What Are Property Manager Accounts & Should I Use Them?

Many real estate investors utilize property managers or property management software that can receive funds and/or pay expenses on behalf of the property owner. While this can be a great help, it also carries the potential to complicate your bookkeeping and accounting. REI Hub offers Property Manager accounts to accurately reflect the flow of funds through these accounts in your portfolio.

Property manager accounts function as a clearing account between the tenant and your rental checking account. After creating a property manager account in REI Hub, you will see it available as a payment account and a deposit account. This means you can book revenues and expenses directly to the Property Manager's account and then subsequently book the distribution from the Property Manager to your bank account.

Click here to learn more about uploading Appfolio statements or, if your property manager uses any other management software, using the universal property management statement uploader.

Handling transactions from your property manager or property management software in this way reflects real-world practice and makes it much easier to account for net deposits, delayed payouts, and property managers who keep a running balance from month to month.

If funds are withheld by a property manager, such as for an additional deposit they maintain during the tenure of your relationship, the transaction can be booked as a transfer to the property manager account, so it's tracked as an asset held by the property manager.

Booking transactions to your property manager account instead of one of your bank accounts does not impact your tax liability. A property manager receiving rent on your behalf acts as your agent and is the same thing as you directly receiving that rent in the eyes of the IRS.

Property manager accounts are optional in REI Hub, even if you have a property manager or property management software. If you do not use property manager accounts to keep track of revenues and expenses incurred by a third-party property manager, you should be individually marking them as net income transactions in your import feed from the bank.