Investor · Hollywood, FL · Member since 2015 · 26 posts · 3 votes
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?
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.
+1 to what Nancy said about the classes and the bank account.
Which Quickbooks Online, backup is a non-issue. It just always works and is always there from your laptop, phone, or tablet... for either you or your account to access.
If you do want to backup so you can get things back to a certain state (if you're playing around, for example), there's a free App in the Quickbooks Appstore (I don't recall the name right now) that lets you take snapshots and restore them if you want.
I know that when we are new to this business, we are hesitant to spend more money than we think is necessary, after all, we have spent a ton of money on the rental home and getting it ready to rent out, so to think of anything else like a financial software program, is just not on the list of things to do, at least for now. We only have a house or two, we say.
And just because we got away with not having a professional layout when we got the mortgage for our first rental or even second rental, we think it's okay just to present a mortgage company, bank or hard money lender, just some figures written down on a piece of paper or on an Excel Spread Sheet.
But what happens when the time comes when you want to really expand. A money lender is going to want more than just an excel spread sheet, sometimes even after your first house is purchased and you are on your second. They want to see that you are truly a professional. A real business that has a lot on the ball. Especially if you plan to expand. They want to see that you have grown as well by how well you run your company.
QuickBooks and CPA's are usually very best friends with each other and that says a lot to your money lender. It tells them that you are serious about your business and are interested in keeping track of every penny you spend, by keeping expert reporting on every aspect of your investment properties. And you have chosen a software program that is popular with CPA's.
If you are an employer and an applicant applies for a position with you and hands you their resume done via an Excel spreadsheet, verses someone who hands you a professional resume done through Microsoft Word or some Resume software program, which one would you think would be the best suited for the job, based on both applicants having the same qualifications? Looks do matter, especially to business people. Especially to someone you want to borrow money from.
QuickBooks is an expense account. Right off the bat you are able to list QuickBooks as an Office Expense. So there is no excuse for saying I can't afford it right now. If you can afford a house, you can afford QuickBooks, (or any financial software program that is professionally suited for businesses) a computer, a printer, and the equipment you need to run your company. It is a must, that you also include this as an investment.
Many mistakes new investors make is to skimp on their office equipment. It is just as important as the rental home you purchased.
This Industry has to do with legal issues, and many law suits, and if you don't have the best to protect your investment, then you won't be in this business very long.
I know, it seems silly to think that by investing in a financial software program verse Excel will make any difference at all, but it truly does to the person you want to borrow money from. It could make a difference between you getting that home or that other investor who also applied.
I love QB. Took me some time to figure it out, but I do enjoy keeping my own books. I have a bookkeeper on call that comes in every few weeks and checks things out, answers my ongoing running list of questions and takes care of all the HUDs, loans & refinances/pay offs.
I also have three Xcell spreadsheets I use. One for cash flow projections that tracks big expenses and incomes such as wholesale fees, gross rehab expenses, my gross payments to my private lender, etc. My next spreadsheet has all my rentals so I can quickly look at gross incomes, rent on each house, and who paid. My last sheet is updated every six months and it tracks net worth. Simple systems keeps the engine moving forward.
On a final note, my spreadsheets are probably features available right in QB, but I'm happy with the system I use.
Well put. I've owned my current business (commercial construction) for 6 years. One thing I would have done differently when setting it up would have been to start with a powerful accounting program.
I started using one 2 years in and migrating all the information was challenging to say the least.
It is best to get in the habit of using the right software from the start. It helps to build good habits and you may find it actually saves you money.
Hugh: I hear that so much from people, that they wished they had began using QuickBooks when they first began.
It is truly important to develop good office procedures and equipment prior to anyone even buying their first rental home.
Once you have your office organized and equipped with the needed office equipment to help you keep track of those purchases, e.g., computer, internet, printer, answering machine or Vonage Phone, Stamps.com, then start house hunting. But unfortunately, having an office setup and procedures, is just not on a new investors list of things to do.
