New owner, bookkeeping question!

[Joe Derobertis]

Hi All,

I've recently acquired a few properties and have started using Stessa (since I get it for free with a BP Pro membership) for bookkeeping.   All of my properties are being managed by a property manager and it seems that I will get my owner draw one month AFTER the rent is paid.  So for example, for September I won't see that money until early October.  That in and of itself isn't an issue, I'm more asking how should I record that?  Ideally I want the money collected to be accounted in the month I'm paying the mortgage so I can get a better sense of my monthly cashflow month over month, but that means I will need to record the draw I receive in October in September so things all line up nicely.

Anyone have any thoughts on that? 
  

[Kevin Sobilo]

@Joe Derobertis, I believe you are over thinking things and I can certainly understand that.

I would simply record things when they actually happen FOR YOU. Just because your PM receives rent, does NOT mean you will get that draw the next month. Perhaps something happens and you need to sue the PM to try to get those funds.

Think of the end of the year as well. If you don't receive December's rent until mid January, that is income for the following year because you didn't receive it until January.

As for your monthly cash-flow, I recommend taking a step back! Way way back. With a small number of properties cash-flow is VERY inconsistent, especially depending on how you define it. 

What I recommend is looking at it over a longer period of time like the previous year to evaluate it. What I also recommend is also factoring in soft expenses that you are budgeting for but have not yet spent. For example, you may buy a property today and budget money for capital expenses each month for the next 5 years until finally you need to replace the HVAC. If you don't factor that cap ex budget in your cash-flow evaluation, then for the first 5 years it looks like you are doing GREAT and in year 5 you are doing TERRIBLE, but in reality its was business as usual all along.