For LL's that manage their own properties-- what do you use to handle finances?
Syracuse, NY · Member since 2014 · 143 posts · 35 votes
Hi fellow BP'ers!
After much hemming and hawing about it, I decided that I would like to manage our first property on my own in the beginning rather than hire a property manager from the get-go. I want to at least know what goes into it and what I'm looking for from managing the property before I outsource that to some professionaly company.
But I started thinking... what does everyone use for finances? How do you let your tenants pay their rent (if they pay online) and what does that service cost you (if you use a service)? Do you use an excel sheet to keep track of all of your expenses, cash flow in and out etc. or an online service or a book keeper and again, what is the cost associated with your system? I am just trying to learn a bit about what everyone does so I can find my own system!!
Also, please share what type of property it is that you have so I know. And if you use a property manager/management company, please share how you feel about how they handle your finances. TIA!
Aah that is the question!
Classes are a Landlord's very best friend.
The Class feature in QuickBooks, will give the landlord a detailed accounting of income per rental building, per rental unit, per county, city, you name it, and QuickBooks will do it.
Not only will the Class feature tell the landlord how much income they made per property, but will also tell them how much money they spent in expenses, per building, per unit, per county, per city, etc., and will subtract those expenses from the income and give you you're bottom line. (I'm panting with excitement because I know what it can do and what it can do for you)
If you are in the red, you will know whether to sell that property or not. If you are in the black, you will whistle all the way to the bank.
When you go to court and a tenant does damages to your rental, you will have an itemized list of all costs that you spent on damages because you have assigned those damages, those costs, to the rental property listed as a class.
QuickBooks was designed in the beginning for industry who sold things. Builders who built things. Therefore the word Jobs. You had a customer and then you had a job you were doing for that customer.
In our Industry we will customize it to fit us!!! So we will make our rental property the customer, and the tenant the Job.
When you see words in QuickBooks like sub account, Subclass, and Job, they're just another word for Indenting, because QuickBooks does everything in outline form. It has headers and accounts, sub classes, and jobs, that are indented under the Header.
Customer: 1234 Money Maker Drive
Job: Betty Spendalot (Tenant)
Customer: 5678 Bank Street Avenue
Job: Conrad Savesalot
Everything is neat as a pin in QuickBooks.
All you are doing is setting it up in outline form.
Let's take a look at the class feature to see how your properties will look there.
1234 Money Maker Drive
5678 Bank Street Avenue
If you can use two fingers to type on your computer, you can use QuickBooks.
You have just setup your properties as a class and Your Tenants as a Job (Indent) of the rental property.
When you invoice your tenants. you will choose the rental address from the CLASS COLUMN on the invoice.
When you pay for a repair on a rental property you will choose the CLASS COLUMN on the check stub.
Any time you want to know where you stand financially on a property, just do a Profit and Loss Report by Class. Voila, with a click of a button, you can see your income less expenses and your bottom line.
You can see just how much money you spent for that building or that unit inside the building, or that single family home, right down to the penny!
Once you know the POWER OF QUICKBOOKS, I kid you not, it will knock the socks right off of you.
I had a customer write me and tell me that he had used QuickBooks for over 25 years and didn't know the Power of QuickBooks until I wrote him exactly what I am writing you.
For a little over $200 (and it's a tax write off), you will have the best friend you can have in this business.
Nancy Neville
Certified QuickBooks Pro Advisor
Personally for one unit, i use quickbooks, this allows me to see monthly profit and loss and gives me a easy print out at the end of the year. I also use a single credit card attached to that quick books to make it completely easy for my accountant at the end of the year. I use a excel spread sheet for my budget. i try to calculate what my anticipated revenue is and my standards expenses such as insurance and taxes, so that i always have set aside money for those standard expenses. If i however had multiple properties i would probably go to a property management software system, that allowed for electronic payment. I currently collect rents form my unit in person, or allow for deposit to go directly into my bank account to make it easier for my tenant and myself.
I use Quickbooks for multiple property management, which I do myself. It does have a learning curve, but it tells me everything about my properties with just a few clicks. The reports are great.
For rent collection, I use www.erentpayments.com for some tenants, and some directly deposit their rent into my business account at TD Bank.
eRentpayment.com is easy, inexpensive, and the customer service is great. It can be completely automated - rent payments can be automatically debited from the tenant's account, or you can give them the option of the monthly debit procedure themselves.
I use Quicken's property manager. I have one property with three units. Tenants deposit rent in our account. I pretty much have my expenses down and have a unique email for account alerts. This is my first year with quicken so let's see how it goes at tax time but it categorizes everything so far.
