Set up Quickbooks for real estate investing/rentals

26 Replies

I'm a new real estate investor, interest in purchasing multi-family properties and renting them for the long-term. I have Quickbooks Pro 2016 (desktop version) and I'm looking for advice on setting it up for my business. I've heard of people using classes for each property/tenant, but I've also heard of people using customers or jobs for each property/tenant. I have a couple years of experience using Quickbooks so I'm pretty familiar with the basics. I just need some help setting it up for this particular application. I plan on having an accountant set up the majority of the accounts/details, but I'm curious about your recommendations. Any advice would be appreciated. 

@Marcus H.

I am not a Quickbooks expert, but I use QB Online for my rentals. My accountant set it up for me and she set it up as tenants are customers and properties are classes. Anybody I pay are vendors.

Setting up your Properties are first setup as a class.  This enables you to do a Profit and Loss report per properties, per unit, e.g., Income minus expenses equals bottom line per building, unit, property.

Then you will set them up again, but this time in the Customer Center as a Customer.  This is just to let you know where your tenant lives.   Then you will make that tenant a "Job" of that Building. 

If you have a building with, let's say 4 units, you will list each unit a "Job" of that building.  Then you will list the tenant as a "Job" of that unit.

QuickBooks is all about setting up your data in outline form.  Thus you have Accounts, sub accounts.  Classes, sub classes.   Customers (Properties) "jobs" (another word for indenting in QuickBooks)

I don't recommend QuickBooks Online for Landlords.  It doesn't have all the bells and whistles you need, e.g. property information or customization features.  I recommend QuickBooks Pro for you which you already have.

Nancy Neville

John, QuickBooks Pro will allow YOU to CUSTOMIZE it by YOU creating DEFINE FIELDS (blank fields that allow you to input data you want to create) that no other software program will allow you to do.

I wanted to see my tenants move in date, Security Deposit, Rental Amount, Move Out Date, etc.  So I created blank fields that will allow me to enter in that data, those answers for every tenant that I have. 

I wanted all this information to show up on ever Invoice or Receipt or bill that I send my tenants and told QuickBooks to do so. 

QuickBooks will allow you to do Mortgage Amortizations, keep track of property Information like land description, square feet, purchase date, type of house, whatever you want QuickBooks to tell you, YOU CAN CUSTOMIZE it to do it. 

YOU can do a Profit and Loss Report by Class to see where you stand financially on each individual property and/or building.  

QuickBooks will allow you to depreciate your fixed assets. 

Will allow you to handle flips

It does so much that it is worth its weight in gold.  

Nancy Neville

In many QB versions, for Depreciation, you can just make a sub-account for Building (called Accumulated Depreciation) and an expense account called "Depreciation". Then you make a recurring JE that debits Depreciation and credits Accumulated Depreciation each month for the prescribed amount.

@Kevin Smith , what item(s) are you depreciating? What is the entry you enter? Thanks.

Updated about 3 years ago

Are you making the sub-account and expense account for the same building? Did you calculate your depreciation, or is that from your cpa, or a general estimated number to be calculated by your cpa for tax time?

@Jai Coward

You are depreciating your assets like Buildings.     

Debit- (other Expense) Depreciation

Credit - (Fixed Asset) Building: Accumulated Depreciation (under the Fixed asset category in QBO)

You could get the calculation from your accountant; it's based a just a few factors.

@Marcus H.  It's been a while since I used desktop version. Setup properties as class, for multifamily, set up each unit as sub-class. For tracking purpose, you can set up the property address as parent customer, then the actual tenant as sub-customer (i believe in desktop, it's called job). 

More and more people are leaning towards QBO nowadays especially if they're using remote accountant/CPA. There has been a lot of improvements in QBO which gives you the option to add custom fields and customize the setup in order to fit your needs. I just attended a QBO product update webinar last week and found out that they will soon roll out a new feature for "automatic late fee" (right now it's still in beta and available only to few users). Another new feature coming is the ability to add multiple notes (with date stamp) in client's account. Both of these new features will be beneficial to industries like REI. I use to be a Quickbooks desktop user but since I discovered online version, I always recommend QBO since then.

Good luck!

Can I use quick books for flips too? For example, if I have three flips under one LLC during the year, is it possible to set up a QB account for each flip and then at the end of the year integrate them for a final p&L for that LLC? Right now I just have separate spreadsheets for each flip and I send them to my accountant, but I don't think that's efficient. Or do you set up an account for the LLC and then a sub-account for each flip? I hate bookkeeping, but not yet interested in paying a bookkeeper so I am looking for something relatively easy!

Thanks!!!

