The Easy Way To Manage Multiple Investment Properties

How do you manage multiple investment properties? How do you manage the cash flow? How do you work with your rental manager and accountant and what property software do you use if any?

0:00 – Introduction
0:27 – It’s actually super easy to manage multiple investment properties
0:45 – First, set up properties in the right way
2:01 – What if your property is negatively geared?
2:40 – Use your property manager to make your management easier
4:57 – Summary of the management of the finances
6:44 – The property software we Ben’s uses – Excel
8:48 – How do you store your receipts?
9:45 – You can do this monthly, or quarterly, or annually
10:16 – What do you do with extra money from positive cash flow properties?
10:52 – It’s super duper simple to do
11:21 – Do you need property management software?
13:23 – Set things up simple from the start, and trust (but keep track of) your advisors

Transcription:

Ryan 0:00
just as we drive to our next property inspection i wanted to talk to ben about how to manage the cash flow and how to manage multiple investment properties this is something people have been asking what kind of software do you use if any and how do you go about doing this because it seems quite complicated so while he’s driving going do we need the maps

Ben 0:20
i probably need the maps as well if you want to pull it up okay i’m not going to the way so the first thing you need to get through your head or the first thing that i needed to get through mine was that it is super easy to manage multiple properties it’s not these big scary overwhelming thing where you need to pay hundreds of dollars a year or a month for software it is super basic so the first thing that i do is set up properties in the right way i’m conscious i use my hands hates the dangers so the first thing i do is when i’m buying the property i set up in a way that is going to make the management of the property as easy as possible

Ryan 1:02
so what do you mean by that

Ben 1:04
what i mean by that is when i physically apply for the home loan at the front the front end of the property i actually set up the home line in a way so that it’s got every single property i own has its own home loan with its own offset account attached to it so effectively from a bookkeeping or an accounting perspective i literally only have to look at that one property at the end of the year and i can get one statement for the entire financial year for the home loan yeah and i can get an i’ve got one account which is the offset account where i put all of the rent that comes in from the property and all of the expenses associated with that one property get taken out of there as well yeah so what a lot of people do is they blend accounts especially people that are just getting started and then it becomes really difficult to do bookkeeping because it’s all mixed up where when you’re just looking at you buy one house with one home loan one offset account it is really really simple to do the bookkeeping on it

Ryan 2:01
yeah so what if your property is slightly negatively geared and you’ve got to pay extra money to keep that property afloat we just deposit money into that account

Ben 2:11
that’s exactly what i do i’ve got some properties that cost me money to hold each month and literally all i do is a once a month transfer a couple of days before the interest is due with a lump sum amount and it’s the exact same amount every month so that again when i do my bookkeeping i know that that’s just the single figure 12 times a year that i don’t have to think about yeah

Ryan 2:33
so okay so that’s one step is when you set it up make it so it’s easy for bookkeeping what about tracking do you use do you use any software do you just use excel to track these things do you track it throughout the year

Ben 2:48
so what i do is there’s one step before we jump into that and that is your property manager so with me your property manager legally has something called a trust account which is where all the rent and all the expenses have to come out of now that’s effectively like your profit and loss statement or your income and expenses statement for a property and what i do is i get when i’m setting up the property i get the manager and i get the manager to pay my water i get my manager to pay my rates i get my manager to pay my insurances so that all of those costs associated with holding the property are actually on their one statement so it saves me having to do heaps of bookkeeping personally yeah now i obviously don’t trust anyone and no one should you know you should really make sure you’ve got a solid relationship with your manager and have rules in place so i won’t let my manager pay anything without me double checking it that isn’t a fixed cost that i’m already 100% in longly so

Ryan 3:49
did you mean like with water you have some sort of sign off process where they show it to you approve it and then they pay it on your behalf

Ben 3:57
you know i’ve just got a system for that so with water for example i let the manager pay the admin and then the manager goes and gets the actual you know because with the water bill there’s an admin component and then there’s a usage component yeah so i approve them to pay the admin component and then i expect them to go get the usage component for me on my behalf you know rates of fix so there’s nothing that i can do as much as i want to jump up and down with the council on not gonna change anything so let them pay that but for example if there’s maintenance associated with the property if it’s something that they think i would approve without me saying it you know i’ll let them approve up to 200 bucks but if it’s anything more than $200 it isn’t 100% necessary then i need to sign off on it and if it’s a discretionary spend like they the new owner wants like the new tenant once a fan i need to sign off on it you know i only had the $200 rule if someone if the water breaks in the middle of the night

