Property Management Bookkeeping

[Kevin Wattenbarger]

Hello BP: I am in the process of trying to streamline my book keeping process from my real estate investments. Thankfully my real estate investments have prospered over the past few years. I currently have 25 units and have a 12 unit complex and an additional quad under contract. As my investments have grown I felt the need to start a management company and acting like a third party management company instead of the owner manager. Currently I self manage my own properties that I own individually and in various partnerships. I really don't have a desire to manage third party properties but may look to do so in the future (I am a FL real estate broker too). However, for both asset protection and systems & processes and to assist with scaling I want to have my management company act like a true third party management company. I currently have one employee who is is my property manager and assistant. I've gone from having a bank account for each property to working out of primarily one (I do maintain security deposit in a separate account from operating account.) I also have been using Buildium for about two years now and know it has helped me grow since I've been using it. How do third party management company's structure their book? My thoughts moving forward is to handle most Managment operations out of three accounts. 1.) property trust/ managment account 2.) company checking account 3.) security deposit accounts Brief description of set-up and thoughts The property trust account receives all rents, fees and security deposits. Security deposits are immediately transferred to the separate security deposit account. property trust account also pays vendors and property expenses. At the end of each month I collect customary managment fees and deposit those into the company checking account. Company checking account pays pay roll and company expenses. At the end of every quarter I pay what's available (above a set reserve limit) to the property ownership entity accounts(separate & additional accounts from what's described above) as owners payments. If capital expenses or additional funds are needed the ownership entity accounts will make owner's contribution to the property trust account. Does what I am describing above make logical sense? Is it similar to how true third party managment companies operate? Any comments, suggestions, best practices, etc on how to streamline and simplify the process would be greatly appreciated. Thank you! -klw

[Kevin Wattenbarger]

@Neal Collins. I second @Chris V. request. Would you mind sharing a few of your thoughts on Appfolio and why you've been so  impressed  by Appfolio over Buildium? When I started using Buildium I was around 15 units or so. At the time I didn't consider Appfoilio much due to price and I still maybe too small to justify the switch but would love to hear your thoughts with experience with each. Regardless, prior to Buildium I was primarily using Excel and separate bank accounts for each property. Buildium (or would imagine most true property management platform) has really helped streamline the process, made life easier and helped with my confidence/ desire to keep adding units. I would never go back to my old ways.