All Forum Posts by: Cara Powers

I actually don't know of a single software that is going to meet all your needs. I can't wait to hear if someone else does. Here's what I would recommend:

Quicken Property Management: It's not free, but it's dirt cheap, like $100 per year. And it can handle up to 100 properties and 100 units per property, so you'll have plenty of room to grow before you need to switch to something more expensive. Then you move your summary information into:

QuickBooks Online Plus: You can do property management in QuickBooks Online Plus, but it's not designed for it. What QBO Plus can do is separate your income and expenses by service line. You put all your flips into one location, your property management into another location, and you add locations as you add business lines (say consulting or wholesaling or whatever). But no matter what you need a

Bookkeeper: Please do not implement any accounting software by yourself. It may seem like a large and largely unnecessary expense to hire a bookkeeper to set up your software and your accounting systems, but it is absolutely necessary. If you are not an accountant, you will definitely mess it up, and it's far more expensive to get someone to fix it than to pay to get it done right from the start. However, you can't just get any bookkeeper, you need a smart bookkeeper, preferably with real estate experience. And if you do use QBO, you should look for one who is a QBO Advanced ProAdvisor.

@Tara Baldauf

Congratulations on getting a live-in flip done in 6 months. That shows dedication. That said, I second what @Bill Hampton said, getting a real estate specialist who will be responsive all year is better than getting someone local. 

As long as everything is under the same tax ID, you could use QuickBooks. I would suggest using Plus and using Locations to separate REI from W-2 income from whatever else you have going on. You could then use classes for each property (or customers and sub-customers). QuickBooks Online has a great dashboard that shows cash position over time and even creates a projection.

If you're aggragating income/expenses from separate tax ID's or even LLC's, you can still do it, but it's problematic. Part of the IRS definition of "separate venture" is that is keeps separate books, so aggregating personal finances with LLC's could result in losing liability protection.

You do need a real estate tax specialist on your team, either a CPA or an Enrolled Agent. Ideally, that person would do more than just your yearly taxes; they’d help you strategize and be available to answer questions all year. However, you don’t necessarily need someone expensive. Expensive and good aren’t actually synonymous. 

If you are talking about a security deposit, it should go into a separate asset account for security deposits. The transaction would increase cash and increase the security deposit asset account. If you weren't using Quicken, I would also recommend having separate asset accounts (and accumulated depreciation accounts) for every class of depreciable property.

@Benjamin Sussman Software can do a lot for you. Only you, however, can decide what to expense and what to capitalize. Be sure you understand the tax code, and/or get on good terms with an Enrolled Agent or CPA.

Wow. So this is where all the Albuquerque real estate investors are. Are any of you part of the mastermind group that was meeting before Covid 19?

Stessa. It's a free app. Google Sheets (or some other spreadsheet program) is also free, but spreadsheet are the easiest method to mess up and the method requiring the most knowledge.

@Colin Reid I actually just finished converting someone with 12 properties he was keeping track of through some "higher level" spreadsheets to QBO. The whole process is actually part of the QBO Advanced training. It's not something you want to tackle yourself with only one basic accounting course and online tutorials. You have way better things to do with your time. Find a bookkeeper with advanced certification who has done this for a real estate investor before, and pay for help. If you really want to do your own bookkeeping, that person should also be able to teach you what you need to know to handle the day to day stuff yourself.

@Dan V. @Kevin McGuire 

So the reason to use Locations instead of Classes if you have a QBO Plus subscription is to have an accurate balance sheet for each property. You'll notice that if you run a balance sheet by Class, there won't be any money in the checking account attributed to each property. Also the equity account won't be accurate for any of the properties.

If you don't care about having accurate balance sheets by property and if you don't need to separate properties by type (commercial v. residential or buy and hold v. fix and flip) you don't actually need a Plus subscription. You can make each property a customer and label income and expenses by customer, and that will give you the same information using classes will.

Let me know if you have any questions.