Ryan 4:55
so in terms of management of the finances let me just try to see if i’ve got this straight so you set up your property you’ve got your home loan you’ve got your offset account but money first is paid into your real estate managers trust they then pay a bunch of expenses out of that trust before whatever’s left over gets sent to your offset account is that correct exactly so at the end of the financial year whenever you’re doing your tax you’ll actually have three different accounts where you need to pull figures from so you’ve got your home loan you’ve got your offset account but then you’ve also got the trust of the real

Ben 5:34
estate manager and what they give you exactly in the real estate manager legally has to give you an annual statement or a statement anytime you ask so i get quarterly statements just to keep my finger on the pulse i also get weekly statements that i don’t look at but i just get them for best practice and then i get my end of year statement then i call my property manager up and i say he’s there you know how do i itemize these up and now that i’ve got the statements i’ll look at income then i’ll look at i’ve got it split into water rights management maintenance so that it all comes pre broken down for me then what i do is i open up my home loan account and i get a statement on the home loan account for the whole year to see how much interest i pay and then i look at another statement which says how much principal i paid back the bank on the home loan and then what i do is i open up the offset account which is the last account which is kind of like with the income and the cost come out of and i just see if there’s any other costs in there that he that weren’t in the management thing effectively so look at the management versus the offset and then what i do is i’ve just got one spreadsheet for each property you know it’s one big spreadsheet with tabs yeah each property has its own tab and i have income at the top then have expenses and have the expenses broken into about 20 categories that my accountants given me any account will give you a spreadsheet that you can use and then i just punch in all of the figures that i’ve got from my home loan account my offset account and my manager and i just punched them in on the month that the cost came out so that instead of my accountant spending time on punching in numbers and pushing receipts they spend the time strategically looking at ways that they can reduce my costs as much as possible

Ryan 7:22
yeah so effectively you’ve set up your accounts in a simple way and your bookkeeping and the simple way that you’re able to do it the majority of it yourself basically all myself you then create a spreadsheet which has your income lines as well as your expense categories you’ve then got that set into monthly how much you’re spending on each expense maintenance water whatever each month was lazy and then well then it would total into yearly

Ben 7:49
i just started doing it yearly because like my accountant didn’t need it monthly that was more like my ocd to see properties you know monthly where they’re running faster so the

Ryan 7:59
thing is i think most people would probably prefer to do monthly but it’s so easy like that’s how i do for my business is you’ve got the months and then you can just do a total column which sums up all the months in excel which is really simple and then you just provide so i’m guessing you just provide that to your accountant they then do your tax return results so

Ben 8:18
i give them that i keep all of like i keep an email file for each property based on like i do like property one and then he 2018 19 financial year for example yep and i put all of the all of that stuff just as a written record into there then i give the accountant a spreadsheet you know and they’ve already got the tax depreciation schedule set up for the property they do all their you know what magical stuff

Ryan 8:46
what about receipts and stuff like that

Ben 8:48
i just keep them all in email form in every email that i’m using in a folder yeah so each property’s got its own folder and then its own financial year within that folder

Ryan 8:57
yeah so if you’re ever audited then all of your receipts you know what i mean yeah they’re all in that year they’re all you know quite easy to find and i would imagine there wouldn’t be that many per property

Ben 9:09
there’s no receipts anymore like back in the old days i used to have a lot more receipts but everything these days is electronic

Ryan 9:15
it’s all invoices and

Ben 9:16
so it’s all everything that i’ve bought don’t get physical invoices from anyone anymore like my rates and stuff come in email form yeah and it’s just better bookkeeping that way because i had receipts from five years ago and the receipts are designed i think to fade yeah they like that and get a warrant he

Ryan 9:35
says no well that is on the paper they uses like cheap it’s it’s a cheap way of printing i think but anyway we digress i

Ben 9:44
digress so effectively it’s super simple now some people would do it monthly i just i just like doing things in batches so i

