It is extremely important for real estate owners to have an accurate grasp of the information on their properties and the status of rental management. By keeping a management ledger that organizes income and expenses, including rent income and expenses for each property, the soundness of rental management can be constantly confirmed, leading to appropriate management decisions. Accurate bookkeeping is also essential for tax reporting and communication with financial institutions, and it is necessary to record a wide range of transactions, including rental income, management expenses, and repair expenses, without omission. With the recent progress of digital transformation (DX) in the real estate industry, it has become possible to reduce errors by utilizing cloud accounting software and management systems to save labor and reduce complicated bookkeeping tasks. This article explains how real estate owners themselves can create and operate their own management ledgers, and the key points of using Excel and cloud computing and automating the process through DX.
Item Design and Entry Rules: Setting Basic Items and Uniform Rules
The first step in creating a management ledger is to design which items to record. The following categories and information are the minimum basic items required to manage rental properties.
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Property information: property name, location, property type (apartment, condominium, house, etc.), size (number of rooms and square footage), acquisition date, etc.
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Contract information: room number, contractor name, contract start and end dates (renewal dates), rent (monthly rent), security deposit and key money, etc.
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Tenant information: tenant name, contact information, move-in date, expected move-out date, emergency contact information, etc.
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Income/expenses information: income items such as monthly rent, common service charges, and parking fees; expense items such as management fees, repair fees, and property taxes; payment dates and amounts received each month; whether or not there are any delinquent payments; etc.
Once the items are identified, it is also essential to unify the input rules. Rules such as the formatting of dates in "YYYYY/MM/DD," the use of yen units for monetary amounts (e.g., enter full-digit amounts, not separated by thousands of yen), and the elimination of distortions in property names and tenant names should be determined in advance. For example, it is important to unify the names of properties and tenants with their official names, as shaky notation such as "Tokyo" and "Tokyo" can cause omissions when searching and tabulating data. In order to prevent input errors and distortions, it may be effective to use Excel's data validation function to select data from pull-down menus as needed. Also, make it a habit to update data on a regular basis. Rent payments and expense expenditures should be checked monthly and reflected in the ledger without delay. It is important to update contract and tenant information each time there is a contract renewal or a move-in/move-out, and to keep the information up-to-date at all times. Furthermore, if you manage the information in Excel, make regular backups to be prepared for file corruption or loss.
If you have multiple properties, you may choose to manage your Excel book by dividing it into multiple sheets. For example, you can divide the sheets into "Property Master," "Income," "Expenses," and "Summary," where basic information for each property is listed in the property master, daily receipts are recorded in the income sheet, expenses are recorded in the expenses sheet, and a comprehensive summary is created by adding up all the information. In this way, even if the number of properties and transactions increase, they can be managed centrally by adding them to each sheet, and the overall income and expenditure status can be immediately grasped on the tally sheet. In addition, by utilizing Excel functions andconditional formatting, you can reduce manual labor and prevent data from being overlooked. For example, an IF function that compares the amount of rent received with the amount billed and automatically displays "◯ (received)" or "× (not received)" is more reliable than visually checking for late payments. By setting up uniform items andstrictly adhering to input rules, the control ledger becomes a practical management tool that is easy for anyone to understand.
Comparison of advantages between Excel and cloud computing: Ease of use, cost, ease of sharing, and ease of maintenance
There are two main methods for creating and operating a management ledger: using Excel (spreadsheet software) and using a cloud-based management system. Each has its own advantages and disadvantages, so let's compare them in terms of ease of use, cost, data sharing, and maintainability.
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Ease of use (operability): Many working people have basic knowledge of Excel, and it is easy to use as long as it is installed on the computer at hand. Another advantage is that it offers a high degree of flexibility, allowing you to create customized tables to your liking. On the other hand, cloud-based property management systems have a specialized UI for rental management, and are designed to be easy to input data without specialized knowledge once the initial setup is complete. For example, simply inputting rent and expenses is automatically calculated and sorted, making it easy to avoid human error. Even if you are not familiar with the operation of the system, many services have a support system in place, so you can use them with peace of mind.
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Cost: Excel-based management has the great advantage that if you already own the software, you can start without additional costs. Some cloud services also offer free plans for simple applications. However, rental management cloud and accounting software with full functionality generally have a monthly fee or an initial installation fee. For example, subscription fees are based on the number of properties or users. However, the cost should be weighed against the time-saving and error-reducing effects of increased operational efficiency. Especially when the number of properties increases and management tasks become more complicated, the efficiency benefits gained by installing a fee-based management system are often more valuable than the cost paid.
