Who manages your books for your rental?

Denver, Colorado
Buying & Selling Real Estate
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Who manages your books for your rental?

Taylor Cook
Member since 2024 · 10 posts · 10 votes

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?

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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
2y

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.

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    2y

    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.

    4Reply
  • Madri Koppe
    Interior Decorator · CA · Member since 2020 · 78 posts · 30 votes
    2y

    We manage our own and plan to continue as we acquire more. If you are busy and it’s worth it for you, you can look into property management companies that can take over everything for you including the bookkeeping. 

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

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

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

    Logical Property Management4.9453 Reviews
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  • Tanner PileBusiness Member
    Real Estate Broker · Colorado Springs, CO · Member since 2019 · 388 posts · 326 votes
    2y

    @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

    Tanner Pile4.931 Reviews
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  • Adam BartomeoBusiness Member
    Real Estate Broker · Cape Coral, FL · Member since 2015 · 2k+ posts · 1k+ votes
    2y

    Your PM should have the far majority of the book work done for you. You should really only have the taxes, insurance, HOA, and any other expenses that the PM is not responsible for. You should be able to handle that yourself, unless you have a medium to large portfolio.

    [email protected]239-339-3969
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  • Sean O'KeefePro Member
    CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 871 votes
    2y

    @Taylor Cook if you hire a bookkeeper you still need to answer clarifying questions on what the transactions were for. It will help, but it won't be completely hands-off.

    [email protected]628-241-0888
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  • Mat Fisher
    Investor · Milan, Lombardy · Member since 2017 · 13 posts · 0 votes
    2y

    @Taylor Cook

    I did them myself for a long time but recently hired a virtual assistant accountant out of the Philippines. I have a lot more volume, but it makes it easier to review as I also have a FT job. I would say it helps but it’s not completely hands off still.

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  • Sean O'KeefePro Member
    CPA | Accepting new clients | 50 States · Member since 2022 · 1k+ posts · 871 votes
    2y
    Quote from @Mat Fisher:

    @Taylor Cook

    I did them myself for a long time but recently hired a virtual assistant accountant out of the Philippines. I have a lot more volume, but it makes it easier to review as I also have a FT job. I would say it helps but it’s not completely hands off still.

    Yes, tough for this to be completely hands-off since the bookkeeper will need feedback on transactions. If you don't have time to provide feedback this can result in a lot of work at the end of the year for you and the bookkeeper. 

    Bookkeeper helps but you will still need to be involved and will need to prioritize providing feedback on transactions on monthly basis. 
    [email protected]628-241-0888
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  • Markus Shobe
    Accountant · Indianapolis, IN · Member since 2019 · 247 posts · 134 votes
    2y

    If it is becoming to much either get a property manager or a bookkeeper. You will be glad that you did as you keep growing. 

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    2y

    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)

    2Reply
  • Ryan Dunn
    Investor · Gilbert, AZ · Member since 2016 · 42 posts · 25 votes
    2y

    On long term rentals the property manager should cover the book keeping. So all you need to do is give it to your tax pro. I do pay 10% and it comes with my manager

    0Reply
  • Todd Lennig
    Accountant · NY · Member since 2019 · 99 posts · 69 votes
    2y

    @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.

    1Reply
  • Max Emory
    Accountant · 100% Remote · Member since 2019 · 495 posts · 216 votes
    2y

    Thanks for the shoutout, @Todd Lennig!

    @Taylor Cook, I'll second everything Todd said. And, I'll add your PM is great for the transactions they handle for each of your properties. But, your PM doesn't see everything that occurs within your business. Their scope just includes the properties they are managing for you.

    So, whether you continue doing it yourself or hire a professional to do your books, you'll need a "master" accounting platform that collects all property-specific transactions as well as non-property-specific transactions (general business) into 1 place. A bookkeeping professional will "translate" the PM's data into your master accounting platform each month so all of those transactions are accounted for.

    This allows you to see how your business(es) as a whole is doing financially in addition to how each property is doing.
    We actually catch a lot of mistakes doing this for our Clients as an added bonus. PMs are human just like the rest of us. They make mistakes and sometimes those mistakes are costly to REIs.

    Another note about PMs, they send you a cash flow statement each month. They typically don't have a balance sheet per property which your tax professional will need (tax basis for each property including land, building, CapEx, capitalized loan costs, accumulated depreciation, accumulated amortization, etc).

    And, they're definitely not keeping a balance sheet or any other financial reports for your entire business. That's outside of their scope.

    All this to say, what PMs account for financially for you is very limited and far from the full picture.

    Just food for thought.

    Hope it helps!

    0Reply
  • Bryce Andrews
    Rental Property Investor · 100% Remote · Member since 2019 · 12 posts · 3 votes
    2y

    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.

    1Reply
  • James Mc Ree
    Rental Property Investor · Malvern, PA · Member since 2016 · 1k+ posts · 936 votes
    2y

    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...

    0Reply
  • Paul M.
    Medford, MA · Member since 2012 · 163 posts · 36 votes
    2y

    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.

    0Reply
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    2y

    @Taylor Cook

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

    Good luck. 

    404-482-3170
    Hampton Tax and Financial Services LLC4.7106 Reviews
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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    2y

    @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.

    1Reply
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