Tips on using quick books for self management of rental?

Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes

Currently reading Brandon Turner’s book on Rental Property Management. Wanting to manage my first rental myself, budgeting in management so that I can outsource it in the future. In regards to book keeping, what are some things you learned or would give advice on when using quickbooks? Effective system that worked best for you?

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Matt Nico

Member since 2019 · 448 posts · 306 votes

Originally posted by @Javier Cuevas Santos:

@Javier Cuevas Santos, your situation is very simple. If I were you, I would go get a business checking account. All of your rents and expenses flow through that account all the time. No matter what. Keep your rentals completely separate from your personal. With only 1 rental property, there is no need for quickbooks yet. Use an excel spreadsheet to start out.

Once you get rocking with 3 rentals or so (I started doing this when I had 3 rentals), I would abandon the spreadsheet, and upgrade. I personally use Cozy for payments. These payments go directly into my business checking. From the business checking, I have quickbooks linked up to it.

Quickbooks Tip: Dont use the "Classes" creation. They limit you at 40 I believe. What to do is separate every property you have using the "Customers" section. This way, when you go to do a profit and loss statement and balance sheets, you sort it by "Sort by Customers", and you will get each property listed out separately. Your accountant will thank you. If you want an example, shoot me a PM and I will send you a balance sheet of my rentals.

Good luck!!!!!

-Matt

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Daniel HymanBusiness Member
CPA · Milwaukee, WI · Member since 2016 · 2k+ posts · 1k+ votes
6y
Make sure to get class tracking (Plus version) so you can associate any transaction with its respective property.
If you create multiple entities, make sure each entity gets its own set of books.
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7 Reply
Stephanie Simmons
Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
6y
@Javier Cuevas Santos
When I had one property - I just opened a separate checking account and all rent/deposits went in and all expenses came out. It was super easy to do taxes at the end of the year because I could just download transactions into excel from my bank - categorize each transaction and boom! - ready for tax accountant or tax software.
If there was a capital expenditure (new AC or roof) - I’d fund the account (owners contribution) and then pay for the expense out of that account.
I’m pretty sure you have to account for each property separately as a landlord so a separate account for each property would make sense.
I’ve never used accounting software. If the account has more $$ at the end of the year than the beginning- I made money. If it doesn’t I lost money. I also kept my reserves in that account (3 months of expenses).
7 Reply
Stephanie Simmons
Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
6y
You might want to check out WAVE accounting on line - they do books for free. I used them for a short term rental business I had and you can set up multiple entities (businesses)
1 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Daniel Hyman thanks for tip!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Stephanie Simmons wow! Thank you so much for the detailed info/tips! You just eased a lot of my anxiety by making it simple. I’m one to over complicate things and the term “book-keeping” scares me. Appreciate you and good luck!
0 Reply
Bradley VanWagenenPro Member
Accountant · Boise, ID · Member since 2017 · 7 posts · 9 votes
6y
QuickBooks works great for keeping track of all your income and expenses. Keep in mind if you use classes to track properties in QBO that you are limited to the number of properties you can track. If you use customers and sub customers to track properties and units in each property, you can pull P&L reports by customer (property) or by subcustomer (unit) and not be limited how many properties you have.
Definitely stay on top of the accounting or outsource as you get bigger. It is not worth paying your accountant or tax accountant extra at the end of the year because they have to clean up messes from the entire year that could have been input correctly along the way - speaking from experience of helping investors and construction companies clean up their books at year end and spending countless hours to do so.
5 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Stephanie Simmons out of curiosity, when you set up the new acct (checking/savings) did you use the checking for book keeping and savings as an escrow acct, if/when you had tenants?
0 Reply
Stephanie Simmons
Flipper/Rehabber · Lakeland, FL · Member since 2019 · 131 posts · 91 votes
6y
@Javier Cuevas Santos. In Florida any interest on the deposit has to be paid back to the tenant. So I got interest free checking - made it a lot simpler. Deposit went into the checking account that I used for the property. You just have to make sure the balance doesn’t drop below their deposit amount (hence my reserves being in the same account).
1 Reply
Matt Ziegler
Rental Property Investor · Colorado Springs, CO · Member since 2020 · 433 posts · 284 votes
6y
Quick Books Pro is a great program for self managing rentals. We migrated to that last year and are very impressed with the ease of use, Made our accountant, and tax man both very happy. Once you get used to using it, it is easy and quick.
3 Reply
Mike McCarthy
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
A tip to consider. I used QB online for a year or so. Last year I switched to the desktop version and am much happier. The monthly fee adds up quick and buying the desktop version is more expensive up front, but it’s for itself after a few months.
Plus you get a bunch of features that the online version doesn’t have.
1 Reply
Lesley Resnick
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
6y
I would not over complicate your life. It will take you longer to set it up and maintain than any value you will receive.
Use a single account for all transactions in and out. Find an online payment system, that will be more important than an accounting system. You should have under 15 transactions a year.
2 Reply
Matt Nico
Member since 2019 · 448 posts · 306 votes
6y
Originally posted by @Javier Cuevas Santos:
Currently reading Brandon Turner’s book on Rental Property Management. Wanting to manage my first rental myself, budgeting in management so that I can outsource it in the future. In regards to book keeping, what are some things you learned or would give advice on when using quickbooks? Effective system that worked best for you?