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Shareability (Collaboration): Ledgers created in Excel can be viewed and edited by multiple people by sharing files with related parties. However, managing the latest version via email can be complicated, and simultaneous editing risks conflicts. A cloud-based system has the advantage that the database is accessed via the Internet, so the latest information can be viewed and updated anytime, anywhere from a PC or smartphone. Since data is reflected in real time even if multiple users log in at the same time, information can be shared smoothly among staff members. For example, it is easy for the owner himself/herself, a tax accountant, and staff of a property management company to refer to the same data and grasp the situation.
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Maintainability and safety: With Excel management, there is a risk of file corruption, accidental deletion, and data loss in the event of computer failure. There is also the risk of information leakage if files are taken outside the company. With cloud systems, on the other hand, data is safely stored on the service provider's servers, and most are equipped with automatic backup and access permission setting functions. Even in the unlikely event of a PC failure, the data remains in the cloud and can be recovered by logging in. In terms of security, choosing a service with encryption and two-factor authentication will ensure a higher level of security than managing the data on your own. The provider will also update the system as needed, so you can rest assured that the latest functions and legal changes will always be available.
In summary, if you want tocustomize and manage a small number of properties by yourself, orif you want to start with as little cost as possible, Excel is the right choice. On the other hand, if the number of managed properties increases and the workload expands, orif you want to operate efficiently with multiple people, a cloud-based system is a viable option. In fact, some have pointed out that, "While Excel-based management is prone to input errors and double entry as data volume increases, cloud-based rental management tools are easy to operate and mistakes are easily prevented. It is advisable to first select an appropriate method according to the current number of properties and business type, and then consider migrating in stages as needed.
3. method to realize automatic updates through DX integration: integration with accounting software and management applications
To further reduce the time and effort required for data entry and updating and increase accuracy, linkage with digital technology (utilization of DX) is effective. Specifically, by linking the management ledger to other systems, a system can be established to automatically update data without manual input. Below are some examples of major linkages and their benefits.
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Linkage with accounting software: If you are already using accounting software (e.g., "Accounting Freee" or "Money Forward Cloud Accounting") to manage real estate income and expenses, it is efficient to synchronize the management ledger with the accounting system. Cloud accounting software also has features for the real estate rental business, such as automatic acquisition of bank statements and automatic expense recording by scanning receipts, which can greatly reduce complicated bookkeeping tasks. The software can be operated in a way that prevents double entry of data, for example, by using a property-by-property income/expenses ledger and importing it into the accounting software for overall financial management, or vice versa, by generating property-by-property income/expenses reports from the accounting software's data. For example, some rental management software can be linked to existing accounting software, allowing for a smooth data transfer at the time of implementation.
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Linkage with bank accounts and payment services: Checking monthly rent payments is a major burden for owners, but this can be automated by utilizing bank API linkage. Manually reconciling rent payments from multiple properties and multiple tenants at different times is time-consuming and error-prone. In recent years, services utilizing financial APIs have emerged that can retrieve bank deposit and withdrawal details in one go, and once set up, account information can be automatically retrieved and updated daily. For example, the cloud-based rental management software "ReDocS" uses this API linkage to realize a function that automatically erases (reconciles) rent payments from each tenant. After the system is installed, payments can be checked accurately without human intervention, even in cases where a part-time worker was previously hired to check payments at the beginning of each month, and reports have shown significant efficiency gains, such as "the number of units that can be managed per person has increased. By linking with bank accounts and payment agency services, the system can also provide functions such as automatic debiting of rent, automatic sending of payment notification e-mails, and automatic reminders when payment is not received. This eliminates the need for the owner to update the ledger every month by checking it against the bank book, and prevents missed payments.
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Linkage with tenant management apps: With the development of real estate tech, more and more services are providing smartphone apps and tenant portal sites for tenants. Linking the management ledger to these apps can automate the updating of tenant information and contract status. For example, by using an online system that handles everything from tenant applications to screening and contracts, property and contractor information can be automatically registered in the management ledger when a new contract is signed. In addition, some management companies, such as INA&Associates, have a system whereby when there is a report of a problem with a facility or a request for repair, the details are ticketed in the management system and stored as a history. Other cloud systems are now available that link vacancy information with major real estate portal sites (SUUMO, Homes, etc.) and have the ability to update and reflect the property's vacancy status with a single click from the ledger. This eliminates the need to log in to a separate site to update information, thereby ensuring that vacancies are not missed at the right time.
In this way, linking the management ledger with peripheral systems can automate and centralize the input process. Reducing the reliance on manual labor will also reduce human error and enable management decisions to be made based on the latest data at all times. There is a growing trend to utilize a combination of various DX solutions with the goal of "centralized management of all income and expenses related to property management" in the future. Even if it seems difficult at present, it would be a good idea to incorporate DX to the extent possible, for example, by starting with automatic bank account linkage. 4.
