Property management for rentals - no accounting system needed?

[Amit Sharan]

Hi BP,

I've just bought a couple of multi-family properties and am getting started with the buy and hold real estate investing. I did my math and have decided to use a professional property management company to deal with every aspect of renting the units in the properties. This company has been recommended to me by couple of investors who have very good experience with them. The company has promised to take care of everything from marketing, tenant screenng, rent collection, dealing with repairs, evictions etc. They way I understand it , if I'm willing to pay for it and can make the numbers work, I don't need to do anything expect deal with the property management company and review their monthly statements to me.

- What has been your experience with such arragnements? Are they really fully passive? If this works, it can allow me to focus on doing deals and scale up without worrying too much about managing my properties. As a part time investor, I find it appealing.

- Do I really need to implement any formal accounting system and use software like Quickbooks at my end? The property management company is going to take care of all expenses, record all invoices, collect all incomes and do exactly one money distribution to me every month. They'll provide detailed reports monthly and yearly. Can I just use their reports to do my taxes either myself or using a CPA? They way I see it, even if I let all money come into my personal account, it would be easy to identify transactions related to my property as there'll only be 12 entries per property in my account every year. All further details would be provided in the reports from the property management company.