Hiring a Bookkeeper or buying quickbooks?

Question

I am currently house hacking a 4-unit and plan to continue to grow my real estate portfolio. My question is do I hire a bookkeeper right out of the gate or start with quickbooks on my own?

FYI I have never used either a bookkeeper or quickbooks for anything else in my life.

I appreciate any feedback

Simon W. · Answer

@John Bradley

get someone right from the start will be very helpful to you. I have clients that uses QBO and I just helped them managed their books accordingly. If you aren't a QBO customer yet, you can get a discount via a ProAdvisor(I am certified) for QBO.

Start the accounting right because it is a headache later if not done correctly.

Get someone who understands real estate. Good luck.

John Underwood · Answer

Neither. Track everything in Excel and turn this over to your CPA. I easily track almost 2 dozen properties this way.

Jon Kelly · Answer

@John Bradley I would start with a very simple Excel based income statement. Track rent and other income for each apartment and categorize your expenses (e.g. insurance, taxes, utilities, mortgage (principal and interest), maintenance (labor and materials), capex, etc.). After you acquire more units tracking on Excel becomes cumbersome and you'll want to transition to Quickbooks or some other real estate related accounting software.

I have 55 units and still track everything on Excel. I should've transitioned to Quickbooks sooner, but my current system seems to be working. At this point, I'm sure I spend more time updating Excel on a monthly basis than I would if I had Quickbooks.

I would suggest doing the financials on your own for a period (at least 1 year) before outsourcing. It might help you understand your numbers better. Looking at your actual numbers also helps your future underwriting. Your "rough" estimates become a little more refined.

Alecia Loveless · Answer

@John Bradley For years I have hacked around in an old version of Quickbooks with no knowledge of how to use it. I finally upgraded my computer and joined for the online version of it. I believe it’s $12.99 a month and I have all my bank accounts in it. I print out a profit loss for my accountant each year.

Now that I have 10 doors I would a bookkeeper to properly set up the accounts in it and teach me how to use it.

If you can find a bookkeeper to set it up for you and then you do the entry work that’s cheap and have the bookkeeper touch it up periodically.

If you can afford the bookkeeper for the whole thing, maybe. I’m still cutting costs.

Scott M. · Answer

This all depends on you and your skill sets, abilities and desires. Like @John Underwood when I started I used excel. I don't recall how many properties in but we switched to quickbooks pretty early on. I also worked with my CPA and he gave me a chart of accounts for quickbooks, as I recall he set it up so it was formatted how he wanted it. As quickbooks was not part of my skillset, ability or desire at the time I moved quickly to a bookkeeper who kept the books in quickbooks. Having someone taking care of the books allowed me to do what is in my skillset, desire and ability and that was to grow the business.

People who have the knack for the accounting/bookkeeping world just don't get people who don't : )

John Bradley · Answer

@Jon Kelly Thanks Jon. I do see the value in tracking this on my own for a year to better understand what actually goes into the book keeping process.

Chris Levarek · Answer

@John Bradley What are your long term goals? If you are looking to grow a sizable portfolio or even build a business, I would argue it can beneficial to know the nuts and bolts behind the accounting.

However! Once a baseline is established, outsource!

If you are truly interested in scaling, know your role or function and outsource the others. You will be happier and grow much faster. Just be sure not to blindly hand things over if you can't question the results.

Oh and enjoy the journey along the way, try not to just hand it all off right away. The experience of learning and building the team is the fun part. My two cents... :)

Jonathan Pavkov · Answer

Be tool agnostic - the most important thing is to understand accounting basics. Depreciation expense, cash flow, capital expenditures vs. expenses. If you understand and track all of those effectively (excel, QB, etc), then a CPA can help you with the best tax strategy.

Daniel Hyman · Answer

@John Bradley

There is a middle way that is not often spoken about. That would be to find a CPA firm that can coach you on how to do your own bookkeeping. That would give you the tools you need to get started and scale with confidence, while keeping your accounting fees down.

Jeffrey Donis · Answer

We used to have a bookkeeper who used Quickbooks. Now, we use quickbooks. @John Underwood 's option is also viable. We used Google Spreadsheets before Quickbooks. Just make sure to keep track of dates, person who made expense/income, describe the item, and provide a monetary amount. Like @Scott M. said, it depends on how much time you have, and your skills. Do you want to be in charge of your own finances, and take the time to learn how to do it efficiently and effectively?

Hiring a Bookkeeper or buying quickbooks?

Hiring a Bookkeeper or buying quickbooks?

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