Posted by Kaycee Miller | Apr 11, 2022 | Education, Landlord Tips, Property Management Tips | 24
When you start managing rental property, you will need to find a good accounting system to track your rent payments, expenses, payments, and profits.
Accounting Systems for Property Management
Just like any business venture, you need to be able to track the monetary success (and failures) of your rental properties with a good accounting system. Keeping good records of your financials will help you secure funds if you ever choose to purchase additional properties as banks will want to see records of your reserve funds and profits from your current investments.
You will also need to keep excellent records of your accounts for tax purposes and if you ever go through a real estate audit.
There are a few ways that rental managers and landlords choose to keep track of the accounting side of their properties: spreadsheets, QuickBooks, and property management software.
Spreadsheets for Rental Property Accounting
Some investors rely on spreadsheets or a pen and paper method for rental property accounting. This system is ok if you have 1 or 2 properties.
Spreadsheets on programs like Excel, give a landlord a way to track and auto-calculate totals from each spending category to provide you with your gross income, net income, and total expenses for the year.
As a real estate portfolio grows, you will need to find an accounting solution that gets easier, to accommodate the increased responsibilities that accompany more units. Modern bookkeeping systems automate a majority of the job duties of a busy rental manager.
Can QuickBooks Be Used for Property Management?
QuickBooks is often at the top of any professional’s mind when they think about accounting software for their business.
QuickBooks can be used for managing your rental transactions by setting up properties as customers, tenants as sub-customers, and classes to track transaction types. The tenant sub customer will show all rent invoices, associated payments, and current balance.
QuickBooks also provides solutions for property managers, who often have more accounting requirements regarding paying owners and trust accounting. QuickBooks offers the following explanation for rental property accounting on their website: “QuickBooks Desktop allows you to set up a company file that lets you run your property management business and do tasks such as receiving and tracking rent from tenants, paying property owners and management companies, fees and overhead charges for property maintenance.”
Despite being the leading accounting solution for small businesses, QuickBooks has its limitations when it comes to managing rentals. Software designed specifically for property managersoffers an industry-specific accounting system with the powerful reporting features of QuickBooks but it is already set up with categories and ledgers for rental management.
Quickbooks is great for general accounting, but it is missing all the tools that will truly make you stand out as the best property manager or landlord. With software designed specifically to your industry, you will get industry-specific tools like a tenant portal for your tenants to log into and make maintenance requests and pay their rent, an owner portal for owners to review their property performance, and built-in tenant screening so you can screen your tenants right within the same application.
Property Management Software for Rental Accounting
Oftentimes, the difference between a positive experience and a negative one is lack of knowledge about the resources that will make property management easier.
The problems experienced by many property managers and landlords can be solved with improved organization and online tools that help streamline business tasks associated with managing rentals.
Great property management software gives a rental manager or landlord all the tools you need to run a successful business. Landlords can look into landlord software which is tightly tailored to meet the needs of DIY landlords.
Property management software accounting features:
- Full general ledger accounting for properties, tenants, and owners. You have the power to review, edit and print ledgers for every property, tenant, owner, and bank account used to manage your properties. Traditional accounting systems are not designed for property management and require double or even triple entry of transactions to maintain accurate and auditable records. With Rentec Direct, this double or triple entry is automatically handled, saving you time and eliminating error.
- The ability to accept online rent payments via eCheck(ACH) or credit card from your tenants.
- Property managers can pay owners electronically via ACH. With two simple clicks in the system, you can quickly identify the distribution amount due to an owner and electronically transfer the funds from your account to theirs. No checks to print, stamps to lick, or envelopes to stuff. The owner gets an electronic deposit into their checking account a few days later.
- Trust account certified software that complies with your state’s real estate board.
- Built-in 1099-MISC e-filing system to make tax season easier.
