The Bookkeeping World

62 Replies

As new investors my husband and I are learning as much as we can get our hands on before taking the plunge into our first rental, hopefully beginning of next year.

As we build our team, business plan, and organize finances we realize the tremendous importance of keeping tract of those assets and its financial.

So my question to you all is the following:

-How do you keep track of your assets? Softwares?

(QuickBooks, Buildium, Quickens, Excel?

- What was your decision based on when you made your choice?

Thanks in advance,

Nataly 

We have used all of the softwares you have mentioned. We find the easiest way for us to do it, is to use Excel and Buildium together. The reason why we like Buildium is because we plan on having a Property Management Company one day, and it gives us a way to screen tenants, have online applications, keep track of late payments, and gives us a way for tenants to pay online. Just to name a few. However, I would not recommend Buildium if you have less than 5 properties unless you want to scale very quickly. 

We also use Excel as a quick way to show our lenders our income, and to keep track of expenses and debts. Buildium would also allow you to do this but we haven't gotten comfortable doing it yet. We will attach a photo of our Excel worksheet and if you'd like a copy please let us know. FYI we have deposits under our income column because once you keep the deposits for repairs, it becomes income. Hope this helps.

@Jennifer Griffin

Hi Jennifer,

Thank you so much for your reply.

So if I understand the spreadsheet correctly, the "profit and losses" tab sums up all the numbers of all properties combined, and if you were to click on either of the above tabs with the property address it will give you the same spread for that property only?

Why wouldn't you recommend Buildium for less than 5 properties?

Do u use a spreadsheet program in particular. The one in ur example looks very helpful.

Thanks again Jennifer. 

I use Buildium and love it - but not as a bookkeeping system, so I use quick books. With QB, I use the class tracking feature and each property is its own class.

@Nataly Llanes

Yes each property has its own tab, and then combines it on my profit and loss statement tab. It gives me a quick snapshot of what our portfolio is doing. With Buildium, the reason I didn't recommend it for less than 5 properties is because of the cost benefits. You can do it in Excel for free. However, if you wish to use Buildium you can for 40/month. 

@Renee Fulcer

So then you use both? 

I wanted to find something that compiles all the perks in one, but I know that each of the softwares have their pros and cons... 

From what I've read, QB allows u to set different classes for different properties as you previously mentioned, but they are all attached to the same account is that correct? I read is recommended that  each property have its own entity and bank accounts.

All in all, what do you recommend for a new investor from your experience. 

Thanks in advance. :) 

@Jennifer Griffin

Oh I see. Makes sense. Although considering we will do our own property management initially until we scale, we are going to need such tools as screening tenants, online applications, and ways for tenets to payment online as you previously mentioned... So all in all I guess is a way of compiling all those tasks into one software and simplifying costs at the end.... What'a your take on that? 

I do use both. I have used QB for 20 years as a bookkeeper for different companies including one that handled commercial Real Estate tenants so I already know how to use it, and I use it for my other business so it's practically a "no brainer" that I'm going to use it for REI.

The class tracking feature allows me so much flexibility in how I can see my data. For example, I have 4 rentals (4 SFH). 3 in Rockford, IL & 1 in Beloit, WI. I can run a P&L and see how they are all doing combined and individually, or how are just the IL properties doing... OK maybe I'm a bit of a bookkeeping nerd :-)

I use Buildium for building my listings, applicant screening, and tenant payments. My husband/partner can log on from anywhere and see tenant payments and charges and see basic income statements. It also tracks my leases and move in/out dates. I don't put all my invoices in it because it would be (for me) cumbersome to try and use it as a QB replacement, probably because I've used it for so long already. 

I guess it's pricey ($36 monthly) for Buildium with only 4 rentals but I think it's worth it. 

I forgot to mention, I have one bank account for general business and one savings account for security deposits. And one QB file for all properties under 1 LLC including the 2.5 flips we've done. Recommendations from our accountant and attorney based on our current size.

