QUICKBOOKS FOR REAL ESTATE INVESTING
QUICKBOOKS FOR RENTAL PROPERTIES
In a prior post I covered using QuickBooks for property flipping. Using the software for flipping is a more straightforward use of QuickBooks and is somewhat easier to explain. Many software systems have been created to account for rental property, but if you are doing your own bookkeeping and you do not have a very large number of units, it is worth taking a look at QuickBooks and this system. If you are managing your own property the method I will outline here is a great way to track your buildings, tenants and rents without spending an exorbitant amount of money on an accounting software package.
This is a brief outline of how to use the software for rental property. I cannot go into extensive detail because it would certainly require much more than a blog post. If you do decide that this is the method for you after reading this post, there are manuals that have been written that will give you great detail on how to set the system up. The software is user friendly enough for non-accountants who are willing to put in a little bit of time and effort to learn. It will allow you to control your real estate investment portfolio and know at any given time where the business stands financially. There are a variety of useful reports that can be generated in addition to the standard financial reports such as a balance sheet and an income statement (P & L statement).
When setting up your system there is a section to track customers. For a rental system it is recommended that your buildings are identified as your “customers.” Within the customer base you can identify individual jobs. Your tenants become your jobs. So, your customers (buildings) can have within them multiple jobs (tenants). So, for example, let’s say you own two apartment buildings. Each building has three tenants. Your system would look like this:
Customer: 100 Main St. (This is building 1)
Jobs: Apt. 1 Smith
Apt. 2 Jones
Apt. 3 Williams
Customer: 200 Elm St. (This is building 2)
Jobs: Apt. 1 Rodney
Apt. 2 Dangerfield
Apt. 3 Quick
In my prior writing I discusses the significance of using the QuickBooks class system for flipping properties. Now I will let you know how it is useful in tracking rental properties.
One way of using the class system for rental properties is to set up each property as a class. There are other identifiers that can be used within the class system as well, but the basic setup for rental is to identify each building as a class. There should also be a class for items that may not necessarily be related to a specific building. Each expense and revenue item you record should be identified with the class that corresponds to the building the revenue or expense is attributable to. If it is a general expense that is not specific to a building then the class would be a “general” or “office” or some other identification that is to your liking. When you want to see how each individual building looks financially you would go to your reports and request the balance sheet and Income Statement (P & L) by class. You will be quite pleased to see that you have tracked the worthiness of each building and now know how each performs independently.
There are probably a few different reference manuals published that explain the system, but I found That “Property Management with QuickBooks” written by Don M. Lander and continued by his daughter, Lisa Edwards was a great reference for this system with great detail. More information can be obtained at: http://www.quickbooksforrentals.com/ or http://www.quickbooks-4-rentals.com/