Term

Definition

Account register

The account register page for bank and credit card accounts is the central hub for that account.

Bank export

Bank exports are helpful if you don't want to link your bank account or if you want to fill in data gaps that an automatic import couldn't get.

REI Hub supports five file types: Open Financial Exchange (.ofx), QuickBooks Web Connect (.qbo), Quicken Web Connect (.qfx), Excel (.xlsx), and Comma Separated Values (.csv).

Batch Booking

The REI Hub system now allows you to book multiple transactions at one time from the Import Feed. This is a convenient way to speed up your bookkeeping, especially when setting up the system or catching up on months of transactions.

Booking a transaction

Booking a transaction means categorizing and adding that transaction to your official records — your books.

Depository accounts

Depository accounts refer to checking or savings accounts.

Import feed

The import feed is a read-only copy of the transactions that happen in your bank reflected in REI Hub.

You can populate transactions in your import feed one of two ways:

Import start date

The import start date in REI Hub is the day we start bringing transactions over via our data providers, Plaid and Yodlee. For most people, this will be January 1 to align with the year of taxes on which you're working. If you're re-adding your bank account, this will be the day after your last imported transaction in REI Hub.

Portfolio-level transaction

Some expenses or transactions do not apply to just one property but to your entire portfolio. Sometimes called overhead, these transactions are referred to as portfolio-level expenses in REI Hub.

Reconciliation

Reconciliation is an optional accounting process that enables you to compare your actual, real-world bank balances with the balances in REI Hub. Reconciliation assists in identifying any discrepancies and confirming that your records are complete, accurate, and reliable.

Transaction matching rules

If you have transactions that reoccur regularly, then you may enjoy REI Hub's Rules feature. Rules help the system recognize newly imported transactions by matching to either a part of the description or the exact amount of the transaction and then assigning the property and accounts you have specified.

Transaction scope

By default, REI Hub's reporting is structured on a tiered basis, going down from Portfolio > (optional) Sub-Portfolio > Property > Unit.

Owner funds

Owner Funds is the default equity account representing your personal funds that are not currently tracked in the business. For example, the Owner Funds account could apply to a personal bank account you do not have linked to REI Hub, which occasionally pays into your business accounts that are linked to your portfolio. There could also be manual transactions you need to create for cash purchases. You can use Owner Funds as the Payment Account.

Term

Definition

Amortization

In real estate, this most often applies to debt, such as mortgages or loans. As the property owner makes mortgage payments over the life of the loan, the loan amount is reduced, and a larger portion of the payment goes toward the principal and less to the interest.

REI Hub automatically calculates this principal/interest split for you using our loan payment template.

Current loan balance

The current loan balance gives us the value that the loan payment automation begins with. The logic works as follows: the current loan balance times the interest rate, which gives us the interest expense portion.

Monthly loan payment

The monthly loan payment is the amount that leaves your bank account every month, including principal, interest, and escrow (if applicable). REI Hub uses this payment amount to amortize the loan payments over the life of the loan.

Opening balance

If you are moving to REI Hub from another accounting system or have already filed taxes on one or more of your rental properties, you may need to enter Opening Balances into REI Hub. An opening balance entry sets the account balance and allows you to keep accurate records without having to recreate detailed transaction histories.

Opening balances will be used most commonly with loan and bank accounts.

Escrow accounts

Escrow is your money handled by a third party. In REI Hub, this refers to mortgages where your loan servicer collects money in each payment and then uses it to pay your property taxes and homeowner's insurance. Once a year, your loan servicer will send you a statement with the actual amounts paid were for insurance and taxes, and you'll enter those in REI Hub.

Term

Definition

Balance sheet

The Balance Sheet is one of the fundamental reports in accounting. It tracks the book value of all business assets and liabilities, as well as the capital contributions and distributions of owners and profits that you have reinvested.

The balance sheet will always balance according to what is known as "the accounting equation": Assets = Liabilities + Owner's Equity.

Cap rate

The rate of return on a real estate investment property based on the expected income. To calculate this value, divide net operating income by property's current fair market value.

Cash flow statement

A statement of incoming and outgoing funds during a specifically set period, and includes a column reflecting the change over the time period.

Cash-on-cash return

A rate of return calculating the cash income earned on the cash invested.

General ledger

A general ledger is a record of every transaction that has been booked in REI Hub. You can filter by year, custom date ranges, or leave the date range field blank to download every booked transaction.

Net income (profit & loss)

Net Income reports, often called profit and loss (P&L) reports, are standard accounting reports designed to show revenue, total expenses, and what is left over, or "net."

These reports help you understand your business's financial health, give a better view of where to cut costs, and aid in strategic decisions when planning to scale your investment portfolio.

Net operating income

Net Operating Income (NOI) is income generated by the ongoing operation of your properties.

