Property Management / Rentals

[Alma Alvarado]

Hello All, 

First post! Here it goes..

My company is currently attempting to start a successful property management company. They have tasked me with setting up the bookkeeping and accounts. 

Current set up: We created an LLC that would be used for any real estate transactions, rentals and property management.

Bank accounts were setup as separate accounts 1) for the real estate transactions 2) rentals & property management 3) When they realized their commingling they set up a third one for a specific owner and property

After reading several articles and posts on BP, I wanted input on the plan I planned to implement. I was thinking we create separate bank accounts for clients we manage property for. Any leases we close, that money can go into the main account and disburse commissions through there. To pay ourselves for the property management, am I then paying from the specific property account into our main real estate account? 

For QB: I want to invoice, create sales receipts for rents paid, maintenance repairs, etc. Do you suggest I create separate companies under QP - One for rentals and one for property management? That was QB's online suggestion.

My main goal is to provide accurate P&Ls for the owners and for ourselves. Eager to hear suggestions, criticisms and solutions!   

[Patti Robertson]

You need an Owner’s Trust account, which is where rent’s will be deposited and repairs for owners properties will be paid from.  It is critical to ensure that you have enough of an owner’s money in the account to pay for an given repair to avoid co-migling of owner’s funds.  You also need an Escrow account, which is where tenant’s deposits and any pre-paid rent over and above what your state allows will be held.  A third Operating Account is needed for your PM company.  Your managment fees will be billed when you do your monthly owner’s statements, just like any other repairs incurred that month. You will write a check/transfer funds from the Owner’s Trust to your Operating account at that time.

You may want to consider first choosing PM software.  Most serve the purpose of a General Ledger and replace QB.  The functionality is specifically designed for PMs and will make your life much easier.