Who manages your books for your rental?

Question

Hi there! I manage my books currently, but since we bought a new property and I have a full time job, it seems like a lot to keep up with the books. Do you recommend a CPA to handle all things on the books, or should your property manager be doing ALL of this?

Theresa Harris · Answer

Unless you have short term rentals where I imagine the volume would be higher, you should be able to keep your own books. I have 4 rentals (had 5, but sold one) and there isn't much to keeping track of expenses. Rent and condo fees (if applicable ) are regular, insurance and property taxes are once a year, repairs are random and (hopefully) infrequent.

Tanner Pile · Answer

@Taylor Cook

Check out Stessa to help manage the books. If you have everything going through one account it will be very easy to track

Bill B. · Answer

I only have a dozen properties but with Quicken I do all the bookkeeping in less than an hour a month. A full time job is no reason not to do the books for at least the first 20. Everybody has a spare 15 minutes per week. (This is all LTR obviously)

John Morgan · Answer

@Taylor Cook

I work full time, have 29 SFR and find  it’s easy to do myself. It doesn’t take more than a few minutes a week. I have 3 that I rent by the room that has more moving parts/bills etc, but I feel it’s super easy to do. I also do my own taxes on turbo tax which is easy too.

Bryce Andrews · Answer

Hi @Taylor Cook,

Lots of great information on this thread. Just to reiterate, probably good to have a bookkeeper/CPA preparing your books in addition to the work your PM does. There are lots of good property managers out there, but a lot of the value of a good bookkeeper comes from having your financials in order, accurate, and ready for tax filing at the end of the year.

Todd Lennig · Answer

@Taylor Cook - Lots of good information from all of the posters.  As a bookkeeper here is what I tell potential clients.  Its time to get a bookkeeper when it is costing you.... the cost is time away from family or finding the next deal no matter what field you are in.

A good bookkeeper will take a lot of your plate, but as mentioned it will be hard with multiple properties to get it all of your plate.

Like anything when you hire a professional and thats all they do, they will be able to provide more insite in to bookkeeping and your industry that the ROI is way more than what you are paying them.

As for who should be doing your books, I am a big believer that you should have multiple people looking at your books.  For example, don't have your CPA firm do your books, why because if there is a mistake they won't catch it.  Mistakes happen, more eyes on the books hopefully will catch those mistakes, and bookkeeping and tax mistakes cost money.

Can you do your books yourself?  Absolutely.  Is bookkeeping hard?  Not for some people.

Happy to talk to you or anyone else about bookkeeping.  Another great bookkeeper in this group is @Max Emory to talk to.

Hope that helps.

Michael Smythe · Answer

@Taylor Cook how much of the process have you automated?

If done correctly, should only take an hour/week.

Bill Hampton · Answer

@Taylor Cook

You can do this yourself using software. Check out Azibo and Stessa.

Good luck.

Paul M. · Answer

I do it myself.   I am a financial accountant (as opposed to tax accountant) so it is pretty easy.   Even if I wasn't I would still suggest doing it yourself, great way to monitor the business.   I listen to podcasts while I do the bookkeeping.

James Mc Ree · Answer

OP didn't mention he had a property manager. He may be doing that himself plus the bookkeeping, so the advice above may be to considering hiring a property manager, CPA and/or bookkeeper. That's a big change from a do-it-yourself hands-on operation. It is neither right nor wrong, just a big change.

If you go all-in on that route, you will be paying a bit more and have all of your real estate time back as you will have much less involvement. That can be a wonderful thing as you will have more time for your family. It may also be a downer if you got into real estate partly to enjoy the business.

Think about why you are invested in real estate besides making money. Does this change positively or negatively impact that?

Consider doing a time study of where your time goes for your real estate business. Keep track of what you do each day for real estate and how much time it takes. You might be surprised to see some tasks are taking a lot more time than you think they should and maybe you are diving a little too deep into those items or need some automation.

I self-manage 13 SFRs with a set of linked Excel spreadsheets. I take all of the tenant calls, do all my own taxes and do almost none of the physical work. I hire contractors for that. I had a W2 job until I retired about a year ago when I wanted more time for family and noticed my real estate business was stealing time from my W2 job. I had a very flexible schedule at my job and probably flexed it too much. The schedule worked fine when I wasn't renovating a property, but the renovations took a good bit of time to self-manage.

You may find managing stable properties doesn't take much time, but renovations or other work does. Maybe it can be outsourced.

Just some things to think about...

Who manages your books for your rental?

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