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Record Keeping Tips for Real Estate Investors

Granite Gate Property Management

Helping Investors Succeed

When its tax time, are you scrambling to find receipts or spending lots of time organizing receipts for your CPA? Or are you an investor that just bought his or her first rental property?

In this blog piece, you are going to learn some record-keeping tips to save time! As a disclaimer, the following is offered as general information and you should discuss your personal situation with your accountant, CPA or other tax and legal advisers.

Tip #1: Don’t Commingle
Don’t mix personal and rental property expenses. Save time by organizing your rental income and expenses in one place. Find a bank that offers free checking accounts and open up a separate checking account for your rental property to track both your rental income and expenses. It may even help to get a debit card linked to your new checking account if you dislike writing checks.

Deposit all your rent checks and pay for all your rental property related expenses out of this new separate checking account. This way at year-end, you can avoid scrambling to figure out your rental property related expenses.

Tip #2: Organize Your Expenses According To Schedule E

Most investors report their rental property expenses on Schedule E. If this is how you report your rental property expenses, then use the different expense categories in Schedule E to assign to your expenses as you incur them. Consequently, at tax time, you can simply and quickly add up similar expenses to report on Schedule E.

If you use a personal finance or budgeting program like Quicken, just delete all the pre-set categories and enter new categories that match Schedule E. For instance, your personal finance program may come with pre-set categories like groceries or school supplies, delete all these pre-set categories and use the expenses listed on IRS Form 1099 Schedule E such as Advertising, repairs, supplies, utilities etc.

Consequently, at tax time all you have to do is just press a few buttons to create a report that sorts your expenses by category and you’re ready to fill out your Schedule E in a matter of minutes!

Thanks for reading! We are here to help with all your property management needs. We also advise investors on investment property purchases and sales.

If you are exploring investing in Davis Real estate, contact us at 530-231-5482 or to discuss your options.

Buying An Investment Property For My Child in College At UC Davis

Should You Invest In A Rental Property For Your Son or Daughter At UC Davis

So, UC Davis has accepted your Son or Daughter for the Fall Term. Congratulations!!

One immediate consideration is student housing. Available options include the dorms, apartments, or sharing a rental home.

The following is a general outline for how some parents have purchased a rental property for their student. Please consult your tax professional or CPA for specific advice concerning your specific situation.

  • Freshman year, the student lives in the dorms and makes new friends with other freshman and sophomore students.
  • During the summer after Freshman year, the parents purchase a home, duplex or half-plex in Davis, either near campus or along one of the many “UniTrans” bus routes that run throughout Davis.
  • In the fall of the sophomore year the student moves into the home and asks his or her friends to share the home. A professional property manager can screen the prospective roommates to ensure that they are financially able to make rent payments.

The rents received from the roommates will offset some of the monthly mortgage that you pay on the property.

The property manager makes sure that the property is kept in good condition, and that rents are paid on time.

During the three remaining years of the child’s college education, the rents received help pay the mortgage and build some equity in the home. Additionally, the child has some peace of mind knowing where they will be living each year. No more frantic search for an apartment before schools starts.

After the child graduates, the parents can sell the home or continue to rent it out. Hopefully, the home will have appreciated in value. But Sellers also have to consider sales transaction costs which can reduce any profits from appreciation.

In the short-term, there is no guarantee that home prices will rise or rise sufficiently to cover transaction costs. Buying for short-term gain is a risky proposition.

However, Davis has been a fantastic market to own rental property given a historically low vacancy rate and high rents. For parents wishing to hold on to a property for the long-term as an investment after their son or daughter graduates, investing makes much more sense.

Buying right can also make a big difference – an old investor adage goes that you make your money when you buy not when you sell. Granite Gate Property Management can help you decide whether buying a rental property is right for you – Our Mission Is to Help Investors Succeed!!

If you are exploring investing in Davis Real estate, contact us at 530-231-5482 or to discuss your options.