Why wouldn't you use an excel spread sheet? Just curious.
Excel spreadsheet and mint.com cover my needs.
I would use Excel and categorize everything using the appropriate values from whichever Tax Form would be applicable to your situation (Schedule E, 1065, etc...)
If you learn how to use some of the advanced Excel features like Pivot Tables and Filtering then you dont need anything more complicated if you are using cash basis.
Personally for one unit, i use quickbooks, this allows me to see monthly profit and loss and gives me a easy print out at the end of the year. I also use a single credit card attached to that quick books to make it completely easy for my accountant at the end of the year. I use a excel spread sheet for my budget. i try to calculate what my anticipated revenue is and my standards expenses such as insurance and taxes, so that i always have set aside money for those standard expenses. If i however had multiple properties i would probably go to a property management software system, that allowed for electronic payment. I currently collect rents form my unit in person, or allow for deposit to go directly into my bank account to make it easier for my tenant and myself.
Jonathan, If you are tracking all the details in QuickBooks - I would strongly suggest using budgets and forecasting tool. You can also get a Cash Flow Report right within QB. Try using Intuit Payment Network , no monthly fee .50 per transaction fee.
I currently have 6 SFRs. I have used QuickBooks for our other business for years, so I also use it for rental bookkeeping. I accept checks, money orders and cash. Some tenants bring their payment to our office, some mail it, and some use their bank's online banking.
Whatever method you choose to use, be anal about keeping records. Sloppy record keeping will bite you in the butt.
My LLC bought my brother's house that came with a garage apt in Ohio about 1.5 hours away from where I currently live. I had been managing by myself in all respects with a spreadsheet being used for the financial. I set it up to make it easy to track monthly expenses, to provide totals, and to roll up the totals into categories as seen on a schedule E from each unit into a "global" view. This was useful for budgeting purposes as Jonathan stated but for me it wasn't the greatest for accounting purposes since I didn't set it up in a register type of layout. I still used a checkbook for tracking expenses but I had to use Excel's comment feature for annotating details for repairs when multiple repairs/improvements occurred in a given month (which occurred a lot last year over the summer since we renovated the house and apt before we rented them).
We recently closed on a 9 unit apt building in our hometown and still have the 2 units out of state. My wife has gotten interested in the business so she is studying to be a realtor, gotten involved with managing our maintenance staff (a family friend and my father-in-law) and also started handling the paperwork after she realized I couldn't do it all and still do my day job (even though I work from home). So for managing the books she purchased Quickbooks.
She set up Quickbooks how others on another thread have suggested: the properties are customers, the units within the properties are jobs and the tenants are sub-jobs. Since Quickbooks is generic it's hard to know how to tailor it to fit a specific type of business but my wife took a 1 day seminar to learn how to use it as well as bought a book that are both focused on using Quickbooks for rental property.
Like Aly L I love the P&L and other types of reports that Quickbooks provides. Had we not purchased the apt building I probably would have kept using Excel but for more than 2 or 3 units it isn't ideal in my opinion. We haven't yet merged all our income and expenses from our original property into Quickbooks but that will be happening soon since I'd like to have it in there before tax time rolls around. I still use Excel with a different workbook for planning property acquisitions but for any heavy hitting expense and income track Quickbooks is where it's at.
We don't have any sophisticated tenants (in fact 3 are HUD and don't have computers) so we either receive checks, cash, or direct deposit from the local PHA therefore we haven't had a need to use credit card or online payments yet.
Hope that helps.
What's your take on the advantage of using rental properties as customers/jobs as opposed to classes? I was taught that classes are long-term (i.e. rentals) whereas jobs were short-term (i.e. flips).
What's your take on the advantage of using rental properties as customers/jobs as opposed to classes? I was taught that classes are long-term (i.e. rentals) whereas jobs were short-term (i.e. flips).
I use the Class distinction the way my Quickbooks consultant set it up - by state, as we have rentals in FL and NJ. We also have a Class "Overhead".
The Customer is myself and/or my husband, depending on whose name is on the deed to that property. The job is the property address, and the tenant is the subset of that job.
I had a QB consultant set up the data file for our rentals when we had 6 of them. We also have another business that is managed in another QB data file, so while it may be overkill at first if you just have one or two properties, it will be very helpful to set it up sooner rather than later as you scale up your business.
@Jade Davis,
Like most of the folks who have commented, I have three properties and no need to pay tons of money for software to manage them.