- A comprehensive set of financial reports and useful reports is included. With specialized reports for property portfolios and owners provide you the most relevant data quickly and easily for your clients. All reports can be emailed, printed, or exported to PDF or Excel. All your data can also be synchronized with Quickbooks to provide a familiar format to CPAs and bookkeepers.
- A mobile system that can be accessed on the go. Imagine traveling and one of your owners requests a report. You can log into your property management software from any internet-connected device to access a report to provide your owner. Or give your owner access to their own portal for them to view their own reports.
But My Accountant Loves QuickBooks
Good news! Most property management software solutions provide options to get your data over into QuickBooks with ease. You can also download reports and ledgers for your accountant to upload and view in QuickBooks. Easy peasy!
When selecting an accounting solution for your rental needs, the most important part is to choose a system that works for you.
This article was originally published in February 2020 and has since been updated.
Related Reading For You:
- Create a Foolproof Rent Collection Policy
- The Most Important Tips for First-Time Landlords
- What Does a Property Manager Do?
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24 Comments
Emma Gray on September 4, 2017 at 5:27 am
See AlsoHow to register the purchase of a house?Real estate software and its importance - ApptivoQuicken Vs. QuickBooks: Which Is Best For Your Business?What is the Difference Between Bookkeeping and AccountingQuickBooks can be a decent framework for maintaining your business, however in the event that you are an expert property manager who works for management fees, you require a trusted accounting system in place.
Moving up to a cloud-based property management tool will one of the best choices for the business!
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Wayne Coogan on May 1, 2018 at 12:45 pm
Is there a property management software that works as an add-on to QB? The GL and ability to reconcile bank accts etc. is robust in QB. But, the ability to track tenant matters is weak in QB. Need software to track tenant management concerns but leave bookkeeping to QB while being integrated.
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Kaycee Wegener on May 3, 2018 at 10:20 am
You can use property management software to track tenant data, collect and record payments, then download that information into a CSV file for an easy upload to QuickBooks. Its the easiest way to use property management software and QuickBooks simultaneously.
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We Factor on July 19, 2018 at 6:49 pm
My accountant uses Quickbooks too. He likes everything about it. I can see that his outputs with quickbooks are excellent too. I think that quickbooks is an amazing tools for business and business owners. Thanks for sharing these.
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Fil Vouts on August 9, 2018 at 8:54 am
Any property management software you could recommend?
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Kaycee Miller on August 9, 2018 at 9:30 am
Here’s a good overview of the top property management software solutions on the market https://www.rentecdirect.com/blog/management-software/
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Tiffany Robert on November 22, 2018 at 7:14 am
can this software be used to generate owner expense/financial statements?
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Kaycee Miller on November 26, 2018 at 10:23 am
Absolutely. Rentec Direct generates all the financial reports necessary to successfully manage your rental properties. Here’s an overview of the reports available within the software. http://support.rentecdirect.com/knowledgebase/articles/512418-reports
Let us know if you have any questions, or if you are looking for a specific report.
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Jay Belcher on March 3, 2020 at 7:20 am
Unfortunately Rentec Direct still does not handle asset accounts (think book value, depreciation, etc.). That’s one reason we still use QuickBooks in addition to PM software – some features your accountant will require for taxes are not supported.
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Heather Peake on March 3, 2020 at 10:44 am
Hi Jay! Thank you for taking the time from your busy day to leave feedback – we love hearing from our clients! True, the software handles everything tax-related for properties, owners, and tenants; however, it doesn’t handle general business accounting. For non-property related transactions, then a solution like Quickbooks or Xero compliments Rentec very well.
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Catherine King on May 18, 2020 at 10:03 am
i have been using paper for 15 years now…got a new computer and I am ready to use a program I have 7 homes might get more after I retire. I’m ready to find an easy program that in the future I can transfer all the information collected if necessary. I also have items like roofs and AC units that I would like to add to the unit but in years past for record keeping not taxes. I also want to attach photos. Any recommendations Cathy
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Heather Peake on May 18, 2020 at 12:26 pm
Hi Cathy, I was a property manager for many years and going from paper/pen, to spreadsheets, and then migrated to software saved me so much time.
