question about property management and posting in expenses?


C

Craig Bartels

All,

I am struggling with something, that I am sure is very simple, here is
the scenerio:

I have an individual that I manage properties for. We collect rent,
then reimburse him for his rent minus our management fee.

I receive money as income with a class structured under his name with
a sub class for each property address.

I then send him his rent money minus the management fee. How can I
show this expense in a class so I can track exactly what his expenses
are? What I had been doing was just putting in what we send him back
minus management fee as one entry....so income/expense shows up right
on our end, but I have no way of tracking the $100 in a class? Am I
making sense?

Thanks!

Craig Bartels
 
A

Allan Martin

Craig Bartels said:
All,

I am struggling with something, that I am sure is very simple, here is
the scenerio:
Your assumption is incorrect . This is not a normal run of the mill
situation. Are you recording these transactions in your own company books or
a dummy set up books just for this purpose?
 
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S

Scott

Craig Bartels said:
All,

I am struggling with something, that I am sure is very simple, here is
the scenerio:

I have an individual that I manage properties for. We collect rent,
then reimburse him for his rent minus our management fee.

I receive money as income with a class structured under his name with
a sub class for each property address.

I then send him his rent money minus the management fee. How can I
show this expense in a class so I can track exactly what his expenses
are? What I had been doing was just putting in what we send him back
minus management fee as one entry....so income/expense shows up right
on our end, but I have no way of tracking the $100 in a class? Am I
making sense?

Thanks!

Craig Bartels
Sounds like you're trying to keep 2 sets of records in one QB data file:
yours and his. From your standpoint, the rent collected is NOT income, it's
a liability (you owe it to the owner) - we use Collected Rents Payable with
sub accounts for each owner & property. When payment to the property owner
is made, the check is split with the full amount of the rent coming out of
the CRP account, and a negative amount (indicating a credit) representing
the fee posted to Management Fee Income.

On the property owners books, they would only record the receipt of the
check in a deposit by posting the full rent amount to Rental Income and a
negative amount (indicating a debit) representing the fee posted to
Management Fee Expense.

Not sure if you can combine these two into one data file or not, but I
suspect it would get kinda messy.

Scott out.
 
S

scfundogs

Scott said:
Sounds like you're trying to keep 2 sets of records in one QB data file:
yours and his. From your standpoint, the rent collected is NOT income,
it's a liability (you owe it to the owner) - we use Collected Rents
Payable with sub accounts for each owner & property. When payment to the
property owner is made, the check is split with the full amount of the
rent coming out of the CRP account, and a negative amount (indicating a
credit) representing the fee posted to Management Fee Income.

On the property owners books, they would only record the receipt of the
check in a deposit by posting the full rent amount to Rental Income and a
negative amount (indicating a debit) representing the fee posted to
Management Fee Expense.

Not sure if you can combine these two into one data file or not, but I
suspect it would get kinda messy.

Scott out.
I do books for a property management company and it took alot of back &
forth, thinking & rethinking to make it work in QB because QB just isn't
designed for it.

Our procedure requires the use of a separate Excel spreadsheet. Properties
are setup as customers with tenants as jobs. Property owners are setup as
vendors.

Rents collected post to income and all property costs, including payments to
owners, posted as COGS.

A check is written once per month to the owner for the amount due, taken
from the Excel spreadsheet detailing rent paid less property expenses less
management fee.

Its not perfect, its not the only way to do it, it can be argued that the
monies collected aren't income but liabilities but it boils down to the
accountant's preferences and the way the business operates. In my example
the COGS are always going to be almost as much as the income so the
difference is the management fee.
 
P

Peter Saxton

All,

I am struggling with something, that I am sure is very simple, here is
the scenerio:

I have an individual that I manage properties for. We collect rent,
then reimburse him for his rent minus our management fee.

I receive money as income with a class structured under his name with
a sub class for each property address.

I then send him his rent money minus the management fee. How can I
show this expense in a class so I can track exactly what his expenses
are? What I had been doing was just putting in what we send him back
minus management fee as one entry....so income/expense shows up right
on our end, but I have no way of tracking the $100 in a class? Am I
making sense?

Thanks!

Craig Bartels
Is the $100 the management fee?

You should use classes only for each property. Any transaction posted
to a client account should be given a class. You need a current
liability account (not accounts receivable) for the client. The charge
to the client will show up in the client account. This would mean you
should prepare invoices outside of QuickBooks and post the invoices as
Dr Current Liability - Client and Cr Management Fees Revenue.

You can run a report for each client account and sort them by class.
 
C

Craig Bartels

Your assumption is incorrect . This is not a normal run of the mill
situation. Are you recording these transactions in your own company books or
a dummy set up books just for this purpose?

No, I am recording these on our books, not a dummy book.
 
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C

Craig Bartels

Sounds like you're trying to keep 2 sets of records in one QB data file:
yours and his. From your standpoint, the rent collected is NOT income, it's
a liability (you owe it to the owner) - we use Collected Rents Payable with
sub accounts for each owner & property. When payment to the property owner
is made, the check is split with the full amount of the rent coming out of
the CRP account, and a negative amount (indicating a credit) representing
the fee posted to Management Fee Income.

On the property owners books, they would only record the receipt of the
check in a deposit by posting the full rent amount to Rental Income and a
negative amount (indicating a debit) representing the fee posted to
Management Fee Expense.

