Baselane mini-review:
tl;dr Baselane is very, very similar to Stessa. I did a small test drive, not enough for a full review. Important note: this is a completely free service. In software, if the service is free, then you are the product, not the client. They are selling your information (sensitive financial info!), and possibly your tenants' info, to 3rd parties that are aggressively marketed to you. Make sure you understand the implications of this.
Slightly longer review:
I didn't get all the way into Baselane. They are very similar to Stessa in that they offer an all-in-one package including a high-yield cash management account and ACH payments from your tenants. They even use the same bank (Blue Ridge Bank) for their cash management accounts, although as of last night Stessa is moving away from Blue Ridge. Similar to Stessa, they have low limits for cash in and out and other related problems, so I while I did a minor test of setting up a couple of units and importing one bank account, I ultimately decided not to go further.
Their initial setup is quite a bit different from Stessa. They try to get you set up with a cash management account from the very beginning, instead of as an add-on, and push their tenant management at you. The bookkeeping is almost an afterthought. They are more transparent than Stessa about their banking limits before you sign up, and having learned from my mishaps with Stessa I took a good hard look at those limits and decided to bounce. Their cash management is offering a lower yield than Stessa (currently 4.66% vs 5.06%), but they don't charge a monthly fee (stessa is $20/month or $192/year) so depending on how much cash you manage it can be a bit of a wash.
Baselane uses Plaid to connect to external accounts, so I was able to connect the one problematic account I tried that wouldn't connect with Stessa's service. I didn't try the second one but it should also work. Using Plaid for everything is a big point in their favor.
Unlike Stessa, Baselane doesn't have any feature that I could find to bring in transactions from an outside property manager. That limits this to landlords who are entirely self-managed.
Like Stessa and QBO, Baselane doesn't take care of splitting properly amortized mortgage and escrow payments, so that's still a manual process. I also found that there were bugs in the property setup page when I tried to enter my mortgage information. I eventually got it working, but it took me 5 or 6 tries and did not inspire me to add additional properties.
Importantly, Baselane doesn't charge a fee. It makes all of its money by selling you products, and presumably by selling data about you. That makes me very nervous. It's also the approach Stessa originally took, but when it didn't produce enough revenue Stessa added a monthly fee and caught a lot of users off guard.
I didn't get far enough into the weeds to try out their customer service, but like Stessa it is mostly based on email and chat.
Overall, Baselane is a lot like Stessa in its pros and cons. You might want to consider it but it wasn't for me.
Stessa Review:
tl;dr: Stessa offers incredible potential but doesn't execute on it. I really wanted to use it but was forced to seek another platform due to software bugs, banking challenges, lack of support for schedule C businesses, and spotty customer support. Unfortunately, I can't recommend it to anyone.
Longer review:
Stessa is heavily advertised here on BP. I tried it a few years ago and thought it had potential, but it wasn't quite mature enough to handle my needs so I went back to Quickbooks.
But earlier this year, they hit me with a very tempting offer: 5.06% interest on any cash I held in their cash management accounts, operated through Blue Ridge National Bank and FDIC insured, as long as I paid them $192/year for the pro version. At 5% interest, it only takes a few thousand dollars in the bank to cover the cost, and if I could free myself from QBO I would be saving hundreds of dollars a year. And their idea of unlimited free "virtual" accounts means I could finally have a unique bank account for each property, plus easily manage security deposits in their own dedicated accounts. And even better, transactions made with their cash management account would instantly sync with my books, so I wouldn't have the constant reconciliation errors I get with QBO.
Plus, the accounting system seemed easier, I would be able to switch my self-managed tenants away from Venmo to ACH payments, I could simplify my life by leaving apartments.com for tenant screening and marketing...it seemed too good to be true. I took the plunge and handed over my credit card and prepared to start moving funds over to their cash management accounts.
Right away, I ran into problems.
First, the don't use Plaid, the industry standard bank account importing vendor, to sync bank accounts for transactions (somewhat confusingly, they do use plaid to verify ACH transactions, but you have to go through a different platform to get there). So of the 4 separate banks I am currently using, 2 would not sync at all (one gave an error, the other wasn't even available as an option). If I was just using their cash management accounts and abandoned my other accounts, this wouldn't matter. So I attempted to press on, figuring I would manually import transactions. But this alone is a major flaw in their system.