A good property management software will be easy to use, have a file library for you to upload those photos, and allow you to keep those AC and roof notes. These two articles outline what to look for and the benefits of using property management software.
Do I Need Property Management Software?Sent your information to our Product Advisors to reach out to you to see if they can help you find a solution that meets your needs. Wishing you all the best success.
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Steve Topper on June 5, 2020 at 4:45 am
I have been using this software for property management and it has made my life easier for me. There are so many things that are done automatically with the help of the software.
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Heather Peake on June 5, 2020 at 6:33 am
Thank you Steve for those kind words! Helping landlords and property managers save time and money to make your job easier is our continued dedicated mission here at Rentec Direct. So happy to hear how the software automation has made a positive impact on your life.
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Stephen on June 13, 2020 at 9:51 pm
Great article, i’ve moved from Quickbooks to the Landlord Studio software.
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Heather Peake on June 16, 2020 at 10:01 am
Hi Stephen, Thank you for your kind feedback. Happy you’ve found a software that fits your business needs.
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Ken Goodman on July 2, 2020 at 1:12 pm
I’ve used Rentec for three years. The reports are good, but it lacks charting/graphics capability. This is a weakness compared to its competitors.
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Heather Peake on July 6, 2020 at 11:11 am
Hi Ken, thank you for your feedback on how we can improve. I’ve passed your comments on to our team and I believe Janell will be reaching out to you shortly to really get a feel for the types of charting/graphics you’d like to see incorporated and perhaps outline a few ideas and suggestions to help in the meantime. We really appreciate you taking the time to reach out and for trusting Rentec Direct software with your property portfolio needs. Wishing you all the best success!
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Jahnavi Jaanu on August 14, 2020 at 7:31 am
Great information. Property management without the apps can be done but it needs more time for the documentation, lot of manual time and always a great co-ordination between the parties. The human errors can cause issues. With the busy era, this does not seem to be possible all the time. Thank you for the details shared about the quickbooks in property management.
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Heather Peake on August 14, 2020 at 8:11 am
Thank you for your feedback. When an app isn’t available, here’s a helpful tip when you find a useful page on a smartphone or tablet, like a property management login screen: How to Set Up a Mobile App Shortcut on Your Smart Phone
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4rooms Property on September 24, 2020 at 10:04 pm
Apps and modern softwares does make the job easy and convenient. This should be used and implemented as it helps us get accurate and fast result.
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Heather Peake on September 28, 2020 at 8:33 am
Exactly! Just as you said, makes the job easy and convenient and helps keep books accurate. Having a great property management software not only helps with accuracy in bookkeeping but also provides an efficient tool for collecting online rent payments, communicating with owners and tenants, and all the resources to scale a property management company for the long game.
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Jan Farley on April 12, 2022 at 1:14 pm
As a Rentec Direct user: This is the 4th property management software I have tried, and this one is by far my favorite. Each of the others had something to like, but this one is a keeper. Easy to use (in comparison), the financial are stellar, you receive and send payment, everything is great about it. Another platform I used had the ability to split payments received – the management fee when directly into operating account and rent could go directly to the owner. I would love to see this incorporated in this platform. It really helped with delays in the owners receiving their funds, and there was no “comingling” because the management fee went directly to the operating account.
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Heather Peake on April 12, 2022 at 2:53 pm
Thank you so much for your kind feedback, Jan! Love to hear how well the software is working for your needs. Although the system allows you to split a posted transaction after it’s received (by editing a transaction and using the Split Transaction option), your experience where the funds were directly split into separate accounts is interesting and am happy to pass it along to the development team for consideration. Thank you again for taking time from your busy day to reach out. Wishing you all the best continued success!
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