Bookkeeping Strategies - Prop Management, Landlording, BRRR, REI

[Will F.]

Hi, I invest and manage about 40 units + locally and a couple OOS.  

I was wondering how most of you do your bookkeeping?  I do a lot of rehabs, value-add properties etc.  Occasional flip houses, and a lot of construction on current long and short-term holdings.

I generally use Buildium software for the property management but I don't keep up with the books nor have the time to reconcile at months end. I sort of end up on excel at the end of the year importing statements and trying to categorize expenses, improvements, etc.  

Anyone have effective systems for managing all this or do you tend to outsource it?

Problems I forsee outsourcing:

I would find it difficult for a bookkeeper to know which properties to expense repairs for unless they already know my system.  It seems like whoever is doing the repairs (ie the prop manager) would be best at immediately inputting the expense into a software like Buildium or Quickbooks.  

So perhaps I need to DIY it as I go along or I need to hire someone in-house to help keep it up?

[Brian Schmelzlen]

Hi @Will F.

If you decide to outsource to a bookkeeper, there will definitely be a learning curve at first.  Often two bookkeepers will not do everything the exact same way, so I am sure even a great bookkeeper will take some time to learn your system.  After some time and experience working together, I am sure that a good bookkeeper will be able to understand your system and improve it in ways that you would appreciate but perhaps not have thought of yourself.

Having good software that you can operate yourself can be a huge help, but as you mentioned it still requires your time.  That might make sense for someone with just a handful of units, but since you seem to be growing quickly it seems like your time would be best spent working on (or even in) your business rather than doing the bookkeeping for your business.  I would make the time investment to train a bookkeeper to work with your system.

Hiring someone in-house is a huge investment.  It might ultimately be the best thing for your business, but I would start off with outsourcing so that you can see if 1) that works for you, and 2) if you work well with that person (you might be able to bring whoever you outsource to inhouse).