New to Buildium, experienced PM software users come on in!

20 Replies

Hi all,

I signed up with Buildium and was hoping for some advise or tips from experienced Property Management software users. I only manage my five SFRs, nobody else's. I decided to start using Buildium now to stay ahead of the power curve. I don't want to wait until I have 10+ properties then play catch up on getting better organized.

I'm figuring it out as I go, little by little, but I was wondering what other people are doing as far as recording mortgage payments. I have a separate bank account for the rental income, expenses and the mortgage payments to be auto drafted from. I would like for the account balance in Buildium to reflect what is actually in the account at the bank. I am debating between a couple options:

1. Record each mortgage, inc. T&I, as an expense under each property knowing that the NOI won't be correct.


2. Record all mortgages in "My Office" not under each property, just to keep the bank account balance correct (I created a property "My Office" for misc expenses). Then maybe add an expense for the T&I paid to each property at the end of the year, and add a deposit to My Office totaling all the T&I expenses for the properties to keep the bank account balance correct.


3. (insert better idea here)


Have you checked out the help documents on Buildium? Article # 111169 goes step by step over how to track a mortgage, including amortization and escrow account. In their suggested setup, the mortgage interest expense WILL lower your net income. If you don't want this to happen, you could instead designate the Mortgage Interest account type as a "non-operating expense". Those accounts show up as a separate line item on Buildium reports and don't affect the net income calculation. It's a little bit of a "hack", but it should work for your purposes. 

Thank you for the response @Ryan Swan . Yes I read that article, and the one on adding a mortgage without including amortization and escrow. I guess I just wanted advise from experienced users on what is working for them. 

I like the "non-operating expense" option and will look into that. Right now I'm still using my handy dandy excel spreadsheet. For the rest of this year the excel spreadsheet will be the primary, but I do want to be completely setup with Buildium to take over on Jan 1st. I'm going to give that "non-operating expense" a shot and see how it goes. Thanks again!

I've used Buildium for 5 years now - LOVE it - you can track all the mortgages separately, escrow, principal paydown etc, the accounts the mortgage payments are drawn out of etc.

You can also generate cash flow reports separate from an NOI report....and maybe I failed Finance 101 - how would your NOI be incorrect if you are accounting for taxes and insurance?

Thanks for the reply @Shane H.

Did you just have to setup the recurring transaction, like Article # 111169, and was it good to go? If your escrow payment amount changes do you just update it without problems? What I meant by the NOI not being correct is if the mortgage, PITI and all, is included together as one entry.

When you input all the information did you input what is in escrow now, how much of the payment goes to escrow and how much to the principle (of course)? And will it know how much goes towards interest if I set it up correctly?

You may have failed Finance 101 but I never even took it!

@Seth Kitchka

I browsed over the article Seth, but yes that appears to be what you want to look at.  Everyone I have touted the benefits of Buildium to I have emphasized it absolutely sucks at the beginning getting everything set up and going, and learning as you go.  I had taken accounting classes in college however it was not my strong suit.  That being said, you are doing the right thing and wanting to utilize a PM software to become more efficient.  Something I think people need to do in order to scale if they want to self manage their own properties.

I've only been using the system on 4 properties now, however feel comfortable scaling up several multiples which I plan to do in the next 4-5 years.  

As for buildium - if you record the transactions correctly you will have an accurate Cash flow statement to look at - it will not take into account anything you have paid towards principal and subtract that from  your noi provided you make the entries correctly and have the chart of accounts set up correctly.

So the tricky part is recording the initial entries - I'd actually suggest if you plan on making the move "Officially" Jan 1 2016, start now and enter all transactions for 2015, and 2014 (if you can) into Buildium - it will make the flow go so much smoother and you can learn as you go, insuring you are setting up things correctly as you go along.

