Rental Property Accounting Software’s Core Features

If you’re like many landlords, you dread when it’s time to hit the books—the accounting kind. Whether it’s tax season or everyday bookkeeping, managing your books and finances gives most of us a certain kind of apprehension.

The good news? Many common landlord accounting tasks can now be automated with rental property accounting software. It may be an investment, but access to robust accounting features pays off. According to a recent Capterra survey, 91% of property management software reviewers said rent tracking was among the most important property management features on any platform. Accounting software does much more than track rent, but automating even this single task can lift a huge burden from your shoulders.

In this article, we’ll cover eight core features to look for in rental property accounting software. Not all landlords need every feature, but hopefully this breakdown will help you shop for a tool that satisfies the bookkeeping needs for your rental business.

#1 Add Properties

First, let’s talk about the fundamental difference between rental property accounting software and generalized accounting software. Unlike generalized tools, rental accounting software is designed specifically for landlords and real estate professionals. This means it’s built and organized around properties and tenants.

Specialized landlord accounting software prompts you to add your properties and units with their associated details: names, addresses, and purchase details like the price, date, and loan terms. These properties can be added, edited, or deleted as needed.

Your software platform will function, effectively, as a property database—a central repository for storing information and data about all your rental properties. And when it comes time to report out, property-centric software may even generate reports by property, by unit, or in aggregate. This way, you’ll get the insights you need without the inevitable clunkiness of forcing a generalized platform to fit your rental business needs.

#2 Add Accounts

Another core feature of real estate investor accounting software is the ability to add and connect your bank account(s).

As a landlord, you may have multiple bank accounts and/or credit card accounts, perhaps associated with different properties or security deposits in accordance with local law. Ideally these funds are separate from your personal ones, so linking your dedicated account(s) to the platform that does your accounting can streamline your financial tracking. A robust software platform will allow you to integrate with these institutions for ease of reporting.

#3 Automatic Transaction Import

Once you’ve securely linked your accounts, the next useful feature you’ll want to take advantage of is automatic transaction importing.

If you use a bank account or several accounts exclusively for your rental business (as you should), you can securely link these accounts to your accounting platform, which will regularly import transactions that appear on your monthly statements. These auto-imported transactions can then be categorized and integrated into your financial reporting.

Security is a significant concern for most landlords, so encryption and secure authentication methods are often used so you can ensure your data’s security across accounts.

By enabling this feature, you won’t have to keep receipts and make a manual record every time you buy supplies for maintenance, purchase a tenant screening report, or fulfill an invoice to your contractor. As long as you use your designated business account, that transaction information will be auto imported on a regular basis.

#4 Data Import

Most landlords who adopt rental property accounting software aren’t starting from scratch. They therefore usually have existing data, either on another software platform, a spreadsheet, or even in handwritten books.

For this reason, a central feature of most platforms is the ability to import large quantities of data during setup so that your account can be populated with all your previous data.

Most platforms will allow data imports from other accounting or property management software platforms as well as from a spreadsheet or csv file using a standardized template. The types of data you might need to import include property and unit details, income transactions like rent payments, and expenses from the past few years.

These platforms will usually still allow you to manually import one-off and recurring income and expenses, but choosing to import it all up front saves time and reduces errors.

#5 Income and Expense Tracking

Income and expense tracking is perhaps one of the most core accounting software features, helping landlords streamline the most basic accounting responsibility.

For rental property accounting software like Ledgre, this feature assigns transactions to predefined categories aligned with IRS Schedule E line items (Schedule E is the IRS form used to report rental