QuickBooks has been around for nearly 40 years, and is a brand name that many people are familiar with. While the software is general purpose, it can be used for rental property management, although it will require customization. 

On the other hand, Stessa was launched a few years ago and is specifically designed for today’s rental property owner. 

Even though pricing is free, rental property accounting software from Stessa offers investors a wide range of features to make rental property finances simple while maximizing potential profits.

In this article, we’ll take a look at the differences between these two tools so you can make an informed decision on which to use for your portfolio.

How Stessa and QuickBooks work

Both Stessa and QuickBooks can be used by rental property owners to track income and expenses, assets and liabilities, depreciation, and owner’s equity. However, there are two major differences between Stessa and QuickBooks for investors to be aware of.

First, Stessa was designed by fellow real estate investors specifically for keeping track of rental property financial performance and creating a paper trail that comes with real estate investing. Simply enter a property address, connect business bank and mortgage accounts to automatically sync information, and run reports such as an income statement, rent roll, net cash flow, and real estate balance sheet.

On the other hand, QuickBooks is general purpose software designed for almost any type of business and individual use. While it’s possible to use their software for a real estate business, there are hoops to jump through to get QuickBooks work for rental property. The six-step process to set up a rental property in QuickBooks includes setting up accounts and items, creating tenants and vendors, and manually tracking income and expenses.

Another big difference between Stessa and QuickBooks is the cost. 

Stessa has a robust free option to use. After signing up, an investor can begin tracking rental property performance on the property and portfolio level from their owner dashboard, collect rent, screen tenants, and receive real-time insights to help maximize revenue and profits.

Members of the Stessa community also receive free access to the Stessa Tax Center. Perks include a customized tax package, a suite of tax resources, and a TurboTax discount exclusively for Stessa users. There are also a few optional, premium paid services Stessa offers, including rent analysis and market research.

QuickBooks offers subscription plans with pricing that varies significantly based on the features selected and whether a desktop or online version is used. 

Pricing for an online subscription to QuickBooks begins at $12.50 per month for the Simple Start plan with basic bookkeeping tools, and up to $90 per month for the Advanced plan that provides features such as business analytics and tracking project profitability.

QuickBooks desktop plans are 38% faster than using QuickBooks online, according to the company, but can also be pretty pricey. A subscription for Pro Plus 2022 begins at $349.99 per year and goes up to $1,147.50 per year for Enterprise 22.0 designed for multiple users. The company does offer discounts off the first year annual subscription.

Let’s take a look at more of the differences between Stessa and QuickBooks, including the pros and cons of each service, to help you decide which is the best accounting software for rental property. 

Stessa

Stessa is a free property financial management platform designed by landlords for landlords. The company was launched in 2016 to help both novice and sophisticated real estate investors make informed decisions about their property portfolio.

The software provides tools to make it easier to track real estate investments, maximize profits through smart money management, and manage day-to-day operations like collecting rent and screening potential tenants. Stessa can be accessed through the web and via Android and iOS smartphone mobile applications. 

Feature summary

Stessa allows an investor to create unlimited property portfolios. As a real estate business grows and more properties are added, portfolios can be created using criteria such as property type (single-family vs multifamily vs short-term rental), geographic location, or ownership structure for different LLCs.

One of the most unique features about Stessa is the way the real estate balance sheet works. Each time a mortgage payment is made the outstanding loan balance is automatically reduced. Property depreciation is automatically calculated each year, and the accumulated depreciation balance is adjusted. 

Stessa also periodically updates property value so that an investor has a more accurate idea of owner’s equity when property value and the loan balance change. Knowing estimated equity makes it easier to decide whether to refinance, sell, or keep holding on to a property.

Other key features of Stessa include:

• Automated accounting tools: Replace cumbersome spreadsheets and easily track income and expenses. Stessa automates the process of categorizing transactions, reducing time spent on manual data entry.

• Centralized dashboard with key metrics and complete chart history: Access a clear real-time overview of your property performance. The dashboard displays critical metrics and historical data in an intuitive, easy-to-understand format.

• Rental applications: Manage tenant applications efficiently and effectively by streamlining the process of publishing vacancies, and collecting and reviewing applications.

• Tenant screening: Use a proprietary approach with RentPrep for comprehensive tenant checks, including a full credit report, background check, and more. For additional screening, landlords can add income verification or judgment and liens, increasing the odds of selecting reliable tenants.

• Online rent collection: Automate your rent collection process, including payment reminders and late fees, reducing the likelihood of missed or late payments.

• Landlord banking: Open FDIC-insured bank accounts and enjoy a more efficient way to manage your property-related finances. You can also earn more than 10x the national average interest rate on every dollar of deposits.*

• Automated bank feeds: Connect unlimited bank accounts for real-time income and expense tracking so you can manage your cash flow effectively and stay on top of your financial situation.

• One-click smart receipt scanning: Quickly and accurately add expense receipts to your property records, reducing the risk of losing or misplacing vital receipts.

• Mobile app (iOS and Android): Utilize Stessa’s mobile app to help you manage your properties on the go. You can categorize transactions, check key metrics, scan receipts, and view your portfolio from almost anywhere, anytime. 