@Renee Fulcer  

Haha! Well I'm sure being a bookkeeping nerd has infinite advantages in this field. Props to you. :)

It makes sense with your record that you use both to run your business. 

Many people would consider $36/month a big expense for such software, but when you consider that is a way smaller fee than paying a property manager while allowing to do much of the same stuff and use almost the same tool it doesn't look like a bad investment after all. 

We are learning more towards Buildium now, since it seems to have the best of both worlds for landlords.   

-Does Buildium allow you to add a different bank account per property? 

-Does that monthly fee include all the tools they offer? Or do u pay a separate fee for things such as: tenet screening, paying bills form the site, receiving tenet payments, etc? 

Thanks Renee, you've been a great help. 

check-out xero. I use an accountant but this is the program we use. It comes with an app, I the pic of the receipt with my phone, enter the details and rag it to the appropriate project. Quick and easy. 

I use simple Excel spreadsheets with formulas. Nothing fancy, nothing complicated. If I needed to show anything to lenders (haven't gone that route yet), I can put together charts from the data without too much trouble. Otherwise, I don't have a lot of issues to deal with concerning my rentals - no HOAs, PM companies, mortgages, etc - so I don't need anything complicated. I lump all of my non-capital expenses into one of 3 categories, mostly for tax purposes - mileage, materials, meals. I account for Capex separately.

I listened to a business book one time that gave me one of the best pieces of advice I have ever heard from any business book - spend as little time as possible on anything that doesn't make money. It is easy to get bogged down in elaborate spreadsheets, expense categories, and the like, especially for someone like me who has spent his career in administration and executive management, so I have to make conscious efforts to KISS when it comes to taking care of the non-profitable portions of my business. 

Nataly - 

Yes, Buildium lets you use multiple bank accounts, but some fees ( like tenant screening ) are extra.  

I charge an application fee collected by Biuldium to cover the screening, so it's a reimbursed expense. 

Nataly Llanes FWIW, I would recommend just using Quickbooks Online (the "Plus" edition) to any friend that has between, say, 4 and 15 units, if they asked me. The reason is that having really solid books is probably the single best thing you can do for understanding whether you're actually getting the return you demand for your money and/or time invested. It forces discipline. I can't emphasize this enough. The other things (online applications to rent, paying rent, etc) are easy to solve with special purpose services online. Until you have more units, the value of having it all integrated isn't as important. Less than 4 and you might as well just use a spreadsheet. More than 15 and the challenge of keeping track of everyone's lease, the turn process, and maintenance becomes too complicated.

QuickBooks allows you to keep track of all the income you make per property.  It keeps track of all the expenses you dished out per property as well,  and then gives you your bottom line. 

All you do is click on a button, select the property, choose what day you want to see your Profit and Loss per property, (any time of the day or night)  and in a blink of an eye, QuickBooks creates it for you. Print out the Profit and Loss Report just created for you,  and view it or take it with you to the bank if you need proof of your properties and  your bottom line.  (At the end of the year you would print out this Profit and Loss Report and give it to your CPA) 

You can Customize QuickBooks to tell you whatever you want to know and have it show up on Invoices, and forms as well.

For instance I have the following data created for every single tenant I have and I have it show up on all the forms I utilize for each individual tenant.  The data is as follows:

  • Rental Amount, 
  • Security Deposit,
  • Date moved in, 
  • Type of Lease, 
  • When Lease Expires,  (And I can have QuickBooks remind me when it is about to expire.
  • And...Move out Date

For each property I own, I list it in the Fixed Asset Feature of QuickBooks and I customize that as well to tell me the following:

  • The year of the house, 
  • type of house, 
  • where located, 
  • property description, 
  • price I paid, 
  • or sold it for, 
  • taxes, 
  • and so much more. 

With just a click of a mouse key here and there I can find out everything I need to know about my properties will show up for me just like that!

I can memorize my invoices that I have created for my tenants for rent that is due to be created by QuickBooks automatically for me every month.  All I have to do is press a key on my keyboard and print it out.  

There is nothing that I can't keep track of regarding my business in QuickBooks and It just doesn't get any better than that!