@Javier Cuevas Santos, your situation is very simple. If I were you, I would go get a business checking account. All of your rents and expenses flow through that account all the time. No matter what. Keep your rentals completely separate from your personal. With only 1 rental property, there is no need for quickbooks yet. Use an excel spreadsheet to start out.

Once you get rocking with 3 rentals or so (I started doing this when I had 3 rentals), I would abandon the spreadsheet, and upgrade. I personally use Cozy for payments. These payments go directly into my business checking. From the business checking, I have quickbooks linked up to it.
Quickbooks Tip: Dont use the "Classes" creation. They limit you at 40 I believe. What to do is separate every property you have using the "Customers" section. This way, when you go to do a profit and loss statement and balance sheets, you sort it by "Sort by Customers", and you will get each property listed out separately. Your accountant will thank you. If you want an example, shoot me a PM and I will send you a balance sheet of my rentals.
Good luck!!!!!
-Matt

10 Reply
Soh Tanaka
Property Manager · Lindenhurst, IL · Member since 2016 · 854 posts · 506 votes
6y
It is an overkill to use QuickBooks for just one property. That said, if you are thinking about growing your business, you might as well start using it to give yourself a chance to learn how to use it. You just have to commit to learn how to use it.
Also, go with the desktop version, not the online version.
3 Reply
Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Javier Cuevas Santos
When starting with one property I used an excel spread sheet. I opened a bank account for the property so as not to commingle funds. I wanted to run things as a business. The number of monthly entries is so small. You will have rental income, mortgage payment, insurance, repairs if necessary and in your case no property management unless your paying yourself. That’s five entries. 10 minutes a month of your time. Use quickbooks when you outgrow excel.
I would also buy Brandon’s book on Rental Property Investing. Many good tips in there as well.
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Bradley VanWagenen ahh ok. I see. Thanks for that! Coming in blind into it, I would’ve found out the hard way.
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Matt Ziegler ok nice, thank you for the advice!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Mike McCarthy I did notice there was a cheaper online version vs. buying the program upfront. Thanks for clarifying that!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Lesley Resnick I am all about simplifying so appreciate the advice!!!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Soh Tanaka ok thanks you the advice! It looks like many agree to use the desktop version!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Kenneth Garrett awesome! Yes I actually read that one first followed by “Investing with Low to No Monday Down”. Thank you the advice!
0 Reply
Javier Cuevas Santos
OP
Rental Property Investor · Oklahoma City, OK · Member since 2019 · 42 posts · 10 votes
6y
@Matt Nico wow! So much good stuff thanks for tips and will definitely PM you!
0 Reply
Bill Goodland
Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
6y
@Javier Cuevas Santos Landlording on Autopilot by Mike Butler
1 Reply
Tanvir Sattar
Rental Property Investor · Cincinnati, OH · Member since 2020 · 380 posts · 588 votes
6y
QuickBooks is a great tool for accounting, but is not built for tenant management. I've linked my QB account with Innago for online payments.
1 Reply
Dave Clauson
Real Estate Investor · Lawrence, KS · Member since 2016 · 55 posts · 35 votes
6y
@Javier Cuevas Santos
I’ve got 10 doors right now and have used Stessa to track expenses and prepare for taxes and Cozy to collect rent. Keep it simple while your business is simple. Plus both tools are free and very easy to use.
1 Reply
James Hamling
Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
6y
Originally posted by @Javier Cuevas Santos:
Currently reading Brandon Turner’s book on Rental Property Management. Wanting to manage my first rental myself, budgeting in management so that I can outsource it in the future. In regards to book keeping, what are some things you learned or would give advice on when using quickbooks? Effective system that worked best for you?

I am going to give it to you straight; QB is a waste of time, energy and resources when starting out. Now I say this as a guy with OB Pro Premium for over a decade, I have licenses that are actually grandfathered in, and I have utilized all QB integrations and levels. I love, not like, love QuickBooks BUT, it has it's place and time and thats not at startup.
There is a lot of good, cheap, simple systems out there that incorporate multiple facets of property management including basic accounting. A far more important feature is online tenant payments, and online portal for property management.
QB has about 14million ways a person can screw it up or do things wrong, and it is just the accounting component, when you have just a few properties this is more hindrance than help.
I suggest finding a good launching point software that integrates process's, and has features that present a marketable gain, likes those I mentioned. Than with a few properties under the belt, thats when you can start bringing in specialized systems.

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