How do you do bookkeeping and financial reporting for your rentals?

[Rene Hosman]

It's almost that time of year again... No, not the holidays. I mean tax season! I've been an excel bookkeeping person for a while but I think it's time to level up now that I'm doing my first BRRRR. I'm planning to get a bookkeeper to help keep me organized and on top of things as I hope to expand my real estate portfolio in 2025. I'm curious what you all do for your do bookkeeping and financial reporting for your rentals?

[Rene Hosman]

For those of you who responded can you tell me about what software you use and the pros/cons?? My personal experience is managing ~4 MTR/LTRs but I'm feeling like I need to expand to something more automated

[Chris Seveney]

@Rene Hosman

If it’s too much to do in excel I have a bookkeeper handle it - now there are overseas companies that can be very cost effective as well.

[Angie Keefe]

Hi Rene!! Congrats on your growing business!!! We use Quickbooks Online for our main accounting software. Our business has multiple LLCs and properties. We currently use Rent Manager for our property management software for our mobile home parks and other rentals, etc, but use QBO as our main accounting books. QBO isn't made for REI out of the box, however, it is an amazing tool and really has amazing reporting when set up correctly.

I am an REI bookkeeper as well.  Please reach out if you’d like to connect. 

[Cliff Benner]

I use QBO and love having the class feature, which is a bit more per month, but you have to have it to separate out transactions for properties for Tax time anyways. This allows me to show my clients how profitable each property is and how changes to the property or how they manage them affects that property. I do have them sync their bank accounts and credit cards to eliminate human error in entering items, and ask them to avoid putting personal expenses on those accounts. This allows us to automate where transactions go and we create reoccurring depreciation entries so they can see what their return will most likely look like. 

[Jake Baker]

@Rene Hosman

I use QuickBooks Online (QBO) for my flipping business, rental businesses, and bookkeeping clients. QBO has every feature you need to run a business, excellent reporting features and integration with other software. It is the most popular software in the industry, and most Tax Preparers are familiar with it, which makes tax season easier.

My Recommendation: Spreadsheets are usually fine for your first 1-3 properties. 3+ properties, you should use a software. If you plan to scale at all, I recommend QBO. If you do not like bookkeeping/accounting/technology, hire a bookkeeper specializing in real estate investors.

[Landon Mizuguchi]

Initially, I was using Quickbooks (QB) and then when I go a couple more properties and multiple LLCs it was difficult to manage on QB and required multiple QB subscriptions and this got expensive. I also have no formal training in bookkeeping and don't want to spend the cash to hire one. In the end, I left QB and looked at Digb and Stessa since they're both setup out of the box for real estate investors and can handle multiple LLCs, Finally, I switch to Digb because they also handle the taxes and income / expenses for each of my rentals get autocategorized so I don't really need a bookkeeper. 

I think going rate for bookkeeper is around $200.- $500 a month to start and I'd really rather keep the cash in my bank account and automate things. 

[Patrick Drury]

@Rene Hosman
I use QuickBooks plus and then have a bookkeeper login to each account and categorize the expenses for each one then have my accountant review. I have multiple properties in each LLC. With QuickBooks plus you can set it up and categorize expenses in one place. For example, you may have one account for 5 different properties in 123 LLC and in another account, you have all the E main st LLC properties. It helps keep the books together for each LLC.

[Alecia Loveless]

@Rene Hosman After preparing my 2022 taxes my accountant strongly recommended I get a bookkeeper. It has been a life changing experience. I highly recommend it.

I was waiting to do my previous years bookkeeping until March each year. Now that I’ve got 8 properties this was a logistical nightmare.

Now that I’ve got the bookkeeper my books are current, and I can just ask for whatever form I want to look at and have it right at my fingertips.

I’m running about $350/month but that’s 8 properties and 31 units. Each of my properties has its own account too.

[Max Emory]

Quote from @Rene Hosman:

For those of you who responded can you tell me about what software you use and the pros/cons?? My personal experience is managing ~4 MTR/LTRs but I'm feeling like I need to expand to something more automated

 Hey @Rene Hosman, we use QuickBooks Online exclusively for all of our REI Clients. I use it for my personal portfolio as well. We've found it has superior reporting features, integration features, and is overall more efficient to work within than other REI-specific software.