Compared to the Net Income report, NOI removes items related to the financing of the property, like interest paid, and the acquisition or disposition of a property, like depreciation or the gain on a sale. It is useful for comparing the performance of assets financed in different ways or owned for different lengths of time.

Operating cash flow

Operating Cash Flow (OCF) is a modified type of Cash Flow report designed to show investors a picture of their day-to-day operations.

Schedule E

If you own rental real estate in your own name or a disregarded entity such as a single-member LLC, you likely need to file a Schedule E with your personal tax return to report your rental income and expenses. The Schedule E report will show your revenues and expenses in the same format as the IRS form and help you include mileage and pro-rate overhead expenses across your individual properties.

Sub-portfolios

By default, REI Hub's reporting is structured on a tiered basis, going down from Portfolio > Property > Unit. The optional 'Sub-Portfolio' feature adds an additional layer to that structure between the top-level portfolio and individual property layers. The sub-portfolio layer makes it easy and convenient to pull reports based on groups of properties.

Return on investment (ROI)

The efficiency of an investment or the measure of the possible profit if it were sold. To measure ROI, compare the amount you invested (initial purchase price plus all additional costs) to the property's current value.

Term

Definition

Basis

The amount of capital investment in a property.

Capital expenditure

The initial money used to acquire, maintain, or improve fixed assets. In REI Hub, this points to the fixed assets in your portfolio.

Depreciation

A reduction in the value of an asset with the passage of time, due in particular to wear and tear. Many CPAs and tax preparers can provide this value for you, or REI Hub can calculate a general amount.

Fixed asset purchase

Fixed asset purchases tend to be larger individual transactions or part of a bigger project. The biggest consideration here is the IRS de minimis safe harbor rule which designates fixed assets must be $2,500 or larger.

Placed-in-service date

This refers to when the property was placed in service (for rental properties, this is the day it was listed for rent) or when a capital improvement was completed. Fixed assets are depreciated starting with their placed-in-service date, not the property purchase or project start date.

Useful life

This is the amount of time the asset is depreciated. Residential property is depreciated over a 27.5-year lifespan, and commercial property over 39 years. Non-property fixed assets, such as appliances, often have shorter useful lives in the 5 to 7-year time range.

Term

Definition

1099 Form

An IRS tax form to report dividends, interest, and self-employment income. In REI Hub, this is tracked through vendors and is usually issued to contractors to whom you've paid $600 or more in the tax year.

Bookkeeping close date

The REI Hub system includes the option to set a bookkeeping close date. This will block journal entries (transactions) from being made before the selected date. This feature is designed to help prevent accidental or inadvertent changes after you have completed your bookkeeping for a specific period.

The two most common use cases are after you have completed bookkeeping for a calendar year or after you have reconciled all your accounts through a certain date.

Bookkeeping start date

The first day of your bookkeeping period, most often January 1 of the tax year.

Cash basis

A method of accounting where revenues and expenditures are recorded when they are received or paid ("changed hands"). REI Hub operates in cash basis.

Chart of accounts

Fundamentally, a Chart of Accounts is just a list (“chart”) of all the different financial labels (“accounts”) that your business uses. You will use these accounts to track the money your business receives, spends, or stores by recording transactions. The core types of accounts are revenues, expenses, assets, liabilities, and equity.

Credit

Decreases asset and expense accounts, and increases liability, revenue, and equity accounts. It's shown on the right side of an entry.

Debit

Increases asset and expense accounts, and decreases liability, revenue, and equity accounts. It's shown on the left side of an entry.

Double-entry accounting

This accounting system gets its name because each transaction has two parts that record the source and destination of the funds. This minimizes errors, eliminates the need for duplicate transactions, and increases the chances that your books balance.

Equity

In finance, equity is the value of an asset or business after subtracting all debts. It also refers to the portion of a company that an investor owns.

Owner contribution

When booking an Owner Contribution, the system will credit Owner Funds as the payment account to show that you are the source of the funds flowing into your business.

Owner Contributions are not taxable events. Your taxable income is the same whether or not all funds have stayed in your business accounts or moved to personal accounts.
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Owner distribution

Funds coming out of your business accounts and moving to your personal accounts or paying your personal expenses are considered Owner Distributions.

Owner Distributions are not taxable events. Your taxable income is the same whether or not all funds have stayed in your business accounts or moved to personal accounts.

Security Deposit

Money received from a tenant that the property owner holds in trust in case the rent is not paid or an apartment is damaged. This is not revenue unless the security deposit is retained when the tenant moves out.

Sub-account

Accounts of any type can be broken down into sub-accounts. Sub-accounts can help you view the information in deeper detail while ensuring that all transactions funnel up to desired top-level accounts, like those required by tax forms.