Rental property management can get complicated; it’s essentially a full-time job. But thanks to a new generation of digital tools, managing day-to-day tasks has become significantly easier. Besides saving time, property management accounting software can provide a snapshot of the progress you’ve made in terms of your real estate portfolio. The software can also show you opportunities where you can improve, and give you a heads up on various payment due dates and property depreciation.
Property managers have options when it comes to ways of keeping track of the financials associated with their rental properties. Two of the most popular options are property management software and QuickBooks.
Some landlords and property managers have bad experiences with managing the financial aspect of property management. It’s not because they’re not smart people it’s often because they simply lack the necessary financial knowledge for maintaining properties. The good news is there are online tools that can help close the knowledge gap in many of these areas.
Some of the leading property management software provides financial ledgers landlords and property managers can use to document and track monthly income and expenses for all properties. Some software even allows users to link bank account information to their accounts to give tenants the ability to pay their rent online with a credit or debit card; the funds are automatically deposited into the landlord’s or property manager’s bank account.
There is property management software that also allows homeowners to pay their fees directly to property managers. The property may also provide a secure forum where homeowners and property managers can communicate through a portal.
Another great feature of some software packages is they often come loaded with a comprehensive set of templates you can use for building financial reports. And a lot of these offerings are cloud or internet-based, so you can access them from anywhere on any device.
Quickbooks software is a second common option for rental property management. Quick Books is great for tracking income and expenses no matter how many properties you’re managing.
Quickbooks allows users to create a company profile, and the overall account setup is fairly simple. Once set up, the software instructions for the software’s various functions are easy to understand. QuickBooks also provides several essential tools for calculating things like rent payments, overhead charges associated with property maintenance, and receiving and tracking rent payments.
QuickBooks also has its quirks. It is primarily designed for small to mid-sized businesses. Also, if you’re not well-versed or comfortable working in spreadsheets, you may find QuickBooks challenging to use. The spreadsheet setup makes it difficult to have a line of sight to multiple units at one time, particularly because each would have to be set up as its own business instead of a piece of the larger portfolio.
QuickBooks has certain limitations that can make it inconvenient to use for property management accounting purposes. One major drawback is setup. Since it’s geared more towards small to medium business use and not necessarily property management. There will be some features and functionality that will make it pale in comparison to property management software.
Another limitation is that QuickBooks does not offer a centralized way to view all tenant-specific information (i.e. unit number, length of tenancy, rent amount, etc.) in one place. It has the ability to track tenant transactions, but you cannot send standardly-worded emails or reminders to tenants using the software.
Lastly, since it’s not tailored specifically to the real estate industry, QuickBooks’ support resources and articles don’t offer the relevant information, educational material, or insight that property management software does.
QuickBooks requires quite a bit of accounting and finance expertise to maximize its functionality. If that isn’t your strong suit, you’ll probably be better off using property management software since it is designed specifically for property management purposes. It can also help take the guesswork out of rent payment and expense tracking.
Keeping an accurate accounting of your rental properties’ financials is critical for success. Even with property management software or programs like QuickBooks. It’s still necessary to have a working knowledge of accounting and finance. That knowledge, along with the ability to maintain income and expense records, is necessary to property management. Armed with general knowledge and organization. You’ll be able to use any software package to gain better insight into property performance.