Next, I ran into immediate issues with the cash management accounts, which were the whole reason I came over to Stessa in the first place. Getting cash in is bizarrely difficult. They have very low limits (by real estate investment standards) for check deposits with the app, and the app is the only way to deposit. They also cap ACH transfers in at $5000/month, so if you're in a high-rent market you might not even be able to accept all your rents from a multi-family property through their system. And it took a full week for the check I deposited to clear, and even longer for the ACH payment I transferred from one of my accounts to show up. They did not, at the time of my trial, offer any check-writing capabilities, so paying bills is nigh on impossible unless you find a vendor that will take a virtual debit card or ACH payments. Good luck paying Joe the Plumber that way. Their ACH limits are comically low, at $500/day and $4000/month. So you'd better hope that you don't need to replace a roof or HVAC system, because you can't pay with a check and can't make an ACH payment over $500. You CAN wire money out for $5, but only after contacting their customer support email. More on that below.
Given the immediate headaches I ran into with the cash management, I decided to close my accounts and get my money back out. This turned out to be even harder than getting the money in. Those low ACH limits, lack of check-writing ability, etc., meant that my money was trapped there unless I paid to wire the money back out to my original bank. Their outbound wire fees are only $5, but my regular bank charges $30 for an incoming wire and I had two separate accounts to manage so the total fees to get my money out were going to be $70. That's unconscionable.
I will note that last night, after I was able to plead my case with customer service via chat and get most (but not all, yet) of my money out via increased ACH limits, they sent out an email saying that they are breaking up with Blue Ridge bank and moving to a new banking partner that will offer checks and match the interest rate. So clearly I'm not the only one who was frustrated. Maybe in a few months things will improve, but for right now I can't recommend anyone use the cash management services at Stessa.
On to customer service: they offer it via a chatbot or an email address only. Maybe that's fine for accounting software, but it's not great for a bank, especially when you have thousands of dollars sitting in limbo for over a week. Repeated emails to their support email went unanswered. After you deal with the chatbot you can get to a real agent via chat, but replies can take up to 24 hours. In my week of trying to get Stessa working, I dealt with 3 separate agents. Only one of them (shout out to Christopher!) was helpful, and even with him it took several days to get my issues resolved. But he did at least refund me the fee for my pro account, bump up my ACH withdrawal limits high enough that I could get my money out over a few days instead of a few months, and follow up with me. Still, you shouldn't have to cross your fingers that you get the good agent on chat when you need help with banking.
As far as the actual accounting services, there are more problems. I was willing to overlook them for access to the 5% cash management income, but they're significant. First, this is not a true double-entry accounting platform and that causes issues that are above my pay grade to explain. Let's just say your accountant will probably scowl at you, or worse. Second, there's no way to customize the accounting categories (called the chart of accounts in most accounting software), so you can't wedge in a schedule C side business. And although they have a workaround for owner-occupied properties (aka "house hacks"), it's fairly clumsy. Plus, they don't offer an automatic split for mortgage payments based on an amortization schedule. So like Quickbooks, you have to manually enter details about each of your mortages every month.
One last issue/bug is the appfolio integration. My property manager uses Appfolio, so this was a selling point for me. But like so many other things with Stessa, it doesn't work. I was able to connect, and Stessa imported my leases. But even after almost two weeks, every time I look at the connections page it still just has the spinning wheel and a message to check back later. Other users report the same issue on their forums.
Finally, it's worth noting that Stessa also makes money by selling you services like landlord insurance. Some people are OK with that, but I don't love that they have so much financial information about me and are selling it to third parties.
Quickbooks Online Review (with notes about Wave and Zoho Books):
tl;dr: even though it's widely used by real estate professionals, it's not great for us. It's also expensive, locks you in, difficult to use, and the support is very poor. It is good at receipt handling, though.
Longer version:
When most Americans first need an accounting software package, the one they will probably turn to is some version of Quicken or Quickbooks. The accounting giant dominates the industry, and in certain applications can be very good at what it does. If you are running a retail business, have employees and contractors, do payroll, track inventory, etc., etc., it seems to be a fine tool.
