Landlords using QuickBooks(R) to manage their rental property accounting sometimes find that it’s not the ideal option for their business.
What if there was a tool that handles your financial tracking and understands the ins and outs of rental property ownership? A platform that speaks your language and offers features designed specifically for landlords and real estate investors?
In this article, we’ll explore five popular solutions that may be a better fit to handle the accounting needs of your rental business:
- Stessa
- Baselane
- Digb
- Rent Manager
- Rental Hero
We’ll dive into their key features, benefits, and why they’re gaining popularity among landlords.
How QuickBooks falls short for rental property owners
It’s no secret that QuickBooks is a trusted tool among business owners. However, it isn’t necessarily the best fit for managing rental properties. Why? Simply put, the platform isn’t necesarily built for real estate.
QuickBooks can handle standard accounting functions, but some landlords find it falls short in addressing the unique complexities of rental property management.
For instance, QuickBooks’ standard set up requires each rental property to be treated as an individual business, a separate “class,” or a unique company file. This could significantly complicate the accounting process, especially for landlords managing multiple properties.
In addition, ensuring accurate financial statements in QuickBooks demands painstaking attention to detail. Landlords need to understand double-entry bookkeeping in order to credit and debit income and expenses to the correct property and account – a task that can be both time-consuming and prone to human error.
The setup process in QuickBooks can also be complicated. You need to create a company file, set up business banking accounts, input tenants (known as customers in QuickBooks), and then also add each rental property. Furthermore, landlords need to establish their chart of accounts using the IRS Form 1040 Schedule E as a reference, which might not be straightforward for those unfamiliar with tax forms.
Tracking rental income and expenses is another area where QuickBooks might fall short. Each transaction, such as rent payments, late fees, and expense invoices, must be accurately recorded and assigned to the right property. This also extends to recording security deposits as short-term liabilities on the balance sheet.
Finally, even seemingly simple tasks, like recording rent payments from tenants, can be complex. To maintain an accurate accounts receivable (A/R) in Quickbooks, you have to create recurring invoices, receive payments, and then credit these to the correct property and bank account. All of these extra steps can quickly lead to potential mistakes and accounting errors, making QuickBooks less than ideal for rental property management.
Due to the complexity of QuickBooks, accurately reporting your rental property income and expense deductions can be challenging. The way Quickbooks generates specific reports for rental properties, like a P&L, overall portfolio performance report, or a tenant ledger, can seem a bit clunky as these same reports were also designed to handle regular operating business that don’t necessarily own real estate.
As you might have guessed by now, Quickbooks also lacks specialized non-accounting features that cater specifically to the needs of landlords, such as rental applications, tenant screening, rent collection, and landlord banking.
5 alternatives to QuickBooks to manage rental property accounting
Stessa
Stessa is smart accounting software built solely for residential rental property accounting and asset management needs. Its array of tools is suitable for any landlord, whether you have a single property or a growing portfolio of multiple residential investment properties.
Tailored to landlords and real estate investors, Stessa’s features range from accounting and banking to tenant screening, legal forms, and rent collection. Its intuitive design lets users generate essential financial reports effortlessly, offering valuable insights into portfolio performance at any moment.
Stessa saves you time and effort while helping you maximize investment performance.
Key features and capabilities
- Landlord-specific accounting: Stessa offers accounting software designed for real estate investment needs, with categories that align to Schedule E and automatic income and expense tracking.
- Real-time portfolio insights: You can track your assets and gain insight into your portfolio’s performance anytime from virtually anywhere.
- Automated bank feeds: Connect with your bank and have transactions automatically imported and categorized.
- Landlord banking: Sign up for an FDIC-insured checking account with competitive APY rates and no hidden fees.
- Tenant screening: Generate applications, track their status, and screen tenants with credit reports and background checks.
- Online rent collection: Automate rent reminders, receive updates on rent payments, and eliminate the need for third-party apps.
- Tenant autopay: Set up convenient automatic payments for your tenants.
- Accelerated rent payments: Speed up the rent payment process and avoid delays with the paid Stessa Pro plan.
- Landlord legal forms: Get access to 50+ legal templates. Edit as needed and send them out to tenants for signatures via DocuSign.
- Flexible pricing plans: You can choose the free Essentials plan or upgrade to the paid Stessa Pro plan, with advanced tools for managing and optimizing portfolios.
- Advanced reporting and tax features: Export your data, generate basic and advanced reports, and easily share key tax info with your CPA.
- Stessa Tax Center: Access resources created in partnership with The Real Estate CPA, providing tax preparation best practices and tax deduction strategies.
- Insurance services: Through Stessa’s partnership with Steadily, users can get competitive insurance quotes and select policies without leaving the platform.
- Unlimited document storage: Keep all your vital documents in one place and organize them efficiently for easy retrieval.
- Mobile app: Store all your receipts in the cloud with smart scanning technology for receipt and invoice processing. The app also categorizes transactions into tax-ready Schedule E categories.
- Property management integration: Link your property management software portal and bring all your data together in one place.
Why use Stessa?
Stessa is a robust, user-friendly platform that offers round-the-clock insights into your portfolio’s performance. With just a few clicks, you can generate critical reports like income statements and cash flow reports, saving precious time and eliminating piles of paperwork.