To record a mortgage in place, just follow their tutorial - (customer service might even walk you through it as well)

First you need to have the appropriate accounts set up on the "Chart of Accounts"

You could do it any number of ways - one way I'm doing it is -- have a main account titled "Mortgage" under liabilities  (long term liability)

Then a sub account of Mortgage titled "US Bank Mortgage"   "XYZ Bank Mortgage" -- or "Mortgage - US Bank" etc -- 

Then you will want an account for "Interest" under expense

Then under Assets you'll want an account titled Escrow - then if you want to further track things I'd suggest setting up a sub account titled "Escrow - US Bank" or "US Bank Escrow"  or "XYZ Bank Escrow" etc    (Escrow would be a current asset)

After that you'll need your current mortgage statements -- to start the books you'll need to enter a general journal entry for Escrow, Interest, Principal (Mortgage)

Once you have that you're off to the races and can enter the mortgage payment each month, however you'll need to know the breakdown of Principal, Interest, & Escrow - for example the entry in your bank account will look like

Payee -- US Bank -- you'll enter the date etc

Then below you'll have the breakdown of the total where you'll enter 

$400         Principal

$300         Interest

$150       Escrow


At the bottom Buildium will automatically add up the totals to whatever your house payment is for the month -- in this case $850

Hope this makes sense -- best thing is to just play around with it a bit and keep checking yourself on the entries and in the general ledger -- your mortgage payments have to be entered manually every month, however this takes little time if your mortgage company offers online account access and gives you the payment breakdown - can be done in a couple minutes.

Get over the biggest hurdle which is setup and the rest will be SO much easier. One thing I've started doing as well is tracking depreciation which Buildium gives you the capability to do. Makes tax prep so much easier. However one thing I dont like is that depreciation does show up on the NOI report -- I've been meaning to call customer service to see if there is a workaround on that. I may have something entered wrong but havent had the chance to call them yet.

I think you'll love it once you get going.  Get those online payments set up as well.  Make sure you take the time to fill out the paperwork pay the $99 fee and get your merchant account set up - online payments through Buildium will make your life so much easier.

Disclaimer - I'm not an accountant so take this advice for what it is -- free -- Probably not a bad idea to have an accountant see if they could help you set up the initial books and help you on tracking depreciation etc.

Hope this helps.

Forgot to mention - if you haven't already, download a copy of the accounting for landlords tutorial/e book Buildium allows you to download - I referred to that more times than I can remember during initial setup and as I've moved along over the years.  Doesnt always have the answers, however in those cases a call to customer service or google usually will provide the answer you are looking for.

@Shane H. Thanks for taking the time and giving me this advise. I really appreciate it! This does simplify it for me a bit. I feel like I have a good grasp on setting up the different accounts and inputting the expenses.

If I'm understanding you correctly you have to manually input the expenses (principle, interest, escrow) every month. That is what I was hoping to get around. I guess it won't be too bad. Like you said I have access to all my mortgage account information online, and I'm already inputting rents in there each month. 

A couple more questions, if you don't mind:

1. Instead of going back in time and inputting all the mortgage payments, would it still work if I put the current balance in? I'm assuming Buildium can keep track of the remaining balance. 

2. Did you input the current balance of your escrow account, or do you suggest I start with that? 

3. When or how to you input how much actually pays from your escrow account to the taxes and insurance? 

Thanks again, I'm going over to Buildium now to setup some of the accounts you mentioned.

I just input all the mortgage accounts, escrow, interest, and the property asset accounts. It makes a lot more sense now. I'm not sure how to put the escrow balance in though. I don't really understand if the escrow account balance should be a credit or debit. I do know I'll have to equal it out with OBE. I figured out the taxes and insurance too. When those are paid I'll record a payment from the proper escrow account.

@Seth Kitchka

I'm not sure if you mean the escrow account balance (do you mean recording the initial balance when starting at a point in time?  OBE) or if you mean each monthly entry?

The initial entry for a  point in time when you are starting the books would be  a General Journal entry

Escrow - XYZ Bank

Escrow  Debit $500

Opening Balance Equity - Credit $500

From then on you dont necessarily need to worry about debits/credits -- just enter the mortgage payment in the corresponding bank account and the system will automatically debit (increase) the escrow account balance -- When your bank makes a payment from the Escrow account you will need to then worry about debits/credits again - you'll need to enter a General Journal entry --

Escrow -- Credit $200

Insurance Expense -- Debit $200

Hope that makes sense

@Seth Kitchka

And the 2nd part to your question - yes every month you'll need to enter the mortgage payment by hand, however as we've alluded to - doesnt take much time at all, even if you had 15 mortgage payments to concern yourself with.

You'd just go to the corresponding bank account

Vendor -- XYZ Bank

choose the property the payment corresponds with for each of the items below

then the breakdown of the payment 

Interest   150

Principal 250

Escrow 100


At the bottom of this entry Buildium will automatically add everything up for you - so just make sure it matches what your payment was for the month -- you'll simply have to refer to the mortgage statement every month to do this - no big deal if you can log in to the mortgage account online.