But if you are a real estate investor with a few properties to track, it's really painful. I started using Quickbooks online several years ago when I found myself with 2 schedule C businesses to track (my real estate agent gig and a very successful year as a freelance artist) plus an LLC to manage rentals, my owner-occupied duplex, and another property not in the LLC. I tried a variety of options but reluctantly ended up with Quickbooks. And for years, I've regretted it.
While Quickbooks is great at the schedule C stuff and using it made my accountants happy, my list of grievances is long. First, it's abysmal at tracking mortgages. It forces users to manually split mortgage payments into various components every month, has a painful process to start new mortgages and close out existing ones, and generally has a miserable process for handling everything around loans and amortization.
Second, it has continual sync issues with my various banks, so I spend many long and tedious hours reconciling my statements looking for missing transactions. My account balances literally never match what Quickbooks has in its register, so every time I fire it up I have to decide if I want to spend a few hours doing bookkeeping or just ignore it and wait. Usually I wait, and every few months I sacrifice a weekend day to the bookkeeping gods. There is nothing at all quick about keeping books with quickbooks.
Third, receipt matching is also problematic at best. And there is no function at all to import transactions from my property management companies, so I need to keep a separate set of books for things I pay and then have my accountant manually reconcile my books with the property management statements at tax time.
Fourth, it's incredibly complicated and hard to learn, but the customer support is very limited and rarely helpful. Pretty much every time I use it, I end up with one tab with quickbooks and 4 or 5 tabs of help articles and google searches and quickbooks forums threads trying to figure out how to do things that seem pretty standard and should be easy, like booking a credit card refund.
Fifth, once you start using it you'll find they make it exceedingly difficult to leave. There's no way to export all your data out of Quickbooks online if you want to stop paying. You can download spreadsheets and run PDF reports, but receipts and search functions and the rules that you used to assign transactions are all gone. You get one year of read-only access after you cancel your account. But since the IRS can look back up to 7 years for an audit, that's not really helpful, and the IRS is also rumored to not be satisfied with spreadsheet downloads. As I am contemplating leaving Quickbooks, it seems that the best strategy for me is to pay them one month a year for the next 7 years so that I can keep my data available in the event of an audit. It's borderline extortion.
Finally, it's shockingly expensive. Because I needed to track expenses in various ways (across both properties and two different schedule C incomes), I had to use what Quickbooks calls "properties," "classes," and "projects," and using all of these bumped me into the highest and most expensive tier, currently $970/year with the annual payment discount. But even the lowest tier is much more expensive than most of the other options above.
As much as I am looking forward to getting away from Quickbooks, there are a few pros worth mentioning. First, the UI is pretty good on both web and app versions. The receipt handling process is head and shoulders above everyone else, with OCR that pulls data out of the receipts and pre-populates your transaction, the ability to send in receipts by email, and the ability to snap (or email) receipts now and book them later, so you don't have to stop and enter a whole transaction at the gas pump or in line at the hardware store. And finally, Quickbooks isn't going anywhere, so there are no worries about it going out of business or getting sold or merged and having the product go downhill.
A quick note about Wave, Zoho, and other Quickbooks competitors. They all have various pros and cons and I tried a couple of them briefly several years ago. But they all suffer from the same over-arching problem that Quickbooks has, which is that they aren't tailored for our business and can't handle some of the unique bookkeeping aspects we have like needing to split mortgage payments and import transactions from a property manager.
I've been trying to find the solution to managing real estate with online software for quite a while now. I've tried a lot of products, and haven't found quite the right fit. But I figured I could share some experiences that might help others. And I also figured I could create a thread where other people could share their experiences.
First off, there are a surprising number of real estate software platforms out there.