Nancy Neville

Great discussion. Quick books has an online version of their software as well and I have been using that for last 3 years. I love it and my accountant is also very happy with all the features. Just search for qbo intuit online.

The only thing about QuickBooks Online, is it's expensive $39.99 PER MONTH.  That is $479.88 a year!  Whooo!!!!  Verses the desktop version for a little over $200.00 and you can use it for a lifetime.  (Every three years is a good time to upgrade though).

With the desktop you can install it on your laptop and use it in the field so it is also portable that way. 

But online is also good, just more expensive in the long run and it doesn't have all the bells and whistles that the desktop version has.  Close, but not everything.

Nancy

@Justin R.

Makes total sense. What other tools do you use for online applications, background checks, tenet's online payments, etc? 

Thanks Justin. 

@Nancy Neville

Thanks a million Nancy, your explanation puts into perspective many of my questions and concerns... 

If you don't mind there are other questions I would like to ask you that you might have the answer to...

-Does QB allow you to attach a different bank account to each property?

- How does it work with multifamily homes (which will be our niche)... Do you create sub classes for each property depending on how many tenets per property? 

- Does the online version provide automatic backup since is "online" vs the desktop? 

Thanks again Nancy. 

@Arun Chhatpar

Thanks for stopping by Arun. The online version sounds like a great investment. 

Nataly

-Does QB allow you to attach a different bank account to each property?

You don't want to do that.  One bank account is all you need.  All you do is setup each property as a class and then link that income or expense  for that property to that property via the Class Column.  (Once you turn on the Class Feature in QBS, it will put a class column on your forms for you to link your properties to.)

- How does it work with multifamily homes (which will be our niche)... Do you create sub classes for each property depending on how many tenets per property?

I had many mutl-family homes and you list the building as a class and the units inside the building as a sub class of the building. 

Example:

8252 Wisconsin Street Apartments  (this is the building)

    Unit 1

    Unit 2

    Unit 3

    Unit 4

All these are sub classes of the main building. (Once again, you will link all rents received and all expenses paid out to these individual units by clicking on them in the Class Column on your forms....Just choose and click)

You will want to keep track of expenses made on the building itself, (upkeep) so you can see exactly what repairs you've done on the building itself verses the repairs you had to pay due to tenant moving, wear and tear and such)

- Does the online version provide automatic backup since is "online" vs the desktop?

I haven't used the Online Version fully, so I don't remember if it has that feature.  But always get in the habit of backing up before you close out of QBS.  (Power outages and such.  Always a good idea to implement backing up every time you quit QBS.  It only takes a moment) Believe me, I've been and there and done that....forgot to back up. Even though I have it assign to backup every time I close out of QBS, there is always that dastardly power outage.)

Nancy

Originally posted by @Nataly Llanes :

@Justin R.

Makes total sense. What other tools do you use for online applications, background checks, tenet's online payments, etc? 

Thanks Justin. 

For context, I'm working with ~10 rental units, all urban areas, with tenants across the age and life-stage spectrum in San Diego.

Online rental application through Cozy.co, though I'm finding about 90% of people choose to fill out a paper application at an open house.  

I don't have a favorite for credit/background checks - I've used Cozy.co, a real estate broker friend, MySmartMove.com, and some other sites I don't remember ... this is something I've always struggled with finding a simple, consistent, bulletproof process that doesn't involve the tenant having to do anything (or anything more than just simply signing a paper or clicking a single button).

Electronic rent payments through Quickbooks Online invoices.  Beautifully automated and integrated with the bookkeeping/accounting functionality and my tenants *love* this.  Especially nice if you ever deal with partial rental months, reimbursing tenants for things, and the move-out process.

I've never tried to use Buildium for more than the trial period - I'm expect it's really great if you don't mind paying for and relying on it.  Not a fan of $100 setup fees for online payments, additional $100 setup fees for other stuff.  That said, I've only heard good things overall and at some point (>15 units?) I imagine it's a no-brainer.

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