Automated system to pay IP outgoings

Discussion in 'Property Investment - Other' started by BigV, 28th Feb, 2011.

  1. BigV

    BigV Member

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    Hi guys

    I'm just wanting to know what's the most effective way to pay the outgoings for your investment properties. At the moment i have one IP but have aspirations to have many more in the years to come.

    At the moment my IP is managed through an agent and they simply deduct bills (rates, water, owners corp, insurance) from that months rent.

    This appealed to me as i consider it as 'taken care of' and it's something that i don't need to worry about especially when on holidays. I guess another added benefit is that at tax time it can make my accounts job easier as well. (I do keep in addition a spreadsheet to record all in and outgoings anyway though)

    I'm considering having a dedicated credit card(with flybuys/awards points) for all IP outgoings. I'm sure i can setup a direct debit so that the rates, water, owner corp, insurance is all charged to the credit card. when the balance is due each month the card can be automatically paid in full with a direct debit arrangement which will debit my offset account to pay the cards balance.

    I've taken up the following card ( https://www.nab.com.au/wps/wcm/connect/nab/nab/home/personal_finance/4/22 ) which allows me to pay 0% interest on balance transfers AND purchases till 2012 (special offer ends 18 march 2011) - this sounds like a exceptional deal.

    I'm thinking of having one credit card for everyday expenses and another reserved to pay for IP outgoings

    Alternatively (but not to confuse things too much) nab also offers an 'additional card holder' at no extra cost. This would mean having one credit card account with 2 credit cards both with different numbers printed on the cards. I'm considering using the primary card to pay for everyday living expenses and have the additional card reserved for IP outgoings. The benefit here is that if my primary card is lost i wouldn't need to re-setup the direct debits for all the companies that debit the additional card number.

    I'd love to hear how some experienced IP owners manage this / can share what scalable system works for you


    Thanks

    BigV
     
  2. kathryn d

    kathryn d Member

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    I do mine the old fashioned way.I keep track of everything in a scribbler.I have the ability to set up automatic payments from our bank account for certian bills.For others who do not have online bank payments, I have given a stack of post dated cheques to the companies.

    For income tax time..my husband enters it in a computer program.
    Makes it easy for our tax preparer.
     
  3. jrc77

    jrc77 Member

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    A couple of thoughts:

    Some of my property expenses can't be set up to pay automatically on a credit card - can do an automated direct debit from a bank account, or a manual credit card payment (I believe this is the case for both me electricity and water bills).

    I also have had credit cards with "additional cards" and the statements don't always indicate what was bought on what card. This would defeat the purpose if you just received one statement with everything mixed in together. I would double check what statement looks like first.

    Having an extra credit card for property expenses could impact on your servicability for extra loans.

    Currently all my property related expenses are sent to my property manager and they are paid out of the rent before the left over is sent to me. Nice and simple for the moment. Obviously not ideal if you were wanting to pay the investment expenses out of a LOC etc.

    Regards,

    Jason
     
  4. BV

    BV Think outside the square

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    I think you'll find that the credit card number is the same so if you lost 1 you'll need a new card number.

    I wouldn't worry too much about having multiple cards.
    You won't have that many bills so Keep things simple.
    You can also pay bills online
     
  5. Perp

    Perp Member

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    As others have said, when you get an additional card with a different number, the two cards still relate to the same account, so you wouldn't achieve sufficient separation of IP and private expenses using this method.

    If you simply want a separate credit card for bookkeeping purposes, it may be worth using either standard debit cards and paying by direct debit or BPAY, or a $0 balance credit card (so as not to impact on servicability).

    As others have suggested, another good option is to get your PM to pay all your invoices, then they send you an itemised statement at the end of the year; makes bookkeeping simple!
     
  6. devank

    devank Why why why?

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    Some of my bills come directly to my internet banking (ANZ). It comes in as PDF and also appears in ‘bills’ section. Generally I log in to on a weekly basis and set these bills to be paid on the due date.
    When the tax times comes, then I download all the PDFs and credit card history.
     
  7. softmonkey

    softmonkey Member

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    With ANZ at least, the online and printed statements record each transaction with the last 4 digits of the card number, so yes you can differentiate between additional cards on the one statement. Note that this field is not included when downloading transactions as a file though (eg CSV, MYOB, Quicken), so you will still need to manually tot things up in one way or another.

    For this reason, a separate unique card seems like a good idea.
     
  8. Perp

    Perp Member

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    Should have been clearer: you may be able to separate the transactions, but if you wish to claim the interest on the credit card as a tax deduction, having a mix of private and business transactions within a single account will make it an administrative nightmare. You couldn't say, for example, that you'd paid off your personal debt but that the business debt was outstanding, and claim all interest; you'd have to apportion each payment between business and private for tax purposes and it would very quickly get very messy.
     
  9. Rickardo

    Rickardo Member

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    I simply hold one credit card for both private and property expenses. I pay all possible expenses from this, then record the IP expenses on a spreadsheet. I have set up a direct debit for the statement balance to ensure I don’t get charged any interest, I could also set up direct debits to pay the IP expenses but I find if I have to do it manually I will always record the payment on the spreadsheet. I prefer not to let my PM pay bills as I’d prefer the reward points and the interest free period – when you get a number of IP’s the points can start to add up.

    I don’t see the need for a separate IP and private card even when holding multiple properties. When my statement comes I simply highlight the IP expenses and put it in my tax folder along with the invoices. Having an electronic record of each payment, along with the hard copy credit card statements and original invoices makes it relatively easy when preparing tax returns, I work off the electronic spreadsheet and verify using paper statements.
     
  10. jaycee

    jaycee Member

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    Wow it seems really complicated.

    My monthly interest bill gets deducted by my bank, don't even have to think about that one.

    I get a bill for 1) water rates, 2) council rates, 3) building & 4) landlord insurance once a year and I pay that and file the paperwork away in a folder. I usually pay them online as that. One off issues that pop up form time to time are managed as they arise, paid out of the same bank account and the bill goes into the same folder.

    This folder the paid bills filed into then contains a copy of all payments I made for the IP & together with my bank statements and depreciation schedule - there's my tax return as done as far my IP's are concnered.

    Am I missing anything ?
     
    Last edited: 1st Mar, 2011
  11. oh_noes

    oh_noes Member

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    Not really, I do the same and find it's easy to manage. I don't see it as a burden and it honestly doesn't take much time. Every FY I have a folder with each IP address on it and put all expenses into it. Tax time I go through this and do my return (or could quite easily give it to an accountant to do)

    In fact I'm soo pessimistic that I would stay from away agents "who do everything". Nothing is free in this world and I think you'll find that it's costing you an additional 5% or so in fee's.
     
  12. jaycee

    jaycee Member

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    This came to mind too. - novelty offerings to "differentiate ourselves from our competitors" - in reality offering next to nothing, but making out it's lots and lots doesn't impress me either ! and usually they aren;t free either !
     
  13. rstephenp

    rstephenp Member

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    How do you charge the tenants for water usage when you pay the rates? . Since water rates and usage are on the same bill from the water provider such as sydney water Or may be I am missing something
     
  14. BuildingBlocks

    BuildingBlocks Internet Warrior

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    Waste of money paying $90/yr for that card just for the purpose of building up awards points. You will only put a few thousand a year on it for a single property, which is unlikely to even get you a movie ticket in return!
     
  15. BigV

    BigV Member

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    Thanks guys i really appreciate all the comments - it's really great to hear other peoples point of view and how they do it