All Forum Posts by: Max Emory

Hey @Blake Dials, it doesn't matter for tax purposes since it's under your personal name and you're using personal accounts. *I'm not a CPA or tax pro of any sort. But, I do work with a lot of them.*

I do recommend have a designated bank account that you solely use for the rental property to make your life easier. If you use credit cards, I recommend having a designated credit card that you solely use for the rental property as well.

This will keep your transactions for the property very organized and easy to find for tax season assuming you don't already have bookkeeping set up.

Hey @Ghizal Miri, it looks like you've gotten some great feedback for Baselane. I don't have any experience with Baselane so I'm not sure how scalable it is as your portfolio grows. It sounds like a great option for people who want to do their own bookkeeping.

I'll just offer that wWe use QuickBooks Online exclusively for all of our REI Clients. I use it for my personal portfolio as well. We've found it has superior reporting features, integration features, and is overall more efficient to work within than other REI-specific software.

The downside is QBO is not set up for REI so if you ever were to go that route, you'll need to do that or work with an expert to ensure it is set up for your business appropriately.

If you want to discuss any of this further, I'm happy to answer your questions.

Best of luck!

Hey @Joe Derobertis, congrats on your new acquisitions!

The way our bookkeeping firm does this is via a manual journal entry dated the last day of the month the transactions actually occurred for your properties via your PM. Then, we match that journal entry to the bank deposit transaction so everything is reconciled.

So, you'll record each line item your PM gives you via their monthly owner statement using a journal entry within Stessa for September 2024 dated 09/30/2024. Then, you'll match that journal entry to the bank feed deposit within Stessa that will most likely flow through your bank account in early October.

This method allows you to clearly see your income less all applicable expenses per month per property within your master accounting software.

Doing this also has the added benefit of allowing you to catch any mistakes made by the PM as well (we catch mistakes all the time for our Clients that would have otherwise cost them money).

Does that make sense?

PS - There's a great FB group for questions like this called, "Bookkeepers for Real Estate Investors".

Hope that helps!

@Adi Prasad, congrats on your new soon-to-be acquisition! 

Use a great RE attorney and title agency. 

Do literally everything the way you would normally do it due diligence-wise. 

The only change is you're not working with a bank for this transaction (and, there are so many benefits from that).

Ensure you have an easy and smooth way to pay your monthly payment to the seller/lender since you'll be working directly with the seller on that rather than a bank. Preferably, you or the seller have a method that can be set to autopay to make both of your lives easier.

Hope it helps!

Hey @Trenton Pelloquin, we use QuickBooks Online exclusively for all of our REI Clients (including buy-and-hold Clients). I use it for my personal portfolio as well. We've found it has superior reporting features, integration features, and is overall more efficient to work within than other REI-specific software.

The downside is QBO is not set up for REI so you'll need to do that or work with an expert to ensure it is set up for your business appropriately.

Something else to keep in mind is your entity structure and how your entities file tax returns. As a general rule, each entity that files a separate tax return (partnership, s-corp, c-corp, etc) will need its own QBO subscription. If entities are disregarded, you can keep up with more than 1 in a single QBO account using the location/business feature to keep track of them separately. This will save you on subscription costs.

Regarding how to track properties & entities using QBO (Plus), there are different ways of skinning this but I'll tell you what works for our Clients. We track properties using the customer feature. So, "Rental Properties" as the customer, then each property address is a sub-customer, and each unit within the property is a sub-sub-customer.

We use the Location/Business feature to track multiple disregarded entities within 1 QBO. Entities that are not "disregarded" need their own QBO to ensure their balance sheets remain 100% accurate.

We do run into an issue every now and then with some transactions that don't allow us to designate the customer/property but we've found ways to get around this and still have the transaction reflect the appropriate customer/property.

This allows us to pull all the financial reports our Clients and their tax pros need to see.

I'm in no way saying our way is the end-all-be-all but it works for us and our Clients' tax filers/advisors.

There's a FB group called, "Bookkeepers for Real Estate Investors". You or your bookkeeper may want to check it out.

If you want to discuss any of this further, I'm happy to answer questions and help walk you through it.

Best of luck!

This is amazing, @Malik Javed. Thanks for sharing!

For bookkeeping purposes for our clients, we usually do an 80 (building) / 20 (land) split until we have the correct figures from the county records (it takes some time for those to post sometimes). This way, their bookkeeping records show something we can refine later.

This method is never used for their taxes though! Thanks for speaking to that.

Hey @Keegan Schaub, congrats on the new acquisition!

For our bookkeeping clients, as a placeholder, we usually do an 80 (building) / 20 (land) split until we have the correct figures from the county records (it takes some time for those to post sometimes) so their bookkeeping records show something we can refine later.

It looks like you got some good insight from others too!

Hope it helps.

Hey @Isaiah Cortez, speak to an REI-savvy attorney who operates in FL (doesn't have to be located in FL but should know state-specific rules/regulations/laws).

We see so many different entity structures for rental portfolios in our REI Bookkeeping Firm.

Whatever you decide, ensure it's simple enough for you to easily abide by the structure in your day-to-day operations. 

We've had bookkeeping clients with complicated structures that apparently protected them to the maximum degree but they didn't abide by the structure when conducting transactions in their business daily (lots of unintentional commingling). When this happens the fancy/complicated entity structure is useless protection-wise.

Lots of attorneys out there who will sell you a $10k+ entity structure that doesn't mesh with your operations as you scale your portfolio and team.

Also, ensure your REI-savvy tax pro and your REI-savvy attorney link up during the entity structure creation process so things are optimal on all sides.

Just something to keep in mind as you're beginning this journey.

@Gurusubramaniam Sundararaman, Google Sheet or Excel! That's always your friend when you can't find a software to accomplish what you need.

As you're scaling your portfolio, it pays to scale in 1 or just a few areas so you can have all properties with the same utility companies, management, etc. This makes everything much easier to track.

Best of luck!

@Lori Brittain, short answer->Yes, keep/record the receipts. Anytime you have the question of if you can write something off, keep the receipt until you speak with your tax pro and they come to a final conclusion for you.

For specifics on your current situation/question, I'll defer to the amazing tax pros in this community. 

We don't provide tax services (just bookkeeping/CFO) but are huge fans of receipts in all circumstances just in case...