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Best accounting software to track rental property income/expenses
Hey BP,
Tax season is right around the corner and another year went by that I did not track my bills! I would like to find a software that I could start using that will help me track my real estate income and expenses.
I self manage my own units and I want to set up good tracking habits early on with a few rental units so that I can scale in the future. I would like a software that I could also use on my smart phone and under $15 a month.
Any suggestions that are real estate friendly?
@Kevin McGuire I use class for each property. The reasaon, location can only be used at header level, meaning you can only assign it by transaction while Class can be assigned at line item level, which means if a single transaction is for 2 or more properties, then you can "split" the line item and assign class for each line.
Originally posted by @Dan V.:
@Kevin McGuire I use class for each property. The reasaon, location can only be used at header level, meaning you can only assign it by transaction while Class can be assigned at line item level, ...
Thanks Dan! Yes this is what I hit as well. I went with locations based on an article I read but now regret it. Specifically, my property manager’s charge needs to be split across properties which requires me to ledger it (ugh). I went with locations because I thought I may use classes for some other purpose (e.g. class=hvac, location=123 Main) but I’ve not yet found such a case. I’ve considered moving it all to classes but it’s a lot of work
@Kevin McGuire The breakdown of expenses or assets (ie. HVAC) should be set up in the chart of accounts, properties should be set up as Class and as Customer/Tenant. Location is ideal if you have 2 separate business model in one entity (ie. rental or flip) and has 2 separate bank accounts. If you want to move them to class and don't care about the details of historical data, you can lump them together and make a journal entry (at least per year) thru 2019 and start tracking the class in 2020.
@Dan V. Thanks! Good insight on the use of locations. I like your idea on how to switch over. Appreciate the follow up.
Has anyone tried RentalGuage? I saw it shown at an event and it looked awesome. I'm an excel guy still but if I switch this would be the one I would try.
We evaluated Quicken/QuickBooks/Stessa and finally decided to go with RentalHero subscription for its simplicity and low price. Been using it to track 4 rental properties. It's easy learning curve for both me and my wife, with good integrations into all our bank accounts/credit cards. Export feature is also great so we can send the annual profit/loss statements to our accountant come tax season.
I'm going to second the Rental Hero recommendations.
I listened to a podcast with the founder when I was first starting to learn about investing in rental properties, and later circled back to it when I was working through deciding which accounting software to use. I use Quickbooks for my "day job", and generally find that it is way more - and thus much more complicated - than I need. On the other hand, Rental Hero is purpose-built for rental properties, intuitive to use, and mobile-friendly. I'd encourage you to give their 30-day free trial a shot and see if it works for you.
I am liking Rental Hero. It is very straightforward and easy to navigate. I tried a few others but kept coming back to rental hero for the simplicity and ability to handle multiple properties.
I've been looking for bookkeeping software that is web based that allows me to allocate income/expenses to individual properties, it's for my Series LLC since all of my series share the same bank account. Rentalhero.io ended up being the least expensive solution that was easy to use. Much better priced than quicken.
We have 16 units. I got sick of spending so much time at the computer, so now I paper file my receipts by property and at the end of the year I add them up! I have set most utility payments up on autopay to the business credit card so I can just pull up the utility accounts online at year end and get the totals. I get simpler every year. I use google sheets for budget, tracking rents received, net income etc. I may go check out Rental Hero to see how much time I would have to spend all year to save time at year end. It would be nice to see profit/loss at a glance and I would really like to scan paid bills & receipts so I can throw them away.
Originally posted by @Chris Habets:
I only have one rental currently (duplex) that I manage myself, but I'm an Excel Guru and honestly can't see myself changing over. I've built the sheet so that each expense is categorized, it shows my cashflow expectations, my receipts are saved as photos with a simple code for easy reference, a nice summary page... I make a new sheet per rental when I expand, and at tax time I just sort and copy paste.
Care to share a copy? It would definitely be appreciated!
Originally posted by @Gabriel Rodriguez:
Sorry! But it's not really intuitive to other people. I've tried to share it before and it takes a lot of time for people to learn what I did.
Great information here - thank you. Just so I am clear - everyone suggesting Rental Hero...It is a good tool for tracking income and expenses from the purchase (closing costs and fees) to financing charges and expenses and income? I am not a property manager, I just want to formalize all of the information that I am keeping in Excel. I have 9 properties currently and I want to be able to follow all of the expenses and income for each property in a clean and simple way.
If there is a better solution I would appreciate hearing.