Actually QuickBooks isn't good for Property Manager's. It is, but you need to do a lot of tweaking. It is good if you do what you are supposed to do, but most Property Manager's don't do what they are supposed to do, because they have different owners dictating to them what they want done instead of the other way around. So I don't recommend QuickBooks for Property Managers, it's just too much of a headache.
QuickBooks however, is great for the regular landlord that handles their own properties.
-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. ...
With Quickbooks, you can have multiple bank accounts per property if you choose, or one bank account per property if you choose, or one bank account for all properties if you choose.
I'll let your accountant tell you which approach is best for you.
Kevin: QuickBooks Pro Desktop Version is all you need. It's pretty good. In September the new version of QuickBooks should be out, so you may want to wait a bit.
The Online version is also great, doesn't have everything the desktop has, but close, but it is about $39.99 a month which is almost $500 a year.
-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. ...
With Quickbooks, you can have multiple bank accounts per property if you choose, or one bank account per property if you choose, or one bank account for all properties if you choose.
I'll let your accountant tell you which approach is best for you.
If you have an LLC per property then yes you should have a separate bank account per LLC. If you don't have an LLC then all you need is one bank account. It's overkill to have a bank account per property.
I am a HUGE fan of Buildium -- Have used it for 5 years, manage 4 units with it, feel I could teach anyone to use the software, love the cloud capabilities and know as I grow it will be no problem to continue to manage additional units. Some have complained of the cost, however if you cant afford the $400-500 a year for solid PM software, then you probably shouldn't be in the business.
Since I'm not in the software everyday, I'm still finding new features as time goes on. The customer service has always been GREAT when I've had to call in with an accounting question or simply needing additional guidance to set something up etc.
I will say this, if you have properties already and were using another bookkeeping software before, the hardest part about switching to Buildium is the initial setup of your books. You can track depreciation, your bank accounts....EVERYTHING needed for your business. It simply takes a while to transfer over all of the data and perform the initial setup....however that initial pain is well worth the reward once you're up and going.
Probably what I spend the most time on is scanning in receipts so I can upload them to the transactions, really not that big of a deal, however it would be nice if all receipts from vendors could be sent to my email. (Not a buildium issue - something I'd need to figure out to help my workflow)
As for fees, there is a $99 one time fee if you want to set up online payments, (online payments is the only way to go) $12.50 or 12.95 per background/credit check - etc. Can post vacancies on 5 sites with the click of a button etc. You can have applicants pay the background check fee or you can charge them an application fee to cover it etc.
Check it out and even if you have one property use the software as it will grow with you. If you do sign up for it use me as a referral and you'll get an additional discount. Best of luck!
Before I switched to Buildium I used Rental Property Manager by Quicken -- it SUCKED!!!
Disclaimer: Please consult with your Accountant and Attorney.
If you have multiple properties - create a property management company. This way you will need only 2 bank accounts for managing your rental properties. Operating and Escrow Account. All rent and expenses funnels into one bank account - this way you save money on other apps you use.
It also helps in managing all your tenants in one file or company. Does not matter which software you use - QuickBooks or any other.
If the properties are single member and you do not need a Balance Sheet for tax time - you can get away with one company file. Saying that if you ever need reports - In QuickBooks check out Balance Sheet by Class report only available in Premier and Enterprise version.
Thanks Shane for taking the time to reply... You just reemphasized every key point that drives to Buildium. Also thanks for offering to use you as a referral, I will definitely keep you posted on that.
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.
Can you send me a link or shortcut to this spreadsheet? It looks very organized. I have searched for some templates in Excel and haven't found any I really like. I am only an amateur when it comes to crating spreadsheets.
I also have three Xcell spreadsheets I use. One for cash flow projections that tracks big expenses and incomes such as wholesale fees, gross rehab expenses, my gross payments to my private lender, etc. My next spreadsheet has all my rentals so I can quickly look at gross incomes, rent on each house, and who paid. My last sheet is updated every six months and it tracks net worth. Simple systems keeps the engine moving forward.
Would you mind sharing your spreadsheets? I'm looking for a good template and have yet to find one I like.