I thought that every real estate investor out there was tracking rental property expenses the same way. Until, one of my clients who bought a property two months ago, confessed me something surprising: he paid for the renovation of the property from his personal account and didn’t record any of the expenses. We had a session last week and I wanted to run some numbers. Turns out he didn’t have any idea of how much money he spent. Please, if you are a real estate investor, please use a better way to track rental property expenses!

How To Track Your Rental Property Expenses for free

If you are investing in real estate, you must know your numbers. Otherwise, it is tough to say whether you’re making money or not! This is a problem if you want to replicate the deals. You gotta know your numbers!

OK, so if you thought I was going to propose you to use some expensive software for real estate investors, you’re mistaken. 🙂 Frugality is still a must at From Cents to Retirement…

Here’s what I do:

  • I record every single transaction on the day it occurred, in a spreadsheet (see below). 
  • I don’t care if we are talking about 20 cents or 20 bucks. Every transaction means every transaction.
  • If I drive to the property, I also record how many kilometers I drove.
  • I also record when I collect rents, including the amount paid, the date and the form of payment (rents are mostly wired these days).

The main advantages of doing this, include:

  • You’ll know your numbers. Good investors know their numbers.
  • This works beautifully for tax deductions. You’ll know exactly the expenses you can write off!

Again, I’ll stress this: if you record your transactions whenever they take place this process becomes much easier. I’ve found it very stressful to try to remember all the expenses – plus if I didn’t, I’d get frustrated.

So, the spreadsheet you should be using should capture ALL your expenses, and then aggregate everything in a very readable way. In particular:

  • Capture all expenses with a timestamp.
  • Automatically sum up the expenses, per property and per month.
  • Provide a clear summary, per property and per month, of the breakdown of the expenses you had.

You can do a spreadsheet yourself, or download one from a reputable Real Estate site. I recommend the following ones:

In particular, I like the second one, from Fast business plan:

Rental Income and Expenses Spreadsheet

Not only it describes the macro and micro information, as it also gives you an awesome monthly view:

Rental Income and Expenses free Spreadsheet from fast business plan
(the images were taken from Fastbusinessplan.com)

Either way, test all of them and choose the one that helps you the most. If you’re looking for a Real Estate pro forma, have a look at this one.