Thanks
Has anyone used Tenant Cloud? I am currently setting it up for our units and it seems easy to navigate so far. Just wondering if someone has used it and found any serious faults to look out for. I currently use excel, but i like the idea of fully operating within one program. Tenant cloud is also free up to 75 units.
An additional question, has anyone had trouble getting their tenants to switch over to an app based program to pay rent and just communicate in general? Currently most tenants email transfer, with the exception of two older fellas that still enjoy filling out cheques every month.
Thanks,
Sheldon
After reading this thread a while ago I decided to give Rental Hero a try and I have to say I like it better than the excel spreadsheets I was using. I like the layout and it makes it a lot easier to keep things organized in one program. I just finished up the 30 day free trial and found it worthwhile enough to pay for the annual subscription. @Andrew Smith yes it works well for tracking income, purchases/expenses for each property and you can attach the invoices to each expense so the documentation is attached right there. It's not as comprehensive as QuickBooks where you can look at a full balance sheet, but it tracks income, expenses, profit/loss statement, and easily lets you separate them out by property which is what I'm looking for at this point. You can customize different categories and subcategories as well to add things like fees, refinance cash out etc.
@Scott Passman thank you very much for sharing your thoughts.
Has anyone used RentalHero to track renovation costs and depreciation? I watched some Quickbooks online tutorials and it looks like a beast, but it does make the whole depreciation thing clear. Does your CPA just handle that if you use Rental Hero instead?
I really like rental hero. I was using excel prior and it wasn't working out. I was always worried about if I missed something and it was a pain to keep track of everything. Now I have everything in one spot and they separate by properties. You can add bank and credit card accounts so it automatically pulls expenses too. I feel much more comfortable with the financial aspects now because I have everything consolidated in one spot. Its around 110 dollars per year which was much cheaper than alternatives like quickbooks that aren't specifically built for rentals also. I'd check out the free trial and see how you like it.
@Yinna Wang
With Rental Hero you can categorize all your expenses, add receipts, vendors, miles, etc. There's multiple ways to view all of your expenses and incomes (All expenses, by vendor, by property). You can export all the data to easily to excel and provide that directly to your accountant. This year without rental hero my accounting was a mess. Took a lot of time to sort out with my accountant. Next year it'll be a quick visit as everything my accountant needs is documented right in rental hero. And if I ever get auditted, all my receipts are uploaded and connected to each expense. Highly recommend rental hero.
Hi Alex,
You should check out waveapps.com. It's free for the small entrepreneur and is basic accounting software. I don't know many softwares that are real estate specific that you can get for $15/mo. Most start at $20 (including QBO) and go up from there.
I hope that helps!
So the reason to use Locations instead of Classes if you have a QBO Plus subscription is to have an accurate balance sheet for each property. You'll notice that if you run a balance sheet by Class, there won't be any money in the checking account attributed to each property. Also the equity account won't be accurate for any of the properties.
If you don't care about having accurate balance sheets by property and if you don't need to separate properties by type (commercial v. residential or buy and hold v. fix and flip) you don't actually need a Plus subscription. You can make each property a customer and label income and expenses by customer, and that will give you the same information using classes will.
Let me know if you have any questions.
@Kunal Patel I tried the Rental Hero trial period, and liked it so I purchased the yearly for $119 (there is no monthly). While testing it out, I emailed back and forth with support, which was very responsive to all my questions. Later on I realized the guy I was emailing with is actually Steve Bjorkman, the CEO and Founder. So Kudos to him (if it was really him) for personally handling his support, great service.
There's also a referral code to get you $10 off, if anyone decides to sign up. It's 11449.
@Yinna Wang do you have to link to your bank accounts, credit card accounts in order to have all of expenses auto transfer/record on rental hero so you don't have to manually do the book keeping? If yes, any concerns about having your financial info security in case rental hero server got hacked? I see so much positive feedbacks from BP and on this thread I want to try it but have concerns about that. That's why I ask. Thanks.
@John Brittain
Let me know if you do and how you like it. I use Quicken Rental Property Manager but have been using it for 15 years and non of the reports work based on the setup being built up over time and mingled with different accounts and businesses. Plus I want something online I can access from any device.
Stessa and Rental Hero are kind of leading the pack right now. I love QBO and have it for my franchise but the $450/yr price isn’t justified in my rental business when Quicken is $115/yr.
@Wesley Shelnutt
Since you have been using it, is there any way to track non-rental items for accounting similar to QB?
E.g.:
1-Admin costs suck as umbrella insurance
2-Non rent incomes, sometimes I do consulting for folks and get paid in on this and need to track or occasionally will make short term loans from the company and need to record those.