Using REI Hub as a Property Manager

Are you using REI Hub to keep your books as a third-party property manager but need help figuring out how to get started? You're in the right place! With just a few steps, you can use REI Hub to create a P&L statement for your property management business and the properties and owners you manage.

First, a small disclaimer: REI Hub is an accounting software that does not provide a complete suite of professional property management tools. For example, at this time, REI Hub does not do the following:

We do not automatically calculate or apply the amount of management fees or owner payouts.
We do not move money directly — you can't send an owner payout or pay bills through the system.
We do not automatically send owner reports or provide an owner portal.

This article assumes you have entered properties and bank accounts into your REI Hub portfolio. Please have a look at our Overview and Getting Started Guide for more initial setup and general context guidance.

Let's now look at how you can differentiate between your property management business and your customer's rental businesses, how to appropriately update your chart of accounts, and discuss transaction entry and reporting.

SET UP A SUB-PORTFOLIO PER OWNER

A sub-portfolio is an additional reporting layer used for groups of properties or legal entities. Setting up sub-portfolios allows you to delineate the separation between the different businesses in your Portfolio and pull reports for them.

You will create a sub-portfolio for your property management business and one for each owner, then place properties into the appropriate owner's sub-portfolio. Your property management company sub-portfolio will not have any properties tagged into it.

To add and set up sub-portfolios:

Open the right-side menu and select Portfolio Settings. Find the 'Enable Sub-Portfolios' option and toggle to Yes. Click Update Settings.
Navigate to the Sub-Portfolios page on the left menu. Click on Portfolio on the left menu and Sub-Portfolios when the options expand.
Click Add Sub-Portfolio in the upper right corner. Add a Sub-Portfolio for each property owner and assign the properties as appropriate.
1. Add a Sub-Portfolio for the property management company itself.

UPDATE THE CHART OF ACCOUNTS

The REI Hub default chart of accounts can be added to as needed. In a property management environment, you should add an equity sub-account for each owner/sub-portfolio so that we can clearly differentiate contributions and distributions by owner. You'll also want to include an equity account for the property management business itself. There should be a unique equity account for each sub-portfolio. Set these up as sub-accounts of the default' Owner Funds' equity account.

Also, you should add any additional revenue or expense accounts that you may want at this time. At a minimum, you'll need a new, top-level (not sub-account) revenue account for the property management company's revenue. There is already a default expense account titled 'Management Fees,' so you can create your new account as 'Management Revenue' or something similar.

You may also add additional expense accounts, either for increased reporting detail to your owners or for your property management company's expenses. The default expense accounts in REI Hub exactly match the IRS Schedule E.

Access and update the chart of accounts from the same right-side menu as above by selecting the Chart of Accounts page and clicking +Add Account in the upper right corner.

KEEP THE BOOKS

OK—you have completed the initial configurations and can keep the books! The specifics may vary somewhat depending on your specific financial structure and setup, but here are the general guidelines:

PROPERTY RENTS AND EXPENSES

Book rents received and expenses incurred on behalf of the property owner to the appropriate property. Ensure the Transaction Scope field is set to 'Property/Unit' and select the property associated with the transaction. This will be the majority of transactions (rents, expenses, etc.) and will populate the Net Income and Owner Statement reports.

If the transaction should be on the property's profit and loss statement, it must be booked to the property in REI Hub. While you are facilitating these income and expense transactions, they 'belong' to the property/owner, not to your property management company.

Please have a look below for more discussion on property management fees.

DISTRIBUTIONS

Book distributions to your owners using the 'Owner Distribution' transaction type, selecting the appropriate owner equity account you created above. If you send individual distributions for each property, set the Transaction Scope to 'Property/Unit.'

If you send a single aggregated distribution per owner, set the Transaction Scope to 'Sub-portfolio' and select the appropriate owner's sub-portfolio. As above, select the appropriate owner equity account as the 'Distributed To' account.

MANAGEMENT COMPANY REVENUES AND EXPENSES

Book transactions for your property management company by setting the Transaction Scope to 'Sub-portfolio' and selecting the appropriate sub-portfolio. If desired, this allows you to populate a Net Income/ P&L for your property management business.

Property management company revenues are typically the management fees you charge property owners (see more below). Property management company expenses are the costs you incur in operating your property management business, such as office supplies or advertising.

MANAGEMENT FEES

Property management fees are unique because they are both an expense to the property/owner and a revenue to your property management company. You may handle this differently depending on how you have structured your bank accounts (e.g., separate bank accounts per owner vs. blended accounts).

SEPARATE BANK ACCOUNTS

Many property managers will have an operating account for their property management company and a trust account per property owner. Rent gets deposited into the owner's trust account, the management fees and other expenses will be withdrawn, and the net will be disbursed to the owner.

When property management fees are paid from the owner trust account to your management company operating account, you will have two versions of that transaction in the linked bank account's import feed—one leaving the trust account and one arriving in the management operating account. You will book the funds leaving the owner's trust account as an expense to the appropriate property so they show on that property's statement. You will book the arriving funds in your operating account as revenue to the property management company sub-portfolio (using the new revenue account you created).

COMMINGLING BANK ACCOUNTS

Some property managers may have one bank account (or multiple accounts) where all their management activity occurs — including property management company activity, property rents and expenses, and owner disbursements. In this scenario, management fees do not move from one bank account to another. Therefore, you will not have imported transactions corresponding to either management fee expenses for the property/owner or management fee revenue for your management company.

So, in this situation, you'll need to manually enter a management fee expense to the property AND manually enter a management fee revenue to the management company sub-portfolio. Because these two transactions will both be for the same amount and same bank account, the amounts will be offset, resulting in no change to the account balance (which is accurate, as the management fees remain in the account). Two transactions are necessary because a single transaction cannot reflect as both an expense to the property and a revenue to the management sub-portfolio.

REPORTING

You can use the Owner Statement report, filtered to the appropriate date range and sub-portfolio, for reporting to your owners. The Owner Statement report will show all the revenues and expenses from all of that owner's properties and the beginning and Owner Funds balances and distribution amounts.

Additional reports like the Net Income by Property may also be helpful to your owners and can be pulled by setting the report scope to an owner's sub-portfolio.

You can use the Net Income report filtered to the property management company's sub-portfolio to report on the property management company.

CONTACT US WITH ANY QUESTIONS

You can submit a ticket through the Knowledge Base when you're logged into your REI Hub portfolio via the Get Help > Contact Us tab, send us an email at support@reihub.net, or call us at 888-939-6865 (Mon-Fri, 9:00 a.m. - 5:00 p.m. Eastern Time).

We look forward to helping you keep your books!