On top of that, Stessa integrates seamlessly with services that landlords often rely on. From accounting software to tenant screening services, Stessa lets you manage all aspects of your landlord responsibilities from one central location.
In contrast to QuickBooks, Stessa offers tailored features like rent collection automation, insurance quotes, and a dedicated tax center. These tools simplify the complexities of rental property financial management, making Stessa a comprehensive solution for landlords.
Pricing
Stessa has two pricing tiers:
- The Essentials plan is free and includes tenant screening and online rent collection, bookkeeping and accounting, basic tax reporting, and landlord banking.
- The Pro plan is $20/month (with a 20% discount for annual billing). In addition to the free features, you can access advanced tools to manage and optimize unlimited portfolios, such as budgeting and Pro-forma analysis, advanced tax reporting with balance sheet reporting and Schedule E, eSignatures, a higher APY on bank account balances, and over 50 landlord forms and templates.
Baselane
Baselane is free financial software for landlords. Its banking and accounting features allow rental property owners to automate and streamline rent collection, bookkeeping, and banking tasks.
Key features and capabilities
- Automated rent collection, reminders, and late fees
- Accounting software with automatic income and expense tracking
- Landlord banking with option for multiple accounts for each property, no account fees or minimum balances
- Real-time reporting, including income and expenses, cash flow, and Schedule E tax reports
Why use Baselane?
The rent collection tool and free virtual banking feature enable landlords to open multiple accounts for each property. In addition, it offers dedicated accounts for saving and tracking security deposits.
Pricing
The software is free for landlords and includes banking, rent collection, and bookkeeping features.
However, Baselane does charge tenants a merchant fee when paying rent with a debit or credit card. The company keeps part of that fee and part of the interest earned from funds held in a landlord’s Baselane Banking account, sharing the remaining amounts with the landlord.
Digb
Digb is tax optimization software for real estate investors. The platform is built solely for tax planning, identifying tax-saving opportunities, and filing taxes.
Key features and capabilities
- Automatic tracking and categorizing of past expenses to identify possible tax write-offs
- Data compilation from every financial account for tracking real-time portfolio performance
- Extensive financial reporting to improve tax planning, including income and cash flow statements
- Downloadable tax reports, Schedule E, and Form 1065 for seamless filing
Why use Digb?
While QuickBooks has tax preparation tools, it doesn’t help landlords identify ways to save on taxes based on previous transactions. With Digb, landlords can use this feature to identify rental business-based write-offs to save money without necessarily paying an accountant.
Pricing
Digb has two tax filing packages. Personal taxes are a $750 one-time fee for the tax year, while tax filing for an LLC is $1,000 per tax year.*
There are also three packages for tracking income and expenses year-round based on the number of investment properties, transactions, and desired features. The Starter plan is $1/month (with a 7-day free trial and a 1 property maximum), the Self-Service plan is $19/month, and the Advisor plan is $39/month.*
Rent Manager
Rent ManagerⓇ is a property management platform for investors with residential, commercial, short-term, and various other types of properties. Besides property management features, it offers accounting capabilities for managing real estate portfolios of any size.
Key features and capabilities
- Automated accounts payable and receivable tools to ease the management of tenants and vendors
- Financial management and reporting tools, including budgeting, financial reports, and tracking with their Loan Manager feature
- Marketing and leasing tools, including advertising and tenant screening, plus property management features like maintenance task tracking and inspection templates
- Extensive tax reporting tools with tax filing schedules
Why use Rent Manager?
The software offers a payment feature with several tools to make collecting rent and paying vendors more efficient. For instance, it has check scanners, which automatically deposit the funds after scanning. Its eChecks tool offers secure online payment of bills and other expenses.
Pricing
Rent Manager has three pricing plans: Basic, Plus, and Premium, priced per unit per month at $1, $1.50, or $2.25, respectively. There is also a one-time implementation fee, starting at a minimum of $200, depending on the plan. Each plan does also require a monthly minimum ($250/month for Basic, $300/month for Plus, and $450/month for Premium).*
Rental Hero
Rental Hero is another rental property accounting platform for investors with single-family homes, multi-family rentals, short-term rentals, and storage units.
Key features and capabilities
- Integrates with over 15,000 banks and credit card providers for daily auto-categorization of transactions
- Detailed financial reporting with the ability to generate reports for each property or unit separately
- Captures and automatically stores and links receipts to respective expenses
- Generates thorough tax reports ready for filing
Why use Rental Hero?
Landlords can customize many details of their rental property set up, including due dates for rent payments and lease end dates for each tenant. In addition, it integrates with a wide array of financial service providers, simplifying the transaction tracking process.
Pricing
Rental Hero offers a single-price structure with a 30-day free trial period. For $10.75/month (billed annually at $129),* you can manage the accounting for unlimited properties, units, and tenants.
Choosing a tailored solution
Generic business accounting tools like QuickBooks don’t typically meet rental management’s unique needs, which require a more specialized approach.
Stessa is a platform designed specifically for landlords and real estate investors, making it a standout choice. With a comprehensive suite of features, it can provide a more efficient way of running your rental property business.
Ready to give it a try?
The best way to know if a tool is right for you is to experience it firsthand. Sign up for a free account with Stessa and discover how it can simplify your rental property operations.
* All prices included do not include applicable taxes and fees.
