Hi Guys - I'm new to the rental property game and I have a few questions regarding the relationship between a landlord and property manager.
- How does the billing and banking between landlord and property manager normally work? Do they just include all payments in one monthly invoice? This includes regular fee structure, repairs, tenant on boarding, etc.
- Does the property manager deposit the rent in the landlords bank account or do they just pay it out of their own bank account at the end of each month?
- A little off topic, but I'm also curious how everyone manages which online softwares are needed here as well. As a landlord, I would like the property management company to have a software on their end, but as I landlord, could i use something as simple as quickbooks?
@Robbie McKnight I can't answer your question completely because there's a lot of variety from office to office.
1. Is the PM managing multiple properties? My software compiles your properties into a "portfolio". When I make a payment, you will receive one payment to your designated account and one statement. Your statement has a page that shows your portfolio performance (income, expenses, and your payment) but then it also breaks down each individual property (income, expenses, and your payment).
2. The rent is received in my account. I pay any invoices on your behalf (utilities, taxes, landscaping, etc.) and deduct my management fee. Then I deposit the remainder (your owner draw) directly into the account you've designated.
3. You should have your own software. Quicken or Quickbooks is what most people use.
Your PM should be providing a written statement every month that includes a detailed breakdown of income and expenses. If they pay an invoice on your behalf (e.g. plumbing bill) then they should provide a copy of that invoice so you can see exactly what you paid for.
At the end of the year, they should provide you with an IRS Form 1099 that shows the information necessary for tax filing. I also provide a year-end summary report with far more detail than the 1099 shows, but not every manager does that.
@Nathan G. Thanks for your quick answers as this is extremely helpful. So overall, it sounds like you provide a detailed breakdown of income, expenses you've paid on my behalf, and your fee. I can then can take this information and input it into my software to produce a accurate PNL by filling out the management fee, and repair / maintenance columns.
That is correct. Again, different managers have different processes but mine provides a detailed statement with labor, supplies, utilities, repairs, taxes, insurance, and other categories broken out. The Landlord can keep them separate or lump them together.
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