Real estate investors and bookkeeping: A messy relationship?

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By Janet Berry-Johnson | writer

Let’s be honest—most real estate investors would rather talk about their latest deal than balance their books. But as their advisor, you know skipping out on solid accounting is a fast track to missed deductions and financial headaches.

Adam Hamilton, co-founder of REI Hub, an accounting software platform tailored for tracking and managing real estate investment properties, has seen it all. REI Hub is on a mission to make rental property accounting less painful. Hamilton sat down with The Net Gains to share his take on how accountants can help their real estate investor clients get their books in order and stop leaving money on the table. –Janet Berry-Johnson

Many real estate investors struggle with bookkeeping because they don’t come from a financial background. What are the biggest accounting mistakes you see investors make, and how can they avoid them?

One of the biggest accounting mistakes I see real estate investors make is simply not taking advantage of all their possible deductions. When it comes to real estate investing, deductions are absolutely everything. People often fall short of deducting everything they can for one of two reasons: they don’t know what they can deduct, or they don’t keep good enough track of all their expenses. 

What should investors look for in rental property accounting software, and how can technology make bookkeeping easier for landlords?

Generally, it’s better to choose an accounting software platform that might offer a little more than you think you want because you may discover that you actually do want more features. Another thing to consider is how many properties you have—some software providers are better when you just have one or two, while others are better equipped for many properties.

For investors who have been managing their rental property finances manually, what are the first steps they should take to transition to a more streamlined accounting system?

The first step they should take is getting all their records properly organized and stored. If they have primarily physical records, for example, they may want to scan all of that and create digital files. Also, it’s a good idea to get in contact with a representative of the software company you are transitioning to. Ask them any questions you have or for advice about how to make the transition as streamlined and efficient as possible.

This interview has been edited for brevity and clarity.

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