The downside is QBO is not set up for REI so you'll need to do that or work with an expert to ensure it is set up for your business appropriately. That's the key component that is usually missing when I hear other entrepreneurs/investors say they don't like QBO.

Something else to keep in mind is your entity structure and how your entities file tax returns. As a general rule, each entity that files a separate tax return (partnership, s-corp, c-corp, etc) will need its own QBO subscription. If entities are disregarded, you can keep up with more than 1 in a single QBO account using the location/business feature to keep track of them separately. This will save you on subscription costs.

If you want to discuss any of this further, I'm happy to answer questions and help walk you through it.

Best of luck!

[Jillyan MacMorris]

Hey there René!

From Excel, I originally switched to QBO, but I had to do quite a bit of finagling to build it properly for my use as a REI. I used it for a few months and it worked fine, but I ended up switching mid-year to Baselane. Have you heard of it? It's a banking/accounting software where the structure of the chart of accounts actually fills out your Schedule E. This will be the first year I will be able to deliver to my tax man a really clear, concrete report. You can organize your entries by unit, and it's all free to use. QBO I think was $30/month.

[Bill B.]

If you have less than 20-30 rentals Quickbooks little brother Quicken is much cheaper, easier, and still overkill for such a simple task. A dozen properties take me maybe 1/2 hour a month. At year end it probably takes 2 hours to go through everything looking for errors and printing reports. 

[Mike Levene]

I'm a big fan of my current tool called Baselane. Its super easy to setup and use, but it still comes packed full of great features and automation to prepare for tax season, but also for rent collection, transaction management, and so much more. I manage 2 LTR and 1 MTR using only Baselane which makes it so convenient to streamline my processes. Specifically for taxes, its pretty straight forward with Baselane because you can tag all of your transactions with the pre defined categories for a Schedule E (the tax form you submit for rental property). The best part is that its a free tool unlike many of the tax softwares out there. Once I realized I could do tax prep, automate rent collection, manage transactions, set up multiple bank accounts with a single click, etc. I don't think I could manage my properties without Baselane.

[Melanie Lovejoy]

My progression has been google sheets -> QuickBooks -> google sheets -> Baselane and Baselane has been by far the best decision.

I have a smaller portfolio, but Google Sheets takes so much time and leaves room for human error. For QuickBooks, I needed the more expensive program to do what I needed it to do, which wasn't worth the price tag.

I started using Baselane semi-recently and have been so impressed by the accounting integration. It is super straightforward and prompts me to tag all of my transactions with categories that correlate directly to Schedule E. I can also tag it by property to easily pull P&L for each property.

I am super happy with Baselane and excited to not have to spend so much time on bookkeeping and prepping things manually for my accountant. 

[Bonnie Low]

 I used to use a bookkeeper and it was expensive, especially considering the size of my portfolio at the time. Worse, she used Quickbooks and I found it to be unnecessarily complex. It was just something neither myself nor my husband could really work with and so it created a dependency on our bookkeeper. I have since transitioned to Baselane for my banking and bookkeeping purposes. I love the simplicity, the functionality and it's made me a better investor because I'm doing the financials myself and therefore have to really understand what is happening in my business. I really think they do a great job with product development, too, and are always releasing new features. They offer regular demos so if you're interested, I recommend you schedule a demo.

[Simon W.]

I am constantly seeing the constant push for baselane. I am a consultant and accountant so I am always open to different platforms.

My question for the baselane users here, does it generate balance sheet? cash flow reports, 12 month cash flow reports? Can you edit Chart of Accounts? Can you generate any of these reports as well as the P&L for each property? Can it consolidate all the properties into 1 report to see the overall picture?

Without these reports, you can't truly see a full picture of your financials.

I am proadvisor for both QBO and Xero. I use Buildium and AppFolio. I love Yardi Voyager. All of these platforms can do all of the above reports and more. I can never recommend any products without these simple reports.

thanks in advance for the answers.

