Smart approaches to foolproof bookkeeping for your property

Create a digital filing system

Manual bookkeeping systems include a series of books or ledger accounts. While these can be purchased at local newsagents or bookstores, once the pages are filled out and the receipts are added, it becomes a lot of information in one place to not only sort through, but carry around.

With this in mind, consider creating a digital filing system. Web-based filing systems mean that investors can update their books from any location, and has the added benefit of always being a click away in case information needs to be accessed in a hurry.

Know which documentation you need for tax time

It’s a good idea to talk to your accountant about what documentation the ATO requires you to keep to support your tax return and claims. A safe suggestion is to keep all your receipts (even if they are small) as it doesn’t take long for expenses to add up.

Avoid paying expenses out of pocket

A good way to ensure you keep track of your expenses is to avoid paying any expenses out of your own pocket. It is better to have your property manager pay for any property related expenses from the rent they collect from your tenants. If you can’t avoid paying something yourself, keep a summary of what you have paid for and give this to your accountant.

If you don’t have the funds to cover an expense from the rent, transfer the required amount to your property manager and allow them to pay it. This way the expense will show on your end of year summary provided by your property manager.

Prepare documents for your accountant

Either keep your monthly rental statements and invoices from your property manager or ask them to provide you with a yearly summary of your property. This summary should detail rent received and expenses paid on your behalf. This summary must be given to your accountant.

Identify gaps of knowledge and improve on them

The majority of investors don’t have an accounting background, so it is important that you consult your accountant and financial advisory before making any investment decisions. It is also important that you regularly ask your accountant about any changes to investment laws that may affect you. Of course, do your own reading via newsletters, the ATO website, and online journals to ensure you are constantly improving your strategy and knowledge.

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Costs of selling real estate

If you are selling your property, make sure you are aware of the costs associated with the sale. Here is a summary of the key costs you need to be aware of. Talk to your agent if you need clarity around these costs.

Legal / Conveyancing

In most states you are not able to sell your property unless you have a contract of sale prepared. Engaging a lawyer or conveyancer to ensure your real estate contract is drawn up with accuracy is an important first step and in some states an essential item before you are able to even list your property for sale.

Legal and conveyancing costs vary depending on the complexity for your property however budget for approx: $1500-$3000.

Professional photography of your property

Great marketing is all about using maximum exposure to capture people’s attention and interest in a property. In most cases the first thing a buyer will see is an image of the listing, therefore the best way to grab someone’s attention is to use a professional photographer who is focused on capturing the best features of a property. With 70% of buyers likely to see your property online, making sure you have high quality, accurate images of the property will help your property stand out from the crowd.

Another way to make your property stand out is to also produce property videos which are great for sharing on social media

Photography this can vary dramatically depending on your requirements, whether you want a twilight photo, drone photo or have other requirements. It is best to talk to your agent about costs involved here.

Video’s start at approx.: $300 and goes up to $3000 depending on what you are looking for.

Marketing your property

Marketing is a separate cost paid for by the seller on top of the commission that the agent receives when the property sells.

These funds are kept in a trust account and used to pay for marketing material such as signage, newspaper advertising, internet advertising, brochure printing and auction marketing. A typical marketing budget is approximately 1% of the asking price. For example, on a $600,000 property you should expect to spend $6,000 on marketing. This could be paid upfront or out of the settlement monies depending on the agreement made with the vendor.

Marketing is normally payable even if the agent does not successfully sell the property.

Budget for 1% of your asking price

Agent Commission

Agent commission is a percentage that is calculated on the sale price and is paid to the agent at time of settlement. You don’t need to factor this expense in up front as the agents commission is only paid if your property sells.

Property styling

Styling your home to sell is an important element to a successful sale according to 98% of agents. Home styling can be decluttering, cleaning and de-personalise the home, rearranging the existing furnishings and accessories through to employing a professional home stylist who will remove the majority of the existing belongings and refurnish / decorate the space with hired items.

Property styling your home will boost final sales price from 7.5% to 12.5% according to a survey of the top agents. With 87% surveyed agents believing you will earn a higher price by property styling. To find out what you should do in each room of your home download our Styling to Sell eBook

Depending on what you want to get done budget for $500 – $1000’s.

Moving costs

Depending on how much you have to move you may decide to organise the move yourself, hire a van and get a few friends to help you – this is the cheapest option and will cost approximately $100 to hire a van and $100 for beers and pizza for your mates.

If you decided to use the services of a professional moving company it is recommended you get a quote from 2-3 different providers for the services you’re seeking. You’ll also need to decide which type of service you want. This might be a full pack, removal and unpack at your new home, or removal only. Most removalists offer insurance on top of their services, and this can be a useful tool to protect your contents from accidental loss or damage.

Budget range $500-$3000