In REI Hub, the Portfolio is the top level of the reporting structure. Properties live underneath the portfolio, and Units live underneath properties (if applicable). Optionally, you can also enable a Sub-portfolio level of reporting for groups of properties that live between the portfolio and the property.

Generally speaking, a portfolio corresponds to a legal entity. Most separate businesses (separate legal entities) need fully separate books and, thus, their own portfolio. This is especially the case when multiple beneficial partners/ owners are involved, as in a partnership or multi-member LLC.

If your legal entity is required to file its own tax return, you should keep it in its own REI Hub portfolio.

The main exception is if all your properties are in your name or held in single-member LLCs for asset protection. In this case, there are no other beneficial owners or legal entities with individual filing requirements, so everything is a pass-through that flows through to your personal tax return (on the IRS 1040 Schedule E). With only one tax return involved, you’re generally in the clear to keep all your properties in just one portfolio.

This is also an excellent application for sub-portfolios — you could create one sub-portfolio for each of the LLCs to view aggregate reports easily.

Your portfolio (or sub-portfolio!) is also relevant to your day-to-day bookkeeping. Overhead or any transaction for your rentals that is not directly attributable to an individual property can instead be booked at the portfolio level of your account. View these transactions on the Net Income by property report in the ‘None Assigned’ column.

Each portfolio carries its own subscription. You can add and manage multiple portfolios from one set of REI Hub log-in information. Access for additional users is also segmented at the portfolio level.

Using Inter-Entity Transfers and Sub-Portfolios in REI Hub

How can I keep my reporting clean and organized using inter-entity transfers and sub-portfolios in REI Hub?

Effective bookkeeping and clean reporting are crucial for any property management or investment portfolio. In REI Hub, there are several features and strategies to help you maintain accurate and organized records. Below is a detailed guide:

Recording Frequent Transfers Between Entities or Sub-Portfolios

For users who manage multiple entities or sub-portfolios within REI Hub, frequent monetary transfers between these entities may occur. To ensure your reporting remains clean and accurate:

Create a Dedicated Equity Account: Set up an equity account, such as "Intercompany Transfers," to track these movements.
Record as Contributions/Distributions: Log these movements as Owner Contributions or Distributions, using the dedicated equity account instead of general "Owner Funds."
Apply the Correct Scope: Assign the appropriate scope to each side of the transaction. This ensures that each part of the transfer is reported correctly, maintaining precision in sub-portfolio reporting.

This approach minimizes errors and keeps inter-entity transactions transparent and easy to track while maintaining detailed records for auditing or analysis needs.

Understanding and Using Sub-Portfolios

REI Hub provides an optional layer of reporting called sub-portfolios. Here’s what you need to know:

Definition: Sub-portfolios act as an intermediary grouping between individual properties and your overall portfolio. You can group properties, such as all properties under a specific entity or LLC, into a single sub-portfolio.
Purpose: They allow expenses to be applied at the sub-portfolio level and prorated across the included properties within. This flexibility is especially useful for entity- or group-specific spending.
Optional Use: Sub-portfolios are not mandatory. If you prefer, you can still individually split expenses between properties or even apply expenses across the entire portfolio without using this feature.

Sub-portfolios offer a versatile way to organize and analyze your financial data, improving clarity and tailored reporting for different entities or property groups.

Best Practices for Clean and Accurate Bookkeeping

To optimize the features offered by REI Hub for clean records:

Always assign the correct scopes and categories when recording transfers or applying expenses.
Utilize equity accounts and sub-portfolios to maintain modular, grouped financial records.
Regularly review your reports to ensure that transactions are scoped and allocated correctly.

By leveraging these tools, you can ensure that your bookkeeping is not only accurate but also reflects the organizational structure of your investments and entities.

Managing Portfolios and Legal Entities