For the first time in my eight years as a real estate investor I am very ashamed of my record keeping.
I've got lots of excuses as to why I let my record keeping slide for a full 12 months: we got married last year, went on a honeymoon, started training for adventure races (which took up 10 - 20 hours a week for nearly half the year!), and were super busy with our investments and business.
I think they are all good excuses, but the reality is that I did the exact thing I tell other investors not to do: I let the entire year of receipts, expenses and records pile up without recording any of them! So I just finished three painful hours of entering expenses and income numbers into an Excel spreadsheet for one of our rental properties.
Let's not think about all of the others that still have to get done.
Thankfully my husband Dave and I actually have a really good system in place - so entering the entire year of receipts for this three unit property actually went quickly and easily considering it's been a year since I did anything.
Here's what we do to make things easy on ourselves when it comes to record keeping for our rental properties: Real Estate Investors 5 Step System For Simple Record Keeping:

1. Open a separate bank account for EVERY property you own.
   ONLY use this account for income and expenses related to this particular property.
   To me this is ABSOLUTELY essential when you have partners involved, but it's smart to do even if you only own one rental property.
   It keeps your records clean and simple, and you always know whether your property is making money or costing you money because there is either money in the account or there isn't!
2. When you spend money out of your own pocket, get a receipt and write on that receipt the address of the property, the specific unit (if applicable) and the REASON for that expense.
   Don't expect to remember why you have a Home Depot receipt for $42.
   31 later on.
   Even if you end up with 15 receipts in your wallet for different properties, if you write on them in the store before you put it in your wallet, you will have no problem tracking and recording that expense.
   This also goes for coffee or dinner with your partners.
   If you have a meeting about your investments, record on that receipt who was there, the specific address or addresses of the properties you own with the partner(s) and what specifically you talked about.
   Write all of this on the receipt before you put it in your wallet.
   
3. Weekly - review your mail and pay the bills.
   If you only have one rental property you might be able to do this less often, but with a bunch of properties, you'll need to set aside a bit of time each week to review the bills.
   You could hire a bookkeeper to do this, but then you'll want to have monthly reports sent to you about the bills that are being paid so that you know when expenses are climbing unexpectedly.
   So, you'll still need a bit of time to review your report.
   
4. After you've reviewed and paid the bills, you COULD be keen and enter them into your property income and expense spreadsheet right then and there, but we never do.
   There's plenty of reasons why we don't, but the biggest reason is that it takes extra time and focus to do this, and well, we're busy.
   And, sometimes honestly, we'd rather watch Heroes! So, we have a set of stacking drawers - one drawer for each property - and we throw everything that comes in related to that property into that drawer.
   This includes notices, bank statements, tenant communications and any receipts or bills.
   
5. Once every 2 - 3 months, take out everything you have for that property and enter it into an income and expense tracking spreadsheet (or fancy software program if you use that).
     Our income and expense spreadsheet has categories for every major expense and income item, and sums up those expenses and revenue sources at the bottom.
   It makes it easy for us to see when a specific expense is increasing or decreasing, and it makes it really easy for us to send our accountants the information they need to do our taxes each year.
   

If you follow the system from 1 through 4, and you get lazy on Step 5, you will curse yourself when you have to sit down and catch up (like I did today), but you will be confident that you aren't missing receipts or losing track of money you spent or earned!