There are a lot of platforms in part because there are a lot of types of customers. Here are a few potential types:
* House hackers trying to figure out how to do accounting (I fall into this category, as I live in one unit of a 2-unit property)
* Real estate agents who need accounting software, or transaction management software, or marketing software (I also fall into this category)
* Landlords who self-manage and want something to help them with marketing, tenant management, accepting rents, etc., and also need bookkeeping/accounting software. (I also fall into this group)
* Landlords who have a property manager where most of the accounting and all of the tenant management is done by the PM, but they still need some general accounting software to reconcile things like capital projects, mortgage payments, etc. (yes, this also describes me)
* Investors who want to analyze prospective deals, quickly calculate mortgage payments and other expenses, etc. (I think almost everyone on the forums here falls into this group, including me)
* Property managers who need to manage many units for many landlords. I'm not in this group and don't want to be, and I won't be doing a deep dive into this kind of software.
* and then of course all the software that is geared at more specialized real estate professionals, most of which I won't be looking at here.
I fall into 5 of the categories I described above, which is probably a bit more than most people. But it's not unusual at all for someone to fit in 2-3 of these. Lots of people invest and house hack, or have a related side business like being an agent, or have a mix of self-managed properties and properties that are professionally managed. And finding just the right software bundle to help in your unique circumstances can be challenging.
With so many types of customers, there are a lot of software vendors out there trying to help them (or make a buck off of them). It can be hard to lump them all together, but here are some of the general buckets I have seen, and companies that fit into them. This list is by no means exhaustive, and you're welcome to add companies I missed or add your experiences in the comments. Following this list, I'll give my reviews of a few of the platforms I've tried (as separate comments added over the coming days).
* General accounting platforms: This includes Quickbooks/Quickbooks Online (the 800 pound gorilla), and competitors like Wave, Zoho Books, etc. These are generalized accounting packages that while powerful, are also confusing and rarely offer specific tools that are helpful to real estate investors.
* Landlord/real estate specific accounting platforms: This includes companies like REI Hub, Rentastic, and RentalHero
* Platforms for landlords who self-manage: This is a little hard to pin down, but I would say it includes all the myriad platforms that offer help marketing a property, signing basic leases, communicating with tenants, accepting rent via ACH, basic document storgage, etc. I'm including things like RentRedi (tied to Bigger Pockets), the old Cozy.co (now part of apartments.com), TurboTenant, Innago, Lease Protector, Zillow Rental Manager, etc., in this group. Several of these are now partnering with REI Hub to offer accounting as an add-on service.
* Tools for investors who want to evaluate deals: Here you have probably the most crowded sector of the market. Literally dozens of companies are vying for your business here, everything from the Bigger Pockets deal analyzer to Roofstock spreadsheets to mortgagecalculator.org's surprisingly robust tools to DealCheck to ... well, there are just too many to list. I won't do a deep dive here, but I included it because some of the other tools I'm looking at like Rentastic offer a deal calculator as part of their bundle. Personally, I am fine keeping my deal analyzer separate from the management of the properties I already own, but I suppose there is some value to one-stop-shopping.
* Platforms that try to be all things to all people: This category is mostly Stessa and Baselane, both of which offer landlord accounting, self-management tools, as well as high interest cash management accounts. I would also put Avail.co and Rentec Direct in here since they do everything except for the high interest cash management account management.
* Tools for Real Estate agents that overlap in some of the landlord areas: I include here things like RealtyZam (parent company of RentalHero), Dotloop (an agent-only form-filling and signing tool that offers industry-specific services to help with basic tenant management like lease signing and secure document management), and Homes.com.
* General form fillers and document signing/management platforms with a real estate vertical market. This includes the frighteningly long list of platforms that want you to give them a monthly fee to help you fill, sign, and manage PDFs. Docusign, Adobe, Zoho, Jotform, HelloSign, PandaDoc, and (so, so many) others.
* Tools for professional property managers: This includes Appfolio, Propertyware, Buildium, and quite a few others. As I am not a professional property manager and don't want to be one, I won't spend much time on these. But I have been on the client side of these 3 and can make some general comments.
What a mess.
With so many types of customers, and with customers routinely falling into more than one group, and so many companies marketing themselves to real estate investors and landlords, it's hard to find just the right mix of software.
Here's where I stand now:
$970/year to Quickbooks Online, a platform I detest, to do a mediocre job managing my books.
