I was wondering if anyone could recommend a good source of documentation for monthly bookkeeping. I have just started investing in the last three months. So far I have 2 duplexes and 2 single family homes. I'm happy with the progress but I can see if I don't become a little more structured I'm not going to be on top of the finances to the degree I would like to. I'm trying to learn as much as I can and I've found that the best learning is hearing or reading about the experiences of others. So I was wondering if there was something available to me or should I get just get a good bookkeeping service? I'm open to all suggestions.
This is an attorney/realestate accountant/ investor who only deals with real estate clients. I went and listened to him speak a couple years ago and was blown away. I also just started a few months ago and have 1 double, 1 single. I’ll be buying this guys bookkeeping system soon. Downside is it’s expensive. I think it’s like 250-300, but it’s incredible for record keeping and tax prep. One time expense, WELL worth the money.
I recommend, if you have a personal computer, using MS Money or Intuits Quicken. Both programs are easy to learn and after a little bit of set up will do most of the work for you. If you think your able handle something a little more complex then using Intuits Quckbooks or Peachtree Accounting would be a good idea. The latter programs will include a group of preset company layouts (i.e. chart of accounts) that should meet your needs. Both product are rather easy to use after you do your initial setup and will improve your reporting capabilities over MS Money and Quicken.
Here are my credentials in case you doubt my advice… I am a corporate controller for a 50mil.
The best advice I could give you and anyone else getting started in the rental business as with any business is:
1. Keep your business finances separate from your personal finances.
2. Run all your business transaction through a business checking or credit card (cash control) and document every expense to support your business reporting.
3. Use professional help for things such as tax, legal and insurance advice.
4. Don't pretend to know what you are doing when it comes to important things such as tax advice, legal agreements and so forth. Even with my credentials and background I still rely on these professionals for advice to insure that I have covered all the bases and have minimized my personal liabilities.
Thank you for your advice. After some research I think I am giving the Quicken Rental Property Manager a chance. I not sure if your familiar with that particular Quicken product, from the reviews I’m reading it appears it may have just been released this month. I took a two minute tour it offers at; http://accountant.intuit.com/products_services/quicken_rental_property_manager/index.aspx
It seems to meet my immediate needs. It even has a running tax summary. If you get a chance, take a look at it and tell me what you think.
I would like to get something that has many capabilities and can graft & chart different profit/loss analysis etc, but, as you know, time is of the essence. As a one man show, the bog down of paperwork hinders my profitability which is researching, negotiating and signing more properties. I’ve only begun and I have 4 properties as of now but I’m aggressively working at this each day and It appears I may be presenting 2 more offers this coming week, so my needs for a program with more options will probably become greater.
I 100% agree with you, without a bit of wavering, on the 4 points you mentioned. Any other advice is welcome.
I have not recommended Quicken or Money for RE. The reason, in spite of the relative simplicity of each program, is that neither does a good job with balance sheets - and RE is a very balance sheet intensive business. Lots of unique assets (each property) that require tracking depreciation, among other things. Also, lots of leverage (mortgages, etc.). QuickBooks does a much better job of tracking these items than either Quicken or Money.
I have yet to review the new Quicken Rental software. With tax season upon us, such a review is unlikely before April. Any feedback you have would be helpful. In particular, if the new Quicken product works well with rentals AND is flexible enough to run flips, sub2’s, sandwich options & sales on payments/paper (QB will do all of the above), I would be interested in changing my course to work around that product instead of QB.
I have not yet had the need for any bookkeeping system just yet, BUT!
I love QuickBooks and all the great things it CAN do compared to other software originally designed for personal finances.
HOWEVER, as stated it is a generic business structure not really RE driven.
BUT, I did come across someone who edited the chart of accounts, designed charts, reports, queries and all kinds of other stuff specifically for running is RE empire. I know the cost was something like $200-$500 and you would just buy QuickBooks and then load in his CD of templates and such to it.
This thing had it all like letters to tenants where it would put the tenant’s name on the eviction letter or the take your trash out letter etc. that way you could check box all the tenants’ names and then hit print and spit out 50 letters addressed to the tenant and such.
Seemed very worthwhile, but I need to have more than 2-3 tenants for me to feel like I could get full benefit of all the features. Heh!
Just took a look at the Quicken Rental site. One important item remains unclear to me: Does it have a balance sheet. You can sort of “fudge” one with plain vanilla rentals, assuming that you are not depreciating aggressively…but the lack of a balance sheet will make tracking other types of RE difficult, to say the least. If anybody uses it, let us know how it works on that count.
Hi:
I’ve used Quick Books and PeachTree for my earned income software company.
But for my rentals, I simply want to 1) track expenses, then 2) update my spread sheets monthly or weekly. What I do is more labor intensive, but have not found any off the shelf products that can do ALL the analysis I need.
I use Microsoft money to simply import my bank and credit card statements (which are the medium for my spending)… when in Money I simply classify the expenses the the chart of accounts (categories and sub-categories) I listed. Then I export to excel.
Then every month or twice a month I update my spread sheets with this data and data from my property managers’ cash flow statements. I do not factor in depreciation as I think of depreciation as a nice “extra.”
I update my spread sheets to show how my rentals are really performing. I notice trends like when I first acquire a property, there are certain categories of expenses to get it up and renting… what my actual vacancy factor is (not what the bank says it is).
I am strategic and organized from the get go:
I purchase EASY properties (high demand locations, properties that rent in the moderate price range). In my 8 years of doing this (and I am 45 and retired for 3 years)… I’ve only had one eviction.
I use professional property management eventhough my properties are “easy.”
I have corporations and expense out through them.
I am organized with my checking accounts and have only one credit card account. I carry NO consumer debt.
Bookkeeping is simply keeping track of your income and expenses. I use Microsoft Money for that. Then I design spread sheets and input into them to get both qualitative and quantitive conclusions of my rental cash flow.
I’m sure doesn’t work for everyone and you do have to be savvy with spread sheets… but I just have not found off the shelf Quickbooks or Peach Tree to be effective for my real estate investing… which again is simple (I dont’ do flips, subject to’s… I like it easy… I simply buy right, and hold and cash flow). I am a boring, old fashioned yet effective real estate investor. My husband chucked his corporate management job because of me and so I adhere to systems that assure continued success.
My CPA and I used Quickbooks then Peachtree for my software company as it does job costing, etc. And come tax time she does her thing with depreciation, etc. Also I’ve done numerous 1031 exchanges. Again, I like to keep it simple and Money and spread sheets do it for me for now in regards to my rentals.
Hi,
I’ll let everyone know what is included in the Quicken Rental Property Manager, according to the USPS website it is due in today. I ordered it from Best Buy on line on Jan 25th; they said it is shipped that day. That made me think it would arrive no later than Jan 28th… A few days later I get an email telling me I should have it in five to seven business days. So don’t be fooled like I was.
The Live Phone Recording of Mike Butler. I think it was around Dec. 15 04 Really Sold Me on His Program. That’s What I would get ahold of instead of a shelf or a"paper sack".