes to setting up your financial goals.

If the goal is to show the necessary affordability ratios to be approved for finance, then no financial review is complete without a plan to pay off existing debt as quickly as possible. Real estate accounting software can streamline this process.

Improving the bottom-line

Your bottom line is the most important part of your investing business. There are thousands of dollars that go unaccounted for every year by investors that don’t stay on top of their business.

Getting your weekly rental checks is nice, but if they are going right down the drain then you will be constantly trying to stay afloat. This is why streamlining real estate accounting via software is so important. A real estate accounting software like Kitt can easily track income, spendings and forecasts. Using these metrics you can then aggregate and analyse many data-points for assessment. Automatically monitoring your progress and setting benchmarks for your financial plan.

Given the complex nature of real estate accounting, you need to use the right tool for the job. This isn't something that can be managed using a spreadsheet. That's not what spreadsheets were designed to do. Let the software do the hard work.

No more stacks of paper, spreadsheets or complicated accounting software!

The sooner you assess your financial situation and make the necessary adjustments to achieve your financial goals, the better.

Fortunes are made and lost every year in real estate. The people who succeed are the ones who plan well, and take accounting seriously. With careful control of the figures, you can build a solid business that stands the test of time.

Key Takeaways

  • Stream-lining your real estate accounting using property accounting software can help you maximise revenue and improve the bottom-line.
  • If you are a new real estate investor start evaluating your spending habits.