@Dan V. - It was my understanding that QBO lacks some key features needed to setup accounts and run reports, etc., that only QBD has, which is why a lot of people still use it... is this not the case? Can QBO do everything QBD does? Maybe @Account Closed can chime in with her expertise about the key differences?!

  1. Customized Features – The QuickBooks Desktop version has several features that are not available in the online version. This includes the ability to prepare 1099s, budget and track mileage and expenses. In general, the desktop version allows more freedom to customize forms than QuickBooks Online.

2.  The Desktop version has a Fixed Asset Items List which allows you to enter in additional information about your houses, customize it to say square feet, year it was built, land descriptions, etc. 

3.  Buy the Desktop Version and it can last you for years before you need to upgrade.   Whereas with the Online version you are paying a huge monthly fee .

It produces perfect and professional Profit and Loss Reports. 

Nancy Neville

@Tahra Wright Yes you can. QB can be customized to fit most business industry including flip. You don't have to setup separate QB account for each flip, but rather setup each flip as Class. You can then run reports by property or a total for the company. Also, accounting for flip is different from buy & hold or wholesale, so make sure your process and procedures are set up properly. 

@Jai Coward For rental property business, I think QBO has enough features for accounting purposes. IMO the main advantage for QB desktop is the cost since you will only pay one time and can be used for as many companies you want. Disadvantages is the possibility of corrupting the file so make sure you backup (external) your files regularly, and if you are planning to use remote bookkeeper, it's more difficult to provide access or transfer files. 

@Account Closed   Actually, QBO Plus can track, prepare and e-file 1099, set up budget, however, it does not track mileage which I don't see it as big deal since you need this only once a year and apps are available too. As far as fixed assets, each account in QBO has a field for description so any property information can be entered on that field. 

@Jim C. I completely understand where you are coming from. I use QBO and it is a PITA as you just saw how you need to translate accountingspeak to rental properties. I am currently researching Buildium, Appfolio, PropertyWare, Rentec, Rental Manager for use. They all have an accounting feature for rental properties. Now I am not sure how good they are personally but they all seem to suggest that their accounting features are better and more custom than QB. Perhaps some users of these software packages can tell us.

@Tahra Wright I am in the same boat. There seems to be a TON of info on BP and elsewhere for getting QB up and running for rental business but not flipping business.  I know that @Gita Faust has a setup she sells for QB for flippers but haven't really seen much in the way of reviews or anything like that, sadly. Nothing against her or her product (that is probably helpful) but I hate to spend $300+ without hearing some feedback from people that have tried the product.  

I don't have much understanding of all the accounting bits so getting this set up at all for my business is very confusing. 

Updated about 3 years ago

I found this video on YouTube that explained a bunch of the very basic setups for using QB for flipping: https://www.youtube.com/watch?v=XfoTDm8u5l8

Whether you use QB online or desktop Pro depends on things such as how knowledgable you are of accounting, who will be doing the bookkeeping entries (local or remote), do you have just one or several entities, and how knowledgable your CPA is of real estate investing.  If you aren't familiar with bookkeeping and will have someone else doing the entires and you have only one entity,  then QB online will probably be best for your money.  If you have multiple entities, understand bookkeeping and will be doing the entries yourself (or someone in your office), then QB Pro desktop is the way to go. For 30+ years, I worked in accounting and then made the switch to real estate investor.  I have a C-corp with several LLCs as I do wholesaling, flipping and landlording in multiple states.  My bookkeeping is done in-house and then sent to my CPA and Tax Advisor who are in Nevada (I am in NC).  QB Pro Desktop was the better choice for me not only because it saved me money compared to the cost of online, but it also allows me to customize it more to what I wanted to see in my reports.  Hope this helps.

Does anyone know if Quickbooks can send you email notifications? I have 4 different property managers and they all send statements at different times. I'd love to have QB send me an email everytime I get a a deposit so that way I know to check my statements.

I'm thinking of going with QB pro desktop version then using a remote desktop app to access it remotely from anywhere. This seems to be the magical combination to me.

@Nancy Neville

I have set up as you described above, but the rent payments received show up in reports as a negative amount and the expense show as a positive amount. I have expenses account for the usual like insurance, repairs and so forth. And then the rent payments are a rental income, income account. I am also not seeing my mortgage payment (a long term liability account) as an expense. I realize only the interest is deductible, but I want to see my actual in and out on each property by month.

One of the best features is the automatic billing on a monthly(or weekly....)of the rent. When we log in on the first of the month, every tenant is automatically invoiced for the rent. We also set up memorized transactions for bills that are the same amount every month. Automation helps.

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