• Manual expense tracking: Enjoy precise record-keeping of all property-related expenses, from maintenance costs to insurance fees, for a comprehensive view of property expenditures.

• Mileage tracking: Track all travel related to your property management efforts for accurate expense reporting. This feature is particularly beneficial for tax purposes, as you can sometimes deduct these costs from taxable income.

• eSigning (in partnership with DocuSign): Simplify lease signing and other document execution with integrated eSignature capabilities. This feature makes it easier for landlords and tenants to sign important documents, reducing the need for in-person meetings.

Advantages

• Free for an unlimited number of rental properties and portfolios
• Performance dashboard at the property and portfolio level
• Track expenses on the go with the Stessa mobile app
• Run financial reports as often as needed
• Share data and collaborate with partners and family
• Organize and store real estate documents online
• Secured to protect data
• Access 24/7 from anywhere in the world with an internet connection
• Stessa Tax Center provides a personalized tax package, tax guide, tax resources, and a TurboTax discount

Disadvantages

• No portal or dashboard for tenants
• No option for tenant maintenance requests online
• Not the best option for non-real estate uses

QuickBooks

QuickBooks was launched in 1983 by the founders of Quicken and over the years has become a household name. Today QuickBooks is owned by Intuit, an American business that specializes in financial software. 

Millions of individuals and small and medium-sized businesses use QuickBooks to do accounting, accept payments, manage and pay invoices, and process payrolls. A landlord can also use QuickBooks for rental property, although the process is quite a bit more complicated than the plug and play simplicity of Stessa. 

Using QuickBooks for income and expenses

Although using QuickBooks may seem straightforward, it can be a bit of a challenge to set up the software for rental property. To use QuickBooks, a landlord has to:

• Understand how double-entry accounting works
• Set up each rental property as an individual class
• Set up tenants as customers
• Set up vendors by name to pay for utilities and services
• Create a real estate chart of accounts
• Track different types of rental income items as individual products
• Ensure each transaction is posted to the correct property and line item account

Tracking depreciation in QuickBooks

Depreciating assets with QuickBooks is equally as complex. As this post from QuickBooks Help admits, calculating asset depreciation is difficult. Unlike Stessa, QuickBooks doesn’t automatically depreciate assets. Instead, a landlord has to manually track depreciation using journal entries:

• Set up each property as an asset
• See if there is an existing depreciation account on the chart of accounts
• If not, create a depreciation account on the chart of accounts by:
  • Creating a new category
  • Selecting other expense from the account type dropdown menu
  • Selecting depreciation from the detail type dropdown menu
  • Giving the account a name such as property depreciation
• Record depreciation by:
  • Selecting a new journal entry
  • Selecting the asset account from the account dropdown menu
  • Entering the depreciation amount as a credit in the mortgage loan account
  • Entering the same depreciation amount as a debit in the depreciation account

Feature summary

The features included in QuickBooks vary based on the plan selected. 

QuickBooks Online has five different monthly plans: 

• Simple Start $12.50/mo
• Essentials $25/mo
• Plus $40/mo
• Advanced $90/month

QuickBooks Desktop comes in three different annual plans: 

• Pro Plus 2022 $349.99/yr
• Pro Plus 2022 + Payroll $649.99/yr
• Enterprise 22.0 $1,147.50/yr

Here’s a summary of the features included with QuickBooks Plus for $40 per month, the option that appears to come closest to the free features from Stessa:

• Track income and expenses
• Capture and organize receipts
• Maximize tax deductions
• Invoice and accept payments
• Track miles
• Manage cash flow
• Run comprehensive reports
• Send estimates
• Track sales and sales tax
• Manage 1099 contractors
• Includes 5 users
• Track time
• Track project profitability
• Track inventory

Advantages

• Different price plans based on an individual user’s needs
• Available in desktop version with an annual subscription and online with a monthly subscription plan
• Accept credit and debit card payments, and ACH bank transfers
• QuickBooks Online mobile app for Android and iOS
• Live Bookkeeping feature helps prepare for tax time for an additional fee

Disadvantages

• No free option
• User must have an understanding of how double-entry accounting works
• May require professional assistance to set up QuickBooks for rental property
• No portal or dashboard for tenants
• No option for tenant maintenance requests online

Stessa vs QuickBooks: How to choose?

Both Stessa and QuickBooks can be used by landlords and property managers to track rental income and expenses, assets and liabilities, and depreciation. 

Stessa was designed by real estate investors specifically for real estate investors, and not for general accounting use. Landlords looking for easy-to-use and understand rental property financial software may find Stessa the ideal option, since the software requires minimal set up and is absolutely free. 

On the other hand, landlords who have in-depth accounting knowledge and the time to learn how QuickBooks works may find the software a decent option to use for rental property. While QuickBooks isn’t free, there are a variety of price plans with different features available with either a monthly or annual subscription.  

To learn more about Stessa, visit the website here. 

*Stessa is not a bank. Stessa is a financial technology company. Terms and conditions, features, and pricing are subject to change. This article, and the Stessa Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, financial, legal, or real estate advice.