Bookkeeping for rental property

Real Estate Investor · Alhambra CA · Member since 2009 · 24 posts · 5 votes

Hi everyone,

I am wondering how you guys are doing accounting and bookkeeping for your rentals, doing by yourself, hiring bookkeeper or hiring accountant? I am currently managing the bookkeeping and accounting myself but the more I acquire properties, the more my time is sucking into just bookkeeping and accounting.

My question for someone who hiring the accounting or bookkeeping service, which companies would you recommend (Local, or online like Odesk or Elance?)

Suggestion is highly appreciated. Thank you very much!

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Steven Hamilton IIPro Member

Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes

14y

Invest a scanner and scan your receipts, find a part time bookkeeper who you can pay once or twice a month to come in and handle everything for you.

I do bookkeeping for a lot of my clients; many do not need constant help, they mostly just need assistance occasionally a day or two per month.

-Steven the Tax Guy

Your guide to IRS laws, rules and regulations.

[email protected]224-381-2660

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Steven Hamilton IIPro Member
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
10y
Originally posted by @Davey Wilde:

In the long run, you're much better off to outsource bookkeeping to a local bookkeeper in your area.
I previously worked for a CPA firm and we always recommended small businesses try bookkeeping on their own to understand the how the numbers work. QuickBooks is the industry standard (90% market share) so start there and then outsource as soon as you can. At some point, it will not be worth your time to continue to do the bookkeeping on your own. It's tedious work and most bookkeepers charge $30-75 per hour. It's well worth it free up your time to focus on acquiring new houses.
That was true; however the Xero market share is growing rapidly and is much cheaper than QB. I direct most of my clients to work on their books themselves and have me review them occasionally.
[email protected]224-381-2660
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Isaac A.
Grosse ile, MI · Member since 2014 · 117 posts · 46 votes
9y
what about zipbooks - https://zipbooks.com/
0 Reply
Andrew Herrig
Rental Property Investor · Dallas, TX · Member since 2012 · 502 posts · 263 votes
9y
@Jonathan Wolter @Ann Bellamy @Steven Hamilton II @Davey Wilde
Reviving an old thread here, but had a question on cash vs accrual accounting for rental properties.
I am setting up my rentals (currently 9 properties) in QuickBooks and struggling with whether to use the cash or accrual method. I have been trying to do it "right" and use accrual, but thinking I may be making things harder than they need to be.
Even with just a handful of properties, things are quickly spinning out of control with journal entries for accruing property taxes monthly (paid at the end of the year) and insurance (usually pre-paid and then expensed out monthly, but each property seems to be a little bit different). Also setting up a monthly bill to separate out each mortgage payment into principal, interest, and escrow.
Am I making my life too complicated, or is this the right way to go about it?
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Steven Hamilton IIPro Member
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
9y
Cash! NEVER accrual. you will make your life a nightmare.
[email protected]224-381-2660
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Steven Hamilton IIPro Member
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
9y
Originally posted by @Andrew Herrig:

@Jonathan Wolter @Ann Bellamy @Steven Hamilton II @Davey Wilde
Reviving an old thread here, but had a question on cash vs accrual accounting for rental properties.
I am setting up my rentals (currently 9 properties) in QuickBooks and struggling with whether to use the cash or accrual method. I have been trying to do it "right" and use accrual, but thinking I may be making things harder than they need to be.
Even with just a handful of properties, things are quickly spinning out of control with journal entries for accruing property taxes monthly (paid at the end of the year) and insurance (usually pre-paid and then expensed out monthly, but each property seems to be a little bit different). Also setting up a monthly bill to separate out each mortgage payment into principal, interest, and escrow.
Am I making my life too complicated, or is this the right way to go about it?
Another thing you may consider is automate some of your entries. Memorized/recurring transactions can be a great thing.
[email protected]224-381-2660
2 Reply
Ann Bellamy
Lender · Tyngsboro, MA · Member since 2009 · 3k+ posts · 2k+ votes
9y
@Steven Hamilton II is the accountant, but from the user standpoint, I can't even IMAGINE having to do accrual accounting for rentals.
2 Reply
Andrew Herrig
Rental Property Investor · Dallas, TX · Member since 2012 · 502 posts · 263 votes
9y
@Steven Hamilton II @Ann Bellamy Thanks for the reply. Sounds like I am over-complicating things and should stick with cash :)
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Steven Hamilton IIPro Member
Accountant, Enrolled Agent · Grayslake, IL · Member since 2011 · 5k+ posts · 2k+ votes
9y
Originally posted by @Andrew Herrig:

@Steven Hamilton II @Ann Bellamy Thanks for the reply. Sounds like I am over-complicating things and should stick with cash :)
Remember the KISS method. It truly does apply here.
[email protected]224-381-2660
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Natalie KolodijBusiness Member
Moderator
Tax Strategist| National Tax Educator| Accepting New Clients · Member since 2014 · 3k+ posts · 4k+ votes
9y
I had a client who printed off those "images" of checks the bank will show you if you click on written or deposited checks on your online banking.
He then cut each individual 2x3 inch mini check out of the sheet.
Then Wrote the address of each of his rentals on a piece of paper and filled it with it's corresponding cut-out mini checks.
Then he folded the paper and taped it shut.
It was like a pile of rental expenses pinatas.
I laughed. So hard. I wasn't even mad.
I...do not recommend this method. But almost any thing more organized than that and you should be okay. I love Quickbooks and Excel. But hey- I'm an accountant.
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Davey Wilde
Real Estate Agent · Seattle, WA · Member since 2015 · 40 posts · 24 votes
9y
@Andrew Herrig
I'm not an accountant but I would highly recommend hiring on a CPA and bookkeeper to handle this. You will save yourself time and headaches down the road by outsourcing and be focussing on the part of your business that brings in more money.
Whichever CPA your choose will be the one actually doing your taxes and will have advice on how to take advantage of all the tax laws.
0 Reply
Jeff Gates
Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes
9y
Some software packages export to schedule e
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Ryan Gallagher
Vendor · Rossville, GA · Member since 2017 · 10 posts · 0 votes
9y
I use Xero for accounting and Hubdoc for document collection in my vacation rental bookkeeping business. They both work quite well. I like to enter my clients' transactions using the accrual method so they can reap the benefits of the A/R and A/P reports. Like Quickbooks, Xero also allows you to switch reports to the cash basis if necessary. I also use some Excel spreadsheets to provide my clients feedback on their revenue, number of nights booked, and booking fees for each property and booking source.
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Account Closed
Realtor · NY · Member since 2016 · 55 posts · 23 votes
9y
use quickbooks
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Ray Harrell
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
7y
Does anyone use Quickbooks Self Employed for rental properties? I want to track rent due, due date, date paid remaining balance, automatic late charges, and also track management expenses and maintenance expenses. OR, if someone has an excel sheet that can do this for 13 doors.
I'm using a simple Excel sheet but lose track when people make partial payments or additional payments. Any inexpensive/free ideas?
0 Reply
Daniel HymanBusiness Member
CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
7y
@Ray Harrell With multiple properties, you’ll need the Plus version of Quickbooks. It’s class tracking feature allows you to associate any transaction with the appropriate property. Then a simple click of a button will generate a report showing your numbers for each property individually as well as the portfolio as a whole.
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Dan Perrott
Rental Property Investor · Indianapolis, IN · Member since 2014 · 354 posts · 167 votes
7y
@Ray Harrell We completely self-manage our properties and use sub-contractors as needed. We use Quickbooks pro for our rental business. I also keep a log of activities in a spreadsheet so that I can cross reference to entries in Quickbooks (expenses, mileage, deposits, etc). It takes less than 1/2 hour per month. We manage 8 doors over 5 physical properties. I think that I could manage 10x more if needed.
Quickbooks allows you to save your scanned receipts directly with the transaction (expense, deposit, etc) as well as track vehicle mileage. It also can export directly into Turbo-tax for the business and personal taxes.
When I began using the software 3 years ago, I hired a Quickbooks consultant to teach me how to use it. We met a couple of times for about a total of 3 hours and I have been fine on my own ever since. As a note, I do have a business accounting background so I already had a solid understanding of basis accounting practices. But if you can manage a checkbook, you can easily manage Quickbooks for your rental business.
Don't be afraid of Quickbooks. There is plenty of online assistance on YouTube as well as certified consultants to get you started. It is very easy to use once you learn it.
1 Reply
Ray Harrell
Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes
7y
@Dan Perrott, Plus seems like overkill for 30 minutes of use per month. Does anyone use a less expensive option? I asked about QB Self Employed because I already have annual free access to it. But it's not robust at all.
0 Reply
Justin R.Pro Member
Rental Property Investor · San Anselmo · Member since 2015 · 659 posts · 600 votes
7y
Originally posted by @Dan Perrott:

@Ray Harrell We completely self-manage our properties and use sub-contractors as needed. We use Quickbooks pro for our rental business. I also keep a log of activities in a spreadsheet so that I can cross reference to entries in Quickbooks (expenses, mileage, deposits, etc). It takes less than 1/2 hour per month. We manage 8 doors over 5 physical properties. I think that I could manage 10x more if needed.
Quickbooks allows you to save your scanned receipts directly with the transaction (expense, deposit, etc) as well as track vehicle mileage. It also can export directly into Turbo-tax for the business and personal taxes.
When I began using the software 3 years ago, I hired a Quickbooks consultant to teach me how to use it. We met a couple of times for about a total of 3 hours and I have been fine on my own ever since. As a note, I do have a business accounting background so I already had a solid understanding of basis accounting practices. But if you can manage a checkbook, you can easily manage Quickbooks for your rental business.
Don't be afraid of Quickbooks. There is plenty of online assistance on YouTube as well as certified consultants to get you started. It is very easy to use once you learn it.
Im impressed, 2 hours of a consultant! Im on 20 plus hours with mine and think Im more confused than hour 2.
Remembering how to add fixed assets, split PM payments, sectionalize asset classes, etc......My head is throbbing!! HaHa
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Dan Perrott
Rental Property Investor · Indianapolis, IN · Member since 2014 · 354 posts · 167 votes
7y
@Justin R. - I have a minor in accounting. Only needed to learn how to use the software. Once it is configured, you can process repeatable processes monthly, quarterly and annually.
@Ray Harrell - you need the pro version to get what you are looking for to manage rentals. Self-employed version is limited. Its basically an expense tracker for tax use.
0 Reply
Sisee Adams
Rental Property Investor · Member since 2018 · 21 posts · 9 votes
7y
As an accountant, I use Stessa ( backword spelling as Assets) for my rental bookeeping needs.
0 Reply
Latimer Luis
Rental Property Investor · Antioch, CA · Member since 2017 · 50 posts · 20 votes
7y
@Sisee Adams I love the updates Stessa just made to the Transactions section as well. I'm with you on this.
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