@Shane H.

That answers my questions perfectly! I feel like a have a good grasp on it now. Thanks a lot for the dumbed down version. I felt like the Buildium article was written in Greek before. It makes sense now. I downloaded that accounting ebook. I think that will come in handy. Thanks again!

@Seth Kitchka You don't need to input the mortgage information every month. Simply set up a Recurring Transaction. If you auto pay the mortgage every month (ie the balance is withdrawn from your checking account on the 1st of the month), then use a Recurring Check. You'll only need to set this up once, and then each month it will auto record the payment with the correct amounts allocated to each component account of the payment (principal, interest, escrow, etc). 

You can find recurring transactions in Buildium under Accounting ----> Recurring Transactions. 

Ryan Swan I've thought about that but will the principle and interest amounts get input correctly since its amortized?

@Ryan Swan  

Tagging people doesn't like to work on the app.

Ah good point. You could still use this method so that the account names are set up correctly and posts at the same time each month. Then you could simply modify the transaction on your ledger and adjust the principal and interest amounts (and escrow if necessary) to reflect the charges for that month. 

@Seth Kitchka

You can do the recurring transaction as Ryan mentioned, however your allocation to principal/interest will need to be manually adjusted by you every month as they obviously change and do not stay the same.  So either way you are touching the transaction each month if you want to maintain accurate books, however the amount of time this takes is extremely minimal and anyone at a later date could be trained to do this.

@Ryan Swan @Shane H.

Thank you two for all the good info and tips. I really appreciate the help!

Shane, I started reading that accounting ebook. I have a feeling it will get a lot of use! It has some great info for people like me without a financial background.

@Seth Kitchka  

No problem - I wish I had found this site or a group of Buildium users to bounce things off of when I switched over -- I started using it when I only had a duplex with the idea I'd accumulate more properties later on -- my accumulation has been slow - however I know it will help me immensely as I move forward.  It's a great system if you use it to the full ability.  (accounting features, online payments/applications, owner payments, screening etc)

And you have no idea how much I referred to the ebook - Accounting Debits/Credits always screwed with me in college - maybe a right brain/left brain type of thing I was always good at math, but for some reason those two always tripped me up as it really doesnt apply to the daily life version of how we use debit/credit or think of the concept when paying for things on our debit/credit cards etc -- Always had in my head debit was taking money away, however not always the case in accounting.  Hope that makes sense.  One thing I've been meaning to do is find an accountant I could pay to sit down and audit me - probably not a bad idea on your end either.  I'll use this post as motivation to do so before the start of next year and add an accountant I can trust to the team.  

Good luck Seth - I'm sure you will find once you fully integrate it will save you a lot of time and the $400 and some change they charge for the lowest tier package is well worth the price.  (Still wish they had the smaller lower priced tier like they did a couple years ago if anyone from Buildium is reading this forum)

One more tip if you will -- I do manage a couple of properties for others so do have a reason to have the "My Office" set up as a property to track management income etc, however if you want to track your office expenses such as postage, (buildium software purchase price/fee), accountant fees, etc - this is a good vehicle to do so.  I think Buildium gave the "My Office" as an example to track things that aren't really tied to a property per se.

I believe the E-book goes into a little detail on this -- if not you can find it by searching through the help articles they have online.

One thing I've been trying to get in better compliance on is tracking Capital Improvements v Repairs, adjusting cost basis etc and the appropriate depreciation for the improvements/equipment.  If you google and come across the IRS definition/examples it will give you a good idea on things you should be doing in that regard, an accountant would probably provide the best advice though.  Will certainly help in understanding the business a whole lot better when you have everything properly allocated.

If you have been using an accountant to do your taxes, having copies of your tax returns will probably help set up your books as well.

That's exactly how I feel right now. I was always good at math but the debit/credit thing is confusing me! I'll get it, it'll just take some time and experience using it.

I have "My Office" setup as well, and using it exactly like that, operational expenses that don't apply to a single house.

My accountant explained the repairs vs capital improvements pretty well. I understand it to be Repairs are necessary to keep it running and Capital Improvements are improvements that increase the value. I think I should setup a meeting with my accountant too. We can go through the Chart of Accounts together and remove what I don't really need or add accounts he suggests.

I'm starting to get more organized, I like it!

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