Not sure if you can combine these two into one data file or not, but I
suspect it would get kinda messy.

Scott out.


Scott,

I have read and re-read what you write, I think what you bring up
makes sense. I willl play with this and post my results later.

Craig
 
C

Craig Bartels

Is the $100 the management fee?

You should use classes only for each property. Any transaction posted
to a client account should be given a class. You need a current
liability account (not accounts receivable) for the client. The charge
to the client will show up in the client account. This would mean you
should prepare invoices outside of QuickBooks and post the invoices as
Dr Current Liability - Client and Cr Management Fees Revenue.

You can run a report for each client account and sort them by class.


I think this is all starting to make sense. Let me play with this and
will get back with all on my results.

Thank you very much!

Yes, the $100 fee is the management fee.
 
C

Craig Bartels

Sounds like you're trying to keep 2 sets of records in one QB data file:
yours and his. From your standpoint, the rent collected is NOT income, it's
a liability (you owe it to the owner) - we use Collected Rents Payable with
sub accounts for each owner & property. When payment to the property owner
is made, the check is split with the full amount of the rent coming out of
the CRP account, and a negative amount (indicating a credit) representing
the fee posted to Management Fee Income.

On the property owners books, they would only record the receipt of the
check in a deposit by posting the full rent amount to Rental Income and a
negative amount (indicating a debit) representing the fee posted to
Management Fee Expense.

Not sure if you can combine these two into one data file or not, but I
suspect it would get kinda messy.

Scott out.

Scott,

Okay, this is making sense.

A few questions:

You mention you make a payment to property owner as a split.

Do you just put these through as general journal entries?

For example, I have a short term liability account for the property.
I receive the $1,000 rent, I post this as a $1,000 liability to this
account and post cash to checking.

I then sent owner the rent he is due minus my management fee.

I post 1000 as credit to checking, then debit to short term liability
account for property $900 and post $100 debit to my management fee
income?

Is this correct?

Thanks!

Craig
 
S

Scott

Craig Bartels said:
Scott,

Okay, this is making sense.

A few questions:

You mention you make a payment to property owner as a split.

Do you just put these through as general journal entries?

For example, I have a short term liability account for the property.
I receive the $1,000 rent, I post this as a $1,000 liability to this
account and post cash to checking.
OK so far - you can do this through the Make Deposit or Receive Payment if
you're invoicing the tenants.
I then sent owner the rent he is due minus my management fee.

I post 1000 as credit to checking, then debit to short term liability
account for property $900 and post $100 debit to my management fee
income?

Is this correct?

Thanks!

Craig
Craig,
No need to do this as a journal entry - this can be entered through Write
Check or directly on the check register via the Splits button. Enter the
check amount as the rent less management fee. In the lower part of the check
screen or on the Splits screen enter the amount posted to the short term
liability as $1000 (this will zero out the liability for this cycle) - this
should result in a -100 on the next line which should be posted to
Management Fee Income. This results in correct reporting for YOUR company
(the management company) but does NOT reflect activity correctly for the
property owner.

We use a separate QB file to track the property owners income & expenses,
keeping owners & properties separated by using classes & subclasses. The
check cut from the management company is entered as a deposit (or received
payment if invoicing is used) with a positive $1000 posted to Rental Income
and a negative $100 posted to Management Fee Expense. Also posted as
negatives are any other expenses deducted from the rent check (repairs etc)
paid by the management company. The deposit should then equal the check
amount and all income & expenses are recorded correctly, so a report can be
generated any time. I'm assuming you don't actually have access to the
customer's checking account, so a "dummy" cash account can be used titled
something like Cash To Property Owners, which can be used for all clients
since you're not reconciling it.

I know there's duplicate data entry this way, but we could see no easy way
to keep the books separated using one QB file, the problem being what's
income to you is an expense to the owner (management fees), what's income to
the owner (rent) is a liability to you, etc.

Scott out.
 
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C

Craig Bartels

OK so far - you can do this through the Make Deposit or Receive Payment if
you're invoicing the tenants.


Craig,
No need to do this as a journal entry - this can be entered through Write
Check or directly on the check register via the Splits button. Enter the
check amount as the rent less management fee. In the lower part of the check
screen or on the Splits screen enter the amount posted to the short term
liability as $1000 (this will zero out the liability for this cycle) - this
should result in a -100 on the next line which should be posted to
Management Fee Income. This results in correct reporting for YOUR company
(the management company) but does NOT reflect activity correctly for the
property owner.

We use a separate QB file to track the property owners income & expenses,
keeping owners & properties separated by using classes & subclasses. The
check cut from the management company is entered as a deposit (or received
payment if invoicing is used) with a positive $1000 posted to Rental Income
and a negative $100 posted to Management Fee Expense. Also posted as
negatives are any other expenses deducted from the rent check (repairs etc)
paid by the management company. The deposit should then equal the check
amount and all income & expenses are recorded correctly, so a report can be
generated any time. I'm assuming you don't actually have access to the
customer's checking account, so a "dummy" cash account can be used titled
something like Cash To Property Owners, which can be used for all clients
since you're not reconciling it.

I know there's duplicate data entry this way, but we could see no easy way
to keep the books separated using one QB file, the problem being what's
income to you is an expense to the owner (management fees), what's income to
the owner (rent) is a liability to you, etc.

Scott out.

Scott,

Thanks again, I think this makes perfect sense. I'll let you know how
it goes.

Craig
 

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