I use the much cheaper: http://www.quicken.com/personal-finance/rental-property-manager-2015
It has all of the flexability I need and most of the features of QuickBooks without the cost.
Read up on the alternatives. There are other pieces of software too that can be useful and are much cheaper to start with.
I use QuickBooks for an ecommerce business I also own and really like it, but I didn't want to jump through all the hoops necessary to make it work for real estate. For the real estate biz I use a giant spreadsheet (14 unit apartment building). I honestly don't like the giant spreadsheet approach and would welcome a mint.com for landlords.
I use Quicken rental property manager like @Les Jean-Pierre . I have multiple buildings, multiple owners (LLC, S-corp, personal, etc) and a few dozen tenants. It is super easy and it converts my info into my tax software (turbotax or whatever) at tax time easily as well. Even if it didn't, the categories and amounts are right there to view. I bought Quickbooks and found I needed to take a 6-month course in quickbook-ese to use it for real estate like @Wade Sikkink says. Go with a simple property management software that is easy to add properties, tenants and owners so it can grow with you!
Aah that is the question!
Classes are a Landlord's very best friend.
The Class feature in QuickBooks, will give the landlord a detailed accounting of income per rental building, per rental unit, per county, city, you name it, and QuickBooks will do it.
Not only will the Class feature tell the landlord how much income they made per property, but will also tell them how much money they spent in expenses, per building, per unit, per county, per city, etc., and will subtract those expenses from the income and give you you're bottom line. (I'm panting with excitement because I know what it can do and what it can do for you)
If you are in the red, you will know whether to sell that property or not. If you are in the black, you will whistle all the way to the bank.
When you go to court and a tenant does damages to your rental, you will have an itemized list of all costs that you spent on damages because you have assigned those damages, those costs, to the rental property listed as a class.
QuickBooks was designed in the beginning for industry who sold things. Builders who built things. Therefore the word Jobs. You had a customer and then you had a job you were doing for that customer.
In our Industry we will customize it to fit us!!! So we will make our rental property the customer, and the tenant the Job.
When you see words in QuickBooks like sub account, Subclass, and Job, they're just another word for Indenting, because QuickBooks does everything in outline form. It has headers and accounts, sub classes, and jobs, that are indented under the Header.
Customer: 1234 Money Maker Drive
Job: Betty Spendalot (Tenant)
Customer: 5678 Bank Street Avenue
Job: Conrad Savesalot
Everything is neat as a pin in QuickBooks.
All you are doing is setting it up in outline form.
Let's take a look at the class feature to see how your properties will look there.
1234 Money Maker Drive
5678 Bank Street Avenue
If you can use two fingers to type on your computer, you can use QuickBooks.
You have just setup your properties as a class and Your Tenants as a Job (Indent) of the rental property.
When you invoice your tenants. you will choose the rental address from the CLASS COLUMN on the invoice.
When you pay for a repair on a rental property you will choose the CLASS COLUMN on the check stub.
Any time you want to know where you stand financially on a property, just do a Profit and Loss Report by Class. Voila, with a click of a button, you can see your income less expenses and your bottom line.
You can see just how much money you spent for that building or that unit inside the building, or that single family home, right down to the penny!
Once you know the POWER OF QUICKBOOKS, I kid you not, it will knock the socks right off of you.
I had a customer write me and tell me that he had used QuickBooks for over 25 years and didn't know the Power of QuickBooks until I wrote him exactly what I am writing you.
For a little over $200 (and it's a tax write off), you will have the best friend you can have in this business.
Nancy Neville
Certified QuickBooks Pro Advisor
@Everyone Thanks for the responses
@Account Closed
WOW! Thank you! That was great.
I use classes for properties - each house is a separate class - and customers for tenants. If I owned MF I would keep each property as a class and then make each unit a customer and each tenant a job.
I think.
I haven't had to deal with that situation, so...
Yes. The classes keep track of your income and expenses and give you your bottom line.
The Customer/Job keeps track of your tenants and where they live. From here you are able to invoice your tenants for rent, late fees, and damages.
Classes will appear on almost all transactions so that you able to choose what property that income or expense belongs to.
When you do a Profit & Loss Report by Class, it gives you income, minus expenses equals Profit or loss per property.
Yes, classes gives you a visual to see how much each property made you in income and what properties caused you grief in expenses, then gives you the bottom line.
Customer/Jobs tells you where the tenant lives and allows you to invoice them for rent, late fees, security deposits, make deposits, etc. By choosing the Class Column on transactions you are able to assign an income or expense account to that property or unit.
Nghi, tenants can still be short-term; you never know how long they will stay so a sub-job still works.