Posted by JHyre in Ohio on February 05, 2002 at 06:29:04:
I make entries on “input sheet”…amount, payor/payee, type of payment, date, and house to which it relates. The latter is important…each house has its own sheet and I use an if-then command to pick up relevant expenses per house and summarize them on the house page…for example- =IF(e4 = “House1”, d4, 0)…so if the category in cell e4 says House1, the number in cell d4 gets picked up, otherwise a zero appears. I then sum everything on the House1 worksheet and presto…I have all the data for that house. I run a similar screen to sift rent, late payments, G&A expenses, etc. It works really well for me and is much simpler than QuickBooks.
Keeping Track of Receipts and Disbursements - Posted by Brad_GA
Posted by Brad_GA on February 03, 2002 at 01:03:11:
Could anybody suggest a good method for keeping track of their books and expenses for each of their rental properties? I have tinkered with an excel woorbook with a single sheet for each property. Or is quickbooks a really good solution? I tried a trial version and it seemed too complicated to even set up. Also, it doesnt seem feasible if a different LLC owns each property. See, LLC’s are really cheap to form and maintain in Georgia but with an LLC, I have been told that to maintain the limited liability characteristics of the LLC, I need a separate bank account for each LLC, and in this case, each property. The two properties I currently own are in their own land truct each with its own LLC as a beneficiary. I can imagine the day when I own 50 or more properties. This would truly be a nightmare. Any suggestions or comments would be greatly appreciated.
Re: Keeping Track of Receipts and Disbursements - Posted by JHyre in Ohio
Posted by JHyre in Ohio on February 04, 2002 at 19:23:26:
I still use and love Excel for my personal bookkeeping. DougO’s suggestions #1 and #3 are my preferred approaches. I dislike the one property per LLC approach…I find it cumbersome and the costs (separate bank accounts, etc.) add up…besides, how much equity do you have in each property? A major property in its own LLC makes sense…an LLC for every SFH strikes me as a massive Pain, and not worth whatever benefit it provides. More sensible- one LLC for every x of equity, say $100k in equity. Muuuuuuch less hassle- and that’s coming from someone who does not have to pay others for bookkeeping, tax returns, etc.
Posted by DougO(NM) on February 03, 2002 at 19:17:42:
Hey Brad,
Funny you should ask, I’ve been working on the same thing. You are right, book keeping for multiple entities can be a nightmare, but is a necessary evil if you want to play the game. I think it comes down to 3 basic solutions, and personally I haven’t decided which is the lesser evil.
Seperate set of books for each LLC and property.
Form a “master” LLC that is the member of each LLC and thus each LLC becomes an asset on the balance sheet of the master LLC, you then keep one set of books but seperate them by class (If using QuickBooks)
Form a seperate LLC, or perhaps Corporation that is the manager for each LLC. It collects the rents and pays out the net to the other entities.It keeps the detailed records, the others keep basically the net numbers.
Theres another option I forgot, (variations) on the above three options.
I’ve been trying to query my local “professional” help ie Accountant and Attorney on how to proceed, but have suceeded in only getting frustrated.
As for keeping the books. For one or two properties QuickBooks will work fine by itself. Just Set-up classes for each of the properties. Then when you make a deposit or write a check, make sure to assign it to the proper class (property). You can then see the individual performance of each property.
When you start getting more than a few, a property management software package comes in handy, as QuickBooks is very unweildy if you try to follow their set-up for managing property. I’ve been using one called Property Boss for the last year, but they went out of business and just got bought by another company and are now planning on staying in business, last I heard. It does a great job of keeping track of leases and rental payments. It also interfaces with QuickBooks to handle rent collection deposits.
Re: Keeping Track of Receipts and Disbursements - Posted by Brad_GA
Posted by Brad_GA on February 05, 2002 at 01:35:15:
John,
Thanks for the insight on forming entities based on equity. I never thought of it that way but I see that is truly a smart approach. Now, when you do your bookkeeping, Do you just use a single entry accounting system modeled after Schedule E? With like one property per column or one property per worksheet? That would be very easy to create.
Posted by Brad_GA on February 04, 2002 at 02:02:39:
I think I like the manager solution you spelled out in paragraph 3. See, one of my properties was bought “subject to” If I make my payments with Allen Street Properties, LLC I think the lender may assume a due on sale violation has occurred (and it has!). But if I make all of my payments with a name like “Property Management Solutions, LLC” or the like, I dont think ill have any trouble. I would like my payments to be made seemingly by a “property management company” so their is no trouble. Its going to be a pain in the gluteus maximus but I think, right now, that may be the solution I will take. Hell, maybe Ill buy 10 properties per LLC and just leverage the hell out of them, maybe by using another LLC as a secured creditor. Hey, thats a thought! That way, they’ll get little if they sue one of my my LLC’s. I dont know. I guess that is a problem Ill have to deal with. Any suggestions by either of the hosts?