Managing your portfolio: Are software options better than old-fashioned ways?

For buyer's agent Paul Glossop, going old-fashioned with detailed spreadsheets still work wonders to ensure that property investors can keep track of their assets. He also takes advantage of the services of banks that can make financial reports for him, as well as the services from the members of his financial team who can consolidate all information for his perusal.

"Personally, I am very old-fashioned. I use a spreadsheet... There's a few things that we don't think about when going choosing a bank, funnily enough, because oils ain't oils, and sometimes when you choose a bank who actually has a very, very good online presence, you typically can get reports of your end of financials as far as all the interest paid," Paul said. 

"From that side of things, I'll jam that into a spreadsheet and I'll also get my end of year financial statement from my property manager for that property. I divert all expenses for every property to my property manager's account—rates, any repairs, ongoing maintenance, etc. [They will] consolidated all of that saying, 'Here's all the rent I've collected, here's our expenses, here's the net number.'

"So, I've got my interest, I've got all my ins, all my outs, and then I might have additional things, such as depreciation schedules, which I just plug in there as well."

Find out more ways to manage your portfolio well and reap the many benefits of your investments:

Basically, how do you go about managing your property portfolio?

Paul Glossop: I can make it actually very simple. Literally, my spreadsheet might only look like—Property 1 has probably three to four columns, Property 2, Property 3, so on and so forth. Now, the accountant from my side is usually quite happy with that because that gives him as much information. I'm the one who's responsible for it but I don't need to give him the spreadsheets, I don't need to give him the breakdowns, I just need to plug that raw number in. That's a very basic way of doing it. For me, it gives me a very simple in and out number and he can apply all the depreciation negative gearing if there is any that's available.

Phil Tarrant: For me, I'm a very visual sort of person. I have a dashboard so I can see at any point in time how my portfolio's looking... I created my own spreadsheet that allows me to have that dashboard really quickly, which pulls in information from all over the place.

What are the software available for property management?

Paul Glossop: There's things such as Somersoft software, [a] PIA software for budgeting and also just people who are looking at managing their money. There's apps out there, there's a myriad, [that are] too many to list... MoneyBrilliant's a good one, [and] that's a free app out there.

Phil Tarrant: Yeah. Destiny's stuff is quite good... They've created a pretty good platform for managing your money.

Why should investors pay close attention to managing their portfolio?

Phil Tarrant: For me, it all comes down to, why do you need this [management tool], right? You've got a compliance perspective, so at tax time, I need all this information to make my accountant's life easy so they can go about doing it... That's a need and you need to deliver that as part of being a property investor.

You want to be able to aggregate all your information, [in] a nice simple space, [or in] a spot, so at that point when you need to go and find it, it's there and it's not a headache to do it. I hate tax time. If your stuff's not together and all organised, it turns into an absolute nightmare so, if you maintain that over the course of a year and it's all in one spot, that's great and you can make that easy.

Aside from making tax time easier, what are other benefits of good property management?

Phil Tarrant: [For] budgeting... keeping track of your money. What are you spending? How are you spending? How, if you cut back and you can get some more savings, can you use that to buy some more property?

When I look at the management of the portfolio, I like looking at the indicators that I use to see how comfortable and confident I am to keep building that portfolio... I can readily see— here's my [loan to value ratio] position, individually and aggregated, so what's my risk appetite level around that? What's my cash flow position as a result of my portfolio and all these different properties?

That gives me confidence and satisfies my need to actually understand how my portfolio is at any point in time... It reflects the way that my brain works and the things I need to know to give me confidence to keep growing my portfolio.

What is your advice for property investors who are having a hard time managing their portfolio?

Phil Tarrant: There are some very sophisticated platforms these days out there that will pull all that information together and present it in a way which you want it to be presented. The only point I would make is that irrespective of what you do, what you use, some app or a big accounting platform, whatever it is you use, your information is only as good as the information you put into it. So, you can have the best app in the world but, if you don't have the information in there, it's a waste of time. If you're not updating it, it's a waste of time.

Don't get too focused on 'Is this gonna do exactly everything I need to do?' It's about 'Do you have the time, effort, attention and the bandwidth to actually manage this?' If you don't want to do it and you haven't got time for it... you can have some very, very simple metrics, then that's enough, right? Get good administration in terms of aggregating the information so someone else can do it for you. But you got to do what's right for you and a database is only as good as the information that goes into it.

Paul Glossop: Yeah, someone's going to have to plug it in because it's always going to change. Interest rates change, rent changes, your expenses for that year change, depreciation—everything will change. So... as a property investor, you need to commit to the fact that you are responsible and you have to stay current.

Can property investors rely on financial teams?

Phil Tarrant: If you don't want to do [management] but you want the information, pay a bookkeeper to do it... You tell them what you want, tell them what you want to see. Your accountant might have a bookkeeping service or, typically, if they don't, an accountant will have a relationship with a bookkeeper and they'll be able to refer you [to] it. It's an administrative job and you've got to get it right... If you want to go from seven to seventy properties and you don't want to actually do the admin, find someone who will do it for you.

Paul Glossop: It's good to get the ins and outs from a lot of different people, I think. The long and short of it is it comes down to making sure that you understand what you're responsible for from the accounting side. For people who are starting out, make sure you get the right team together... before you even kick it off. Get your goals and objectives set up well before you start buying property.

Tune in to The Smart Property Investment Show's Q&A episode with Paul Glossop to know more about mortgage lenders, the ins and outs of first home owners' grants, and more answers to some of the most frequently asked questions about property investment.

Tags:

• Expert advice

Share