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Community Explorer **

Recording income for Multi Family buildings - best practices

Hi,

 

I've done a lot of looking around, but haven't come to conclusion on the best way to solve my situation, which I am sure is common:

 

- I own several buildings with several units in each building

- I have a property manager who sends me income monthly, net of his fees and other expenses.

- I have a chart of accounts all set up and working for expenses. 

 

What is the best way to set up the accounts for the income?  I have class turned on in my QBO version.  I want to be able to track by building, apartment, and tenant.

 

thanks.

 

19 Comments
Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

Your "Customer" in QBO would be your Tenant info.

 

Sub Accounts would be one way to go for the other info:

 

Rental Property Income

  - 123 Main Street Building

          - Apt A

          - Apt B

          - Apt C

  - 456 First Avenue Building

          - Apt 1

          - Apt 2

  - 789 Wherever Building

          - Etc., Etc.

 

Then with your Classes you'll isolate your income and your Expenses for the Buildings and whatever else you want to track.  Don't forget you can use Split entries if there are expenses that are really for everything.  If you have one company do the yard work, snow removal, etc. and they just send one invoice.  If you really want the detail, Split the entries.

 

Mike's Mowing              $100

Grounds Maintenance   $50                  Class: 123 Main Street

Grounds Maintenance   $25                  Class: 456 First Avenue

Grounds Maintenance   $25                  Class: 789 Wherever

 

Be sure to Memorize the entries so you're not having to pick each apartment, etc. every month.  

 

 

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Thanks for the reply Pete.  When you say sub account, do you mean customer:customer?  Ie. 123 Main Street Apt A is a sub-customer of Tenant X?  If so, what happens when Tenant X leaves and I have new Tenant Y in Apt A?

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Should the tenant be a sub-customer of the unit?

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

Definitely one class for each building, so can easily assign expenses in the bank feed. And run a P&L by class, for each schedule C or E, if each building is an LLC, or to see profitability by building. For each apartment in a building you can either use Service Items or Sub-Customers, not account as that will clutter up the P&L.  Not sub-class, because that will mean a very wide P&L By Class; you cannot collapse the report to show just primary class

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Thanks Malcolm.  These buildings are all under one company (Canadian).  Will definitely put each building under class.  Still left with the question of should the tenants be sub-customers of the apartment (customer).

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

No, not Sub Customers, just the Person or People on the Lease as your Customer.  By their address, you'll know what unit they are in.  (Or you could create also create a Job, not sure to what detail or complexity you need/want.)

 

From there you can look at things either from the Customer Reports or from the Unit Reports.  Sometimes they'll be the same, but if John Smith moves out in the middle of the year, you can still see how much or what he paid.  But looking at  Building123, Apt A you can see what the unit made throughout the year.  And you just make John Smith "Inactive" once he moves out.

 

Sub Accounts I showed was for the Income because you said you wanted to know how much each building and unit were making.  So you'd go to your Chart of Accounts and Add an account.  I called it Rental Property Income, but you can call it whatever you (or your Accountant) want to call it.

 

Below that would be a Sub Account for each Building.  Still in Chart of Accounts you'd Add another Income Account and name it the Building name.  Right below where you put the Name you Check the Sub Account of and pick Rental Property Income. 

 

Continue the process for the Units and when you Check the Sub Account you'd pick Rental Property Income: Building Name.  Then ultimately you get a tree like I showed in my first message. 

 

Generally speaking you'll just be looking at Rental Property Income, but you can easily run reports on each building or each unit if you want to drill down.

 

The Class you set up would probably be for each Building from what you described.  This will allow you to pull up either Income or Expenses. 

 

And again, when you actually get to the part where  you're entering in the rent received, etc.  remember to Memorize as much as you can so you're not constantly searching for each sub account.  Could be a pain if you have a lot of individual Units.

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices


@Pete_Mc wrote:

No, not Sub Customers, just the Person or People on the Lease as your Customer.  By their address, you'll know what unit they are in.  (Or you could create also create a Job, not sure to what detail or complexity you need/want.)

 


In QBO there are no Jobs. It is simply called is sub-customer.

 

And no need to create sub-accounts in the COA, if  you use Classes

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

Oops, my bad on the terminology.  Didn't realize they eliminated the "Job" label in QBO (Sub-Customer strikes me as a very strange concept...)

 

And by using the "Sub-Customer" you're basically working with Jobs (or similar) so that's how you'll break out the numbers within a Class?

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices


@3waller wrote:

Still left with the question of should the tenants be sub-customers of the apartment (customer).


Most posts here tell you to use Sub-customer for the tenants (with the unit number as part of the name, Eg 1A First name  Last name ) , where the building is the parent.  Some say to use the unit as the sub and the tenant as the sub-sub, but that seems a bit much, especially if you are using Class to categorize income and expense. 

 

On the P&L you have one line for income, and columns for each class (building). 

 

 

 

 

 

 

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Thanks guys, so I think we have consensus?

 

Building = class

Apartment = customer

Tenant = customer:customer (ie, a sub customer of apartment)

 

Let me know if you disagree, thanks.

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Ok, I got that done as described above, looks good.  Now I have a month's worth of outstanding invoices which are recurring.  I receive money net from my property manager.  For example:

 

- I have 50 units invoiced at various amounts, totaling 50k

- Various expenses of 10k (maintenance, property management fees, etc)

- There I received 40k net from the PM via direct deposit in my bank account.