[Nelisa Lee]

Quote from @Simon W.:

I am constantly seeing the constant push for baselane. I am a consultant and accountant so I am always open to different platforms.

My question for the baselane users here, does it generate balance sheet? cash flow reports, 12 month cash flow reports? Can you edit Chart of Accounts? Can you generate any of these reports as well as the P&L for each property? Can it consolidate all the properties into 1 report to see the overall picture?

Without these reports, you can't truly see a full picture of your financials.

I am proadvisor for both QBO and Xero. I use Buildium and AppFolio. I love Yardi Voyager. All of these platforms can do all of the above reports and more. I can never recommend any products without these simple reports.

thanks in advance for the answers.

 Curious about these same questions from Simon for Baseline. We've found for both our flipping business and our rental portfolio that Quickbooks gives us everything we need to see our full financial picture and everything at a property level as well. 

[Russell Brazil]

Google spreadsheet for me

[Cliff Benner]

Quote from @Simon W.:

I am constantly seeing the constant push for baselane. I am a consultant and accountant so I am always open to different platforms.

My question for the baselane users here, does it generate balance sheet? cash flow reports, 12 month cash flow reports? Can you edit Chart of Accounts? Can you generate any of these reports as well as the P&L for each property? Can it consolidate all the properties into 1 report to see the overall picture?

Without these reports, you can't truly see a full picture of your financials.

I am proadvisor for both QBO and Xero. I use Buildium and AppFolio. I love Yardi Voyager. All of these platforms can do all of the above reports and more. I can never recommend any products without these simple reports.

thanks in advance for the answers.

I'm an Accountant as well, and have this issue with these more Industry or "inexpensive" Softwares for Books. I just find that they aren't worth it because of all the edits you have to make on the spreadsheet to get the same result, and one of the softwares refused to allow Journal Entries which seemed like a huge red flag to me. 

[John Morgan]

I'm old school and pen and paper all my expenses then jam a receipt in a folder for each property. Takes me two seconds to do. And easy to add up the expenses for each property every year when I do my taxes on turbo tax. I've got 29 SFR and this seems to be quick and easy to do.

[Saad D.]

@Simon W.Great questions. 

Baselane offers cash flow at the unit, proper or portfolio level. Yes, you can consolidate it into 1 report.

Balance sheet- this will be built next year. It's not as highly requested as one may think for multiple reasons (we're building based on feature demand). 

Edit chart of accounts - not at the moment. We offer over 120 categories that are real estate related and periodically add more based on customer requests. 

How do you use edit chart of accounts feature and for what use case?

[Simon W.]

Quote from @Saad D.:

@Simon W.Great questions. 

Baselane offers cash flow at the unit, proper or portfolio level. Yes, you can consolidate it into 1 report.

Balance sheet- this will be built next year. It's not as highly requested as one may think for multiple reasons (we're building based on feature demand). 

Edit chart of accounts - not at the moment. We offer over 120 categories that are real estate related and periodically add more based on customer requests. 

How do you use edit chart of accounts feature and for what use case?

I think users aren't requesting the balance sheet is because they don't know that they should be seeing it.

"You don't know what you don't know."

Most investors using baselane aren't accountants or financial advisors.

Being able to edit Chart of Accounts, add or remove, is very useful.

For instance, I have a client that owns rental properties and build construction homes. Either sell or convert it into a rental or a STR.

Having an editable Chart of Accounts is key to dealing with these type of clients.

From what I gather, Baselane right now only focuses on P&L. 

Balance Sheet can show how much was a building was purchases for, how much principal loan is still outstanding, how much is in escrow and how much is in tenant security liability, Construction typically in the long-term development are put in the balance sheet and not P&L.

Most investors are doing multiple type of real estate, not just rental. This is why it is very important for these type of reports.

The first thing I learned in Accounting 101. Balance Sheet is a snapshot of the company's financial health at a specific point in time.

Income Statement is a showing us the health on an operating POV. Income Statement shows a company's income and expenditures over a period of time.

Balance Sheet is like the Head/Brain of the company and Income Statement is like the Body.