A spreadsheet helps organize the day-to-day rental operations. Excel is a preferred choice, because of its ubiquity, flexibility, and agility to add information. Google Sheets has also gained popularity in recent years. This article discusses the benefits, but also the limitations, of using Excel for your rental management. Most importantly, this article includes a free, downloadable Excel and Google Sheets document for your rental property management.
Tracking the day-to-day operations is crucial to understand your financial health and to avoid lawsuits. The same process is required, whether you have one, or 100, rental properties. From a high level, the information to keep on record includes:
- Property Marketing - the description that sells the property, the features and amenities, the beautiful photographs, and other listing information
- Prospective Tenants - tenants who are interested in your rentals, from leads to applicants
- Tenants & Leases - the current residents who are living in your rental properties and high level lease term
- Service Professionals - your local support to help maintain the condition of the rentals
- Maintenance Requests - maintenance and repairs submitted by your tenants, the current status of each request, and the next steps
- Financials - tracking financials, from rent collection to tax information
We understand that you may not be ready for software to automate the process, so we included a tracking sheet at the bottom of this post to get you started.
Benefits of Excel
Excel is a powerful tool and seems to have endless functionality, with many features used only by “power users.” It works well for generating forecasts, using previous data to predict future results. Excel makes it easy for landlords to stay on top of their daily finances for their property, while keeping an eye on the long-term value of their investment. It also makes data manipulation much simpler, allowing you to write in your own functions and create graphs and charts to demonstrate trends. Today, Excel is a common feature on computers as it is included in the Microsoft Office package and hundreds of tutorials can be found online. Overall, Excel is a simple, user friendly way to organize and track rental data, a common task for landlords and managers.
Benefits of Google Sheets
Seeing the capabilities of Microsoft Excel, Google created their own application called Google Sheets. While the two are largely similar, there are some differences worth mentioning. Google Sheets is a cloud-based technology, meaning it can be accessed anywhere with an internet connection. It also has sharing capability, allowing multiple people to edit a sheet at the same time and making it great for collaboration. With this shareable feature, Google Sheets does something known as version control for you. It keeps a running tab of all the edits made within the sheet, that way you are able to revert back and forth from one version to the next without losing any of the information. With Excel, version control must be done manually by sending it back between users.
As a landlord and manager, Google Sheets may work better than Excel if multiple people are using the spreadsheet or if you need a real-time version on any device.
Limitations of Excel and Google Sheets
While these tools are helpful for tracking, they both have shortcomings. Excel and Google Sheets are data entry tools in which the user has to input the data and manipulate it as they wish. Data will not automatically generate for you. Specific examples related to property management is the manual entry of recorded rent payments, maintenance communications, and leads that come from rental listing websites. Neither of these tools will send notifications or reminders for tasks such as lease renewals or rent collection, leaving more responsibility for the landlord or manager. While Excel and Google Sheets are great for analyzing and tracking data, this does not translate to document storage. Property management documents such as lease contracts and applications must be stored elsewhere.
Proven Management Tools
When a landlord or managers starts with rentals, they typically do not want to spend money on tools. But, they often underestimate the value of their time and the likelihood of error. They do not consider the cost of their time to perform data entry, respond to leads, and populate documents. These activities can take more than 8 hours a month, which is hundreds of dollar in time. Even for one rental unit, there are affordable solutions that will cost less than the amount of time spent checking bank statements and following up with tenants.
Here are the reasons to use a purpose-built property management tool:
Advertising: Excel does not have the technology to market your property on all of the rental listing websites and track your leads. More exposure in advertising your rentals will reduce vacancy and turnover costs. You reach more prospective tenants and can respond to them faster when you have a system to consolidate these features. Hemlane will even respond to your interested tenants to schedule the first showing.
Debt Collector: Tenants can be forgetful when it comes to rent payments. Without a system in place, landlords must manually remind tenants when rent is due. With late rent, the landlord may feel like a debt collector by following up personally with the tenant. Not to mention, tenants may try to deposit the rent without paying the late fees. The best systems out there will require the late fee to be paid before the rent is due.
Maintenance Coordination: Property management is a 24/7 job. It always feels like maintenance requests are initiated at the most inconvenient times, such as during Sunday night’s family dinner. A system can respond to the request and assess the urgency to know whether or not you should be notified immediately.
Legal Risk: Unfortunately, rental management is one of the more litigious businesses. When you don’t have a system that tracks tenant communications, rent receipts, lease signing, and other management tasks, you can open yourself up to a lawsuit. It doesn't matter how many rentals you own, but rather the process with each property. A smart property management system will do this for you.
Professionalism: Bad tenants (aka “professional tenants”) can quickly make any landlord want to sell their investment property. Professional tenants often seek out unsophisticated landlords, where they find it easier to take advantage of any situation. With a system and process in place, you are less likely to encounter one of these tenants. The most costly expense is a bad tenant. A system will screen tenants and make recommendations to keep you out of trouble.