Tracking Expenses on numerous rental houses

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Tracking Expenses on numerous rental houses

Carson E.
Investor · Laramie, WY · Member since 2015 · 16 posts · 1 vote

We have close to 30 rental houses and trying to run the books on them gets beyond tedious.  We use the Wave app to take pics of our receipts and then process them at a later time.  Now our CPA wants items broken out between capital improvements (appliances, carpet, tile, etc) and regular operating and maintenance expenses for each unit.  Wave does not allow us to do this and I am not sure of the best way to move forward... Last year we were able to estimate percentages based on what we spent on each house, which was much easier, however this year we have to do specific breakdowns.  From our research, it seems like quickbooks or other popular accounting programs do not allow this.

So for example - in 2019, we rehabbed (ourselves) approximately 6 houses, which additional upgrades/fixes to several other units as they came open and before they were rented.  When I go to a Home Depot or similar building supply center, I go probably 3-12 times weekly and source supplies for several houses that were currently being worked on.  One receipt is not just for one home, but may include 3, 4 or even 5 different houses.  We literally have thousands of receipts that is hard to imagine how we begin going through them.

Do other people have trouble finding a logical way to pull out capital expenses and track them for several properties and with multiple houses on the same receipt? How are you tracking these items efficiently?

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  • Soh Tanaka
    Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
    6y

    I'm not an accountant, but here's some suggestions.

    If the frequency you are doing the bookkeeping is overwhelming, do it more often or hire someone else to do it. 

      I know sometimes you can't just get everything at Home Depot, but it has a rebate program, plus it emails you receipts, so you don't have to carry receipts and scan later, so try to use Home Depot as much as possible (it looks like you are already doing this.)

      If you buy a paint for House A, and light bulbs for House B, buy the paint and check out (get a receipt,) and then buy the light bulbs (get another receipt.) Home Depot allows you to enter PO number. Maybe you can put your property address in there (just some thought.)

      I don't know anything about Wave, but QuickBooks is great. Initially, there will be some learning curve (I've been using it for years, and I still learn new things,) but once you get it going, it'll give you pretty much everything you need.  

      Separating capital improvements and expenses should not be too hard, at least for rentals, as everything prior to property ready to be in service will be "capital improvements" and after that, there should not be that many capital improvements. (This is just how I understand things.)

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      • Kenneth GarrettPro Member
        Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
        6y

        @Carson E.

        Bookkeeping sucks for most people.  Tracking expenses especially when you buy supplies for multiple projects is a pain.  I take the receipt had write on the receipt what property they apply to and enter the info in quickbooks. My CPA doesn’t need the receipts.  It’s my job to keep the records accurate in case of an audit.  It’s my backup.  I have since turned over bookkeeping to my  CPA, but it still requires me to provide the info.

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      • Mark Fries
        Contractor · Jacksonville, FL · Member since 2017 · 1k+ posts · 2k+ votes
        6y

        @Carson E.

        Just get quickbooks and when you checkout at HD, organize your cart per address and checkout individually. HD emails each receipt to you...problem solved.

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      • Kevin DeVargas
        Accountant · Atlanta · Member since 2020 · 71 posts · 38 votes
        6y

        @Carson E.

        Hi Carson,

        I've worked with many Real estate clients.  I would recommend the following you may or may not be doing all of the following.

        *Have a separate credit card dedicated to business transactions

        *When buying supplies for multiple properties in one day ask the cashier to ring them up separately. 

        *Write down on each receipt the street number of the home it pertains to.

        *Give your accountant online access to the CC account. 

        I hope this helps. Let me know if you have any other questions. 

        Thanks. 

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      • Ken Weiner
        Rental Property Investor · Los Angeles, CA · Member since 2015 · 30 posts · 56 votes
        6y

        @Carson E. I am not sure why you are having trouble tracking capital improvements separately from operating expenses in Wave Accounting.  I use Wave and easily do this by creating an Asset (Property) in the Chart of Accounts.  Then for any capital improvement transaction, categorize it under the Asset account you created instead of a normal Expense account such as Repairs.  Then that transaction will not be part of your Operating Expenses.

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