Real Estate Business

[yitzf]

Real estate accounting question:

Using rent manager.. doesn't have any obvious place to input property values, mortgage owed liability, depreciation etc (not much of an accounting software, more rent collection operations.. ).

Anyway, practically, if property purchase was 1mm, mortgage was 850k, and a whole slew of debits and credits on the HUD...

What are the JE?

debit asset 1m, credit mortgage p, 850, credit cash for down payment, .
- what's w the rest - appraisals, legal, broker etc? The cash deducted upfront.. how to book?

Just a couple of thoughts.
-You need to separate the land and building in order to depreciate properly.
-Some closing costs are related to the asset and some are related to the mortgage. The mortgage closing costs are capitalized and amortized over the life of the loan, and the building closing costs are capitalized together with the building (cost to place into service).
-Prepaid expenses and escrows are assets.
-Equity is the plug but should tie to the deposit and cash paid etc

[churnbabychurn]

Just a couple of thoughts.
-You need to separate the land and building in order to depreciate properly.
-Some closing costs are related to the asset and some are related to the mortgage. The mortgage closing costs are capitalized and amortized over the life of the loan, and the building closing costs are capitalized together with the building (cost to place into service).
-Prepaid expenses and escrows are assets.
-Equity is the plug but should tie to the deposit and cash paid etc

[churnbabychurn]

Don't know anything about rentmanager. But no RE software that I know of will calc your dep etc. you should've able to setup recurring JEs.

Quick Google search.. virtually all of these do this http://www.capterra.com/fixed-asset-management-software/

I understand that these are not necessarily tenant / rent collecting software, but I would be supprised if the bigger ones like Yardi don't support depreciation. (Tax/book) etc.


Eta, they definitely have an add on for it

[ADG]

Can anyone recommend neighborhoods where there is a strong rental market with home valued between 100k-300k hundred? 

[thaber]

Quick Google search.. virtually all of these do this http://www.capterra.com/fixed-asset-management-software/

I understand that these are not necessarily tenant / rent collecting software, but I would be supprised if the bigger ones like Yardi don't support depreciation. (Tax/book) etc.


Eta, they definitely have an add on for it

H1 property management software should not be used as accounting software. Even Yardi will tell you that. Everyone does anyway, to some degree, but it's not what it was built for.
The Add ons and so forth are compensatory but not lechatchila

[Ephraimh]

Can anyone recommend neighborhoods where there is a strong rental market with home valued between 100k-300k hundred?

Jersey City / Newark

[jackofall]

H1 property management software should not be used as accounting software.

What does H1 mean?
Are you suggesting that property management companies have a standalone accounting software, i.e. QBs?

[churnbabychurn]

H1 property management software should not be used as accounting software. Even Yardi will tell you that. Everyone does anyway, to some degree, but it's not what it was built for.
The Add ons and so forth are compensatory but not lechatchila

So why they all have financials and general ledger?

[thaber]

What does H1 mean?
Are you suggesting that property management companies have a standalone accounting software, i.e. QBs?

Meant +1.
Appfolio and Yardi both recommend using QB in conjunction with their system

So why they all have financials and general ledger?

For the property. All the accounting for the property is done in the software, but not the overhead, or the tax /depreciation /basis etc.

[jackofall]

Meant +1.
Appfolio and Yardi both recommend using QB in conjunction with their system For the property. All the accounting for the property is done in the software, but not the overhead, or the tax /depreciation /basis etc.

Yardi never mentioned it to me. To the contrary, they tout their accounting module as being best in class.
Never heard of a Property management company that has a standalone accounting software.

[Zalc]

Yardi never mentioned it to me. To the contrary, they tout their accounting module as being best in class.
Never heard of a Property management company that has a standalone accounting software.

Exactly. Having to manage dozens of QuickBooks files in addition the the management software is crazy.
Surprising that they recommend it. People with many LLCs use it with QB?

[thaber]

Yardi never mentioned it to me. To the contrary, they tout their accounting module as being best in class.
Never heard of a Property management company that has a standalone accounting software.

Exactly. Having to manage dozens of QuickBooks files in addition the the management software is crazy.
Surprising that they recommend it. People with many LLCs use it with QB?

I guess I'm not being clear. How do you set up the actual operating expenses of the company? Not the properties. Yardi when I used it wasn't equipped for that. Current software also isn't. We would set it up as a building, and it was fine, but not technically correct.
With regards to the accounting stuff, it's always been done by an accountant, so there was never a need to look into it, and my understanding is that it wouldn't be considered part of a property management suite.
But I only meant one QB file for the office. Not one for each llc or building


ETA: I just reread CBC's original post - I totally had misunderstood. Why not add GL Line items for what you need? it doesn't let you do that? AFAIK all prop mgmt software has that as a basic. And you should be able to upload bulk JE as  a csv file if needed. Sorry for adding to the confusion I read too fast.

[churnbabychurn]

I guess I'm not being clear. How do you set up the actual operating expenses of the company? Not the properties. Yardi when I used it wasn't equipped for that. Current software also isn't. We would set it up as a building, and it was fine, but not technically correct.
With regards to the accounting stuff, it's always been done by an accountant, so there was never a need to look into it, and my understanding is that it wouldn't be considered part of a property management suite.
But I only meant one QB file for the office. Not one for each llc or building


ETA: I just reread CBC's original post - I totally had misunderstood. Why not add GL Line items for what you need? it doesn't let you do that? AFAIK all prop mgmt software has that as a basic. And you should be able to upload bulk JE as  a csv file if needed. Sorry for adding to the confusion I read too fast.

Yes, of course the management company needs an accounting system. QB etc.

I was looking for a system that calculates depreciation automatically etc.

[mendy from lakewood]

Yes, of course the management company needs an accounting system. QB etc.

I was looking for a system that calculates depreciation automatically etc.

if you find one please also let me know I am also looking for it

[thaber]

Yes, of course the management company needs an accounting system. QB etc.

I was looking for a system that calculates depreciation automatically etc.

You would know this much better than me, but wouldn't you, as an accountant, play with all those numbers on the return anyway for optimization purposes? and then keep track of that for the next years return? if so, then the numbers in the PM software wouldn't be anywhere near the numbers on the return (which are the ones that matter) and would just confuse things.

[churnbabychurn]

You would know this much better than me, but wouldn't you, as an accountant, play with all those numbers on the return anyway for optimization purposes? and then keep track of that for the next years return? if so, then the numbers in the PM software wouldn't be anywhere near the numbers on the return (which are the ones that matter) and would just confuse things.

Yeah, I guess tax would typically be tracked separately in a tax software.. I don't do much tax bh..

[jackofall]

Yeah, I guess tax would typically be tracked separately in a tax software.. I don't do much tax bh..

For purposes other than tax why would you care to track depreciation?

[churnbabychurn]

For purposes other than tax why would you care to track depreciation?

GAAP? How else do you produce normal financial statements?

How can you get an audit report on financials that don't track and report depreciation?

[jackofall]

GAAP? How else do you produce normal financial statements?

How can you get an audit report on financials that don't track and report depreciation?

Sounds fun. Good luck.
How many different depreciation buckets are there?

[thaber]

Sounds fun. Good luck.
How many different depreciation buckets are there?

http://shavell.com/wp-content/uploads/2017/01/Article-Buckets-of-Depn-JF17_65.pdf