Limitations of Self-Management and Significance of Entrusting to Professionals: From the Perspectives of Expertise, Legal Compliance, and Operational Efficiency
We have seen above how to maintain and operate a management ledger on one's own. However, bookkeeping is not the only task involved in real estate rental management. It involves a wide range of practical tasks, such as property maintenance, tenant relations, contract procedures, troubleshooting, and compliance with legal revisions. While self-management has advantages such as cost savings and a high degree of freedom, it is also necessary to be aware of some limitations and disadvantages.
First, doing all the management work yourself requires more time and effort. Especially for owners who have a separate day job, the amount of time they can devote to rental management may be limited. The more properties you have, the more work you will have to do on a daily basis, and even if you have prepared a ledger, you may not be able to keep up with the input and checks. In addition, there are many situations in rental management that require specialized knowledge of real estate, contract law, and building facilities. For example, it may be difficult for a specialist to respond to legal complaints from tenants, to handle legal procedures in the event of rent arrears (e.g., demand for payment, lawsuits for vacating the premises, etc.), or to plan the renovation of deteriorating facilities. It is also necessary to keep abreast of the latest changes in laws and regulations (e.g., changes in lease contract rules) and subsidy programs, and it is not easy for an individual to follow up on all of these matters.
In addition, rental management may require 24-hour emergency response. If the owner has to deal with problems such as water leaks or power outages in the middle of the night, it is a huge mental burden to have to deal with them on his or her own. If the property is outsourced to a management company, you can rest assured that such emergency calls will be handled on your behalf. With self-management, the owner is directly responsible for handling all inquiries and complaints from tenants, and in many cases, the owner feels "it is mentally burdensome to handle complaints and rent reminders on their own.
For these reasons, it is highly significant to consider the option of entrusting the work to a professional. By outsourcing to a professional property management company, the owner can concentrate on the strategic aspects of management (property selection, financial planning, etc.) while leaving the complicated tasks and emergency responses to the professional. In addition, based on their wealth of experience and knowledge, property management companies can provide comprehensive support, including know-how on tenant recruitment, contract renewal procedures, and settlements when tenants move out. They are also well versed in legal revisions and market trends, so they can respond appropriately in line with the latest information. For example, INA&Associates uses a self-developed management system to complete contract and renewal procedures and rent remittance statement reporting online, and has a 24-hour call center to handle tenant inquiries. As a result, INA&Associates is able to efficiently manage a large number of properties with a minimum number of staff, enabling it to provide low-cost, high-quality services. INA&Associates offers a rental management service for a fixed monthly fee of 1,000 yen per unit, and comprehensively handles everything from contracts and renewals to tenant relations, rent collection and remittance, and delinquency reminders. By entrusting the work to professionals, owners are freed from the hassle of daily management and can expect positive effects in terms of tenant satisfaction andmaintenance of asset value. Another advantage of outsourcing is the ability to take advantage of the network (repair companies and leasing sales force) that only a professional company can offer.
Of course, there is a cost associated with outsourcing management, but as mentioned above, recently, very inexpensive services have emerged through the use of DX, and there are more and more cases where value can be provided beyond the management fee. It is important to consider the balance between the savings from self-management and the efficiency and peace of mind from outsourced management, and make the best decision based on the number of properties and your own situation.
5. conclusion: summary and message encouraging consultation with INA
We have explained everything from how to create a property management ledger, to a comparison of Excel and cloud computing, to the key points of automation through DX integration, and the significance of entrusting it to a professional. A management ledger is like a management "compass" for real estate owners, and its correct maintenance and operation will improve the accuracy of profit management and help you make investment decisions in the future. It is a good idea to create a basic ledger by yourself first, and then use Excel or other software to manage the ledger on a small scale. However, when the number of properties increases and the workload begins to grow, it may be time to consider outsourcing to a professional instead of taking on everything by force.
Fortunately, there are now companies that leverage technology to provide high quality rental management services at low cost, such as INA & Associates, which supports owners with efficient operations that incorporate the latest DX. The option of "entrusting management to professionals" will bring peace of mind and time to owners, and will ultimately lead to stabilization and expansion of real estate management. If you have tried your hand at creating a management ledger and feel that you would like to make it more efficient or feel more secure with the help of a professional, please contact INA&Associate. Our experienced professionals can help owners protect and nurture their valuable real estate assets. With a management ledger and the right partner on your side, you can achieve safe, secure, and efficient rental management.