$400/year to Dotloop, a platform that hasn't seen a significant UI improvement in years, to help manage my real estate agent transactions
Logins with 7 accounts across 4 banks (2 of which are also lenders), 2 additional lenders, 2 major credit card issuers, and a property management company using appfolio, and no centralized place to manage them all.
Tenants paying rent by Venmo every month, which creates additional work to keep track of it all.
More money than I care to say out loud to a CPA who takes the piles and piles of reports and documents I generate from all this, plus my W2 and my wife's W2, and turns it into something that the IRS will accept. I'm sure he'd be happier if I could consolidate this quite a bit, and it might save me some money if I can save him some time.
In my attempt to simplify things, I have tried a lot of tools: Quickbooks Online, REI Hub, Stessa, Baselane, Wave, Docusign, Jotform, Dotloop, Homes.com, Cozy.co (now apartments.com), plus client-side experiences with property managers using Appfolio, Buildium, and Propertyware. I'm sure I've forgotten a few.
What I found out:
From the perspective of a real estate agent who needs to track expenses, a small-time landlord with 2 self-managed units, a house hacker, a landlord with 4 units under professional management, and an investor who analyzes deals, plus a guy who occasionally is lucky enough to have a little cash to put aside and wants the best return possible while it sits in the bank, is there one tool that will rule them all? Read on below as I review (as separate comments to this thread over the next several days) the tools I've tried and give my honest opinion on what worked, what didn't, and why. And feel free to chime in with your own experiences and tools or categories of tools I might have missed.
@Israel Gonzalez I'm working on a post about this topic but the short answer is that REI Hub is working well for me, so far.
@Sam B. That apartment building had a rough 6 months after Covid so I took an unsolicited offer. Ended up doing OK after a 13 month hold but it was a roller coaster! Still have the duplex, thinking of getting rid of it. You're right about properties not cashflowing the same anymore - property taxes and insurance are making it hard. But I do love working with Ron. Hope you are doing well, too!
@Sam B. invests in Beaumont
I'm in Boston. I do my real estate sales very part time, but I keep an eye on several key submarkets. I am seeing price reductions these days. Not all properties, and not huge price reductions. But 3 months ago there were absolutely zero price reductions in markets like Medford. Now there are 3-4 on some days. It definitely feels like the market is turning. Just hoping it is a slow leveling off and not the top of the roller coaster ride.
If you just have one rental unit, you can use the free tools at apartments.com to handle everything. They'll do credit/background checks, leases, payments, etc. If you end up with a larger portfolio, it doesn't scale all that well but it is great for the small landlord just getting started.
So here you've got a $4M property and a $2M property and you're worried about $450k in capital gains taxes? Come ON, man! You've just won the lottery. Be grateful! The taxes are 7.5% of the total valuation. I would love to pay 7.5% taxes on that kind of money. Don't let taxes drive the decision. Plus, the taxes don't vanish into thin air. They come back around as paved roads, educated employees, clean air and water, world's largest military, etc. You're standing on the backs of other taxpayers.
Interest rates are through the roof right now. I got quoted 8% today for an interest only cash-out refi from the same lender that gave me 4% in February. 30 year amortization is running 6.5-7% on residential investment properties, it was a full point lower or more 2 weeks ago. Assuming you own these properties free and clear, you can seller finance them for a reasonable interest rate while also saving a bit on capital gains if you structure it right. Seller financing will make the properties vastly more attractive to buyers and will help you sell fast at a good price. Just make the loan 20% cheaper than they can get from a bank and offer less hassle in terms of qualifying the buyer. Don't be greedy.
Unless you have some other use for the cash that is going to earn you more than the interest + capital gains savings combined, you might as well offer seller financing. I am not enough of a tax expert to calculate the savings, but maybe this article will help point you in the right direction.
Given that you haven't really expressed any desire to be in the commercial real estate business and that with interest rates and inflation both in conflict we're in for some unpredictable times, I'd sell them both. If the person you're splitting 50/50 with doesn't want to seller finance, keep the one that allows for seller financing and let the other one go. Heck, I might have a buyer for you at the right price and terms. Shoot me a PM. But don't be greedy. Offer them up at a 6.5 or 7 cap (or a bit lower cap rate with friendly financing terms) and just unload them. You don't want to be sitting on them for months and months in this environment.