All Forum Posts by: Bradley Niemiec

You don’t create a liability by transferring money from a bank account into a liability account.  That will result in a pay down effect and reduce the liability balance as you are experiencing.  

The money you are depositing into your bank account as a security deposit should be created “from” the liability hence the debit (deposit) to the bank account/or undeposited funds and the credit (increase) to the liability account.  

@Brett Sayers

In regards to #1 Security Deposits -

First, create a new "Other Current Liability" account in your chart of accounts and call it "Security Deposit Liability".  You can have one of these where you dump all of your deposits or you can go as far to make additional "Other Current Liability" sub-accounts for each property. The subaccounts can be titled like "123 Main Street - Deposits".  They will then appear as "Security Deposit Liability: 123 Main Street - Deposits" in your chart of accounts.  Each sub account will total and reflect in the figure shown in the main Security Deposits Liability account.  Keep in mind that these are just liability accounts and are not where you deposit your funds.

From your post you are holding the security deposits in a savings account which I assume is listed as a bank account in your chart of accounts.

Are you tracking tenant accounts as customers in QB?  If You are NOT:

->So, you receive a deposit from a tenant.    If you are NOT tracking tenants as customer then simply do a GJE ("general journal entry" and enter the received payment, lets assume its a $500 check, as such:

Account- Saving Account   ;  Debit: $500 ;            Memo- Security Deposit Apt#1 Mr. Happy   ;  Class- 123 Main Street

Account- Security Deposit Liability: 123 Main Street   / Credit: $500    / Memo- Security Deposit Apt#1 Mr. Happy ; Class: 123 Main Street

NOW, if you ARE using customers to track tenant ledgers then you will need to enter a security deposit charge in their ledger for example: (I find the customer function clunky in QB for tenants but it can work)

You'll need to make a new item "service charge" and call it something like "Security Deposits Charge".  You do not have to define a $ when you set up the item.  Have the item point to your Other Current Liability account for Security deposits or its subaccount by property.

Then you can manually enter the security deposit charge in the customer account and it will show in the liability.

Doing this will automatically show the liability in the Security Deposits liability account regardless if you have actually received payment or not.

Then you will need to "receive payment" for that customer and it will post to his account.  Then that check will be available in your make deposits icon to deposit to your savings.

I think you are confusing where you are depositing your security deposit
funds with the actual liability it creates. They are two different
things.

Cool? :)

B-Rad

I have a small student rental portfolio in PA. When you invest in off campus housing it’s all about the number of beds as opposed to the number of doors.

Some things to consider when you evaluate an area to invest in student rentals:

1. Know the area that undergrads rent.  There is usually a maximum square block area surrounding the university that is the highest density of undergrad off campus housing.  Purchasing outside of that area will make your property less desirable and potentially unrentable to students. 

2. Familiarize yourself with specific university rules governing off campus housing eligibility.  Some allow all; some have lotto systems or point systems; some allow only seniors.  Some universities have specific code requirements for off campus houses that may go above and beyond local government requirements.  Knowing these things will help prevent unwelcome surprises after purchase.

3. Research what the boarding costs are for the university on campus traditional housing.  That way you know what the parents are already prepared to pay. This can help you establish or negotiate a rent price.  This also effects payment frequency.  If they’re paying the university their boarding “rent” by semester then there’s no reason you should be collecting monthly.  For example, My student lease term runs 6/25/20-5/25/21 (this allows for a one month landlord possession to repair and upkeep) and they pay the total term rent in two installments due 5/15 and 11/15.  Obviously my students are only ever a single year because the university area I service only allows seniors to live off campus. 

4. If you have any connection to Greek life don’t be afraid to reach out and see what off campus areas they like to “control”.  Greek and sports clubs like to carry tradition and keep the same houses year after year.  These houses seem to take a little more abuse but tend to also rent years in advance.

Also, tailor your lease to include additional rules and regulations pertaining to student housing.  For example, limiting the number of people inside the property at one given time.  Older houses have a hard time with 200 revelers bouncing up and down at a 2am party.  If that floor collapses you want to be covered.  Require renters insurance with liability.  Get the maximum state allowed security deposit.

Good luck! 

I've used Quickbooks Desktop for years now.  You can track your income and expenses by classes so you can define each property as a class and get great reports.  It's a solid bookkeeping system and it makes life easy on your accountant provided you set accounts up correctly.  I've used this software from approx 20 units to the 250 +/- units I currently have.  I really should make the jump to QB online but then I'll be looking at that all the time because I'm a numbers junky so I try to leave the finances in the office with desktop. 

We use propertyware to manage our tenant ledgers, online payments, tenant portals and maintenance requests, and while it offers a financial aspect, we find that portion of PW subpar and always GJE (General journal entry) out to QB for the hard numbers.