Ryan 9:53
think you’re at once you’ve got the cash flow and you’ve got the luxury to do that and i think if people are in a more in a tighter cash flow position then i might need to do a monthly to make sure they’re managing their cash flow well but it sounds like you’ve just got it set out really easily for the negatively geared properties once a month that extra money you send it across so there’s enough money in the bank account to pay the bills and then what about with your positive cash flow properties with the extra money just leaving an offset account i guess you can do whatever you want with it

Ben 10:23
yeah so you know i like to just leave you know once you’ve paid off your own home like if you’ve got debt on your own home then theoretically all of the extra income sitting in all your account should be sitting against your offset account on your home loan but if you don’t have debt on your own home then you know the money can just sit there and offset against the property and reduce your interest rate so it’s super simple like really really simple like if you’ve got you know one home loan account and one offset account for each property you’ve got a good property manager who does 90% of your payments for you and that sends you the right statement at the end of the year and you’ve got the right accountant that you can just make a simple spreadsheet for and pull it all together it is simple like i literally spend two hours he at one point i think i had nine properties that i owned at the one time or something eight or nine properties like it was still only taken me two hours to do it yeah it’s so simple like when people say they need software and stuff it’s just software companies selling you rubbish yeah he don’t need it

Ryan 11:27
i think that’s the thing but what you talked about in today’s episode is just a simple way to manage it so you don’t need software so you can use excel because it just is so simple whereas i think some people they move money around so much and to try and put in the right offset account and make it offset you know they’re moving money back and forth and then they’ve got expenses coming out of multiple different accounts it’s all mixed in together you know then maybe you do need software to be able to manage that because that gets really confusing

Ben 11:59
manage yourself like a lot of it’s got to do with like if you’ve got a bunch of properties now restructuring it to this simple format which is what i’ve done or because it wasn’t always like this it’s easy to say after 10 years if it’s like this it’s so easy to be a fucking nightmare like i used to create a huge i remember like walking into my account and once we’d like to a4 like folders just filled with paper receipts and she’s like what’s this and i’m basing my receipts from my properties in my business and she’s like okay well now i’m charging you 600 bucks instead of 150 to do your return and i was like what she’s like yeah i want to look i want it to look like this and i’m like we’ll start i’ll go home and i’ll put it together like that because i didn’t value my time at 600 bucks for three years at that point and i would just i went home put it in the spreadsheet she gave me and then ever since then i’ve just used it

Ryan 12:52
yeah so what property software do we recommend excel or google sheets which is free yeah and so as you can see if you set it up correctly it can be quite easy to manage the cash flow of multiple different properties and as you can see this can really scale up or down if you have one property you can use this strategy if you have 24 properties you can use this strategy you would just have 24 tabs in your excel document instead of one tab and so it seems very simple to do

Ben 13:23
i think a lot of it is just setting things up simple from the start and trusting your team of advisors like i do trust my accountant i’d trust my property manager but i also double check every single thing they do and there’s rules around all of that for me like i don’t just allow them to spend my money without my sign off so if i’m spending money it’s always going to be my discretion to do that yeah and i think you know when after after a period of time you know sometimes there’s a bit of carrot sometimes there’s a bit of stick with these time advisors around you and sometimes you do have to step in and go you’ve spent this i didn’t ask you to spend it i didn’t sign off on you spending it now you can either refund me the money properly or we can you know figure something out here because of you know it was in an an overtime your team of advisors understand what type of person you are all of mine understand that i’m a complete taught us that i want to run the it’s a business demand i want to i want to run the properties as lean as possible and as simple as possible like i don’t want my mindset to be distracted by my properties i’m paying someone a management fee to do that stuff and i want to be spending my time in my business and with my kids

Ryan 14:36
yeah so we hope that that helps you to manage your property portfolio we hope you can see that it can be quite easy to manage multiple different properties and manage the cash flow of that we wish you the absolute best out there while you go ahead and invest and

Ben 14:53
yeah if i have any real hot us in arsalan ecdh today

Ryan 14:56
no i think it was just like

Ben 14:58
this is how it’s done it’s so simple it can be easy and i’ve even been to vietnam so guys i was just like driving in trying to focus on that team and that was my changes complete like

Ryan 15:08
this is how it is no i think people will get a lot out of this and they can see how easy it can be and we’ll stop getting confused killer you’ve done a good job

Ben 15:18
yeah

Ryan 15:18
good job ben all right that’s it from us today until next time stay positive

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