 

How do I show the invoices as paid and enter the expenses from the bank register?  I see how you can try and match transactions, but looks like I would have to enter all 50 payments.  There must be a similar way.

 

thanks.

Anonymous
Not applicable

Re: Recording income for Multi Family buildings - best practices

Hi there, @3waller.

 

Allow me to chime in the conversation and help share some information.

 

Since the money received and expense spent happens before receiving the net, you can create a holding account or deposit this in the undeposited funds. Then, you can just transfer the amounts from the holding account to the business bank.

 

Please don't hesitate to let me know if you have further questions. All the best.

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Hi Lily,

 

I'm not worried about the timing really.  I am happy enough to enter this mid month when I get the net.  However, I am still left with the question of how I enter this, while clearing out all the invoices.  Looks like I can do the invoices with 50 clicks, but surely there is a better way?

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

Ummm.....   Yes, but Expenses aren't really part of the Deposit discussion.  Be careful of making it sound like you create a New Acct or use Undeposited Funds for all sorts of things.

 

Undeposited funds are for funds you receive, but have not been Deposited (hence the name).  So if I open my mail and have a payment from 1A, I find their Invoice and show it as Paid, but the money is not in my Bank Acct yet so QBs puts it in Undeposited Funds.  When I make a Deposit of the 1A payment and whatever other payments I've received, I go to Bank Menu, Make a Deposit and select those payments I'm making a deposit with.  Different payments may be selected as they may go into different banks.  No Expenses are involved in these entries.

 

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

Hey Pete,

 
I feel we got off track a bit here.  I am not interested in the undeposited approach.  The timing of the payment occurs at the same time I see my expenses.  I am going to recap if it is ok, and hopefully someone can direct me on the process of entering:
 
- 50 different monthly invoices for rent on a recurring schedule are entered, totalling 50k.  Date of invoices are the 1st, showing unpaid (for this month).
- received 40k direct deposit from PM on the 15th
- also received detailed expenses of 10k from PM on the 15th.
 
Please let me know how to reconcile thst deposit with the outstanding invoices, while entering the expenses.
 
Thanks

 

Fred
Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

If I understand correctly, the PM collects all the rent money, pays whatever expenses they need to and then gives you the balance. 

 

I think you then need to set up a separate account.  I created a "Bank" account in QBs and called it : (PM Name) Trust.

 

In this account I track what the PM is doing.  So Rent received does not show as a deposit in my checking account (because wasn't) it is shown in this Trust account. 

 

Expenses are all shown also going through this account because, again, the checks that were written for the expenses came from the PM (on your behalf and with your money).

 

I have it set that the PM keeps a fixed amount of money each month to pay the expected expenses, taxes, etc.  So let's say it is $100.  At the end of the month, anything over $100 is deposited into my (real) checking account.  I then Reconcile the Trust account from their report, like any other bank account

  • Rent payments they received
  • Any other money in from returns or whatever reason
  • Expenses paid
  • Amount transferred my checking (let's say it was $40K from your example)

All should come to a balance of $100

 

 

Then in my checking account I show the $40K deposit plus any other deposits or checks I've written and everything should match the Bank Feed and Reconcile correctly.

 

Note:  If the account you're trying to match the Bank Feeds to is actually the same one your PM is writing checks on, then it sounds like there's a bigger issue.  Because regardless of the expenses, you should see ALL the rent money being deposited into the bank. 

 

I'm guessing your case is like the one above where they collect and they spend on their account.  But if not, go see your Accountant or go find one and have them do a full audit.

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices


@3waller wrote:

 

- I have a property manager who sends me income monthly, net of his fees and other expenses.

 

 


 

If the PM tracks income by apartment, and sends you a report every month, then why do you need to repeat the tracking by apartment in QBO?

Community Explorer **

Re: Recording income for Multi Family buildings - best practices

I don't need to, but I want to.  I always want to have my own accurate book of record.  Was doing it all in excel before, doing it all in QB now.

Established Community Backer ***

Re: Recording income for Multi Family buildings - best practices

@Malcolm Ziman point is a very valid one.  Though I do track the income to see if someone is habitually late or under.  And I do break out their rent and CAM payments.  (But it's also a retail building so fewer tenants.)

 

I do not keep track of individual repairs and expenses for each unit though - unless it something to depreciate or is not some other general Expense.  I will review all the repairs, etc., but if I ever need the details I can go back to the PDF of the report. 

 

For Expenses in QBs I just enter the monthly total for each section per the PM report.  I could even combine some of those categories, but I already have Memorized entries for each of their categories, so it's actually less key strokes since I'm not typing all the "+" to add the numbers.  <g>  Also it let's me run reports to match their totals when things don't add up.  A couple of times I've found where they've made an entry error.

 

I also do not worry about the exact date unless there's an issue - which I then go to the report and if necessary I'll enter the exact dates.  But for my purposes all Rent and CAM payments are made on the 10th.  If it comes in on the 5th or the 15th, I don't care.  Just that it was paid that month.

 

All expenses happen on the last day of the month.  Again, if I need to accurately enter something I have the report to make the change.  But January's expenses are January's expenses to me regardless of what day the PM put in the transaction.

 

So the only date that is exact in my QBs are the transfer from the PMs account to my account so that it matches the Bank Feed.  And any significant Income or Expense that needs to be tracked.  (Someone who is habitually late with their payment I would track so that if it became a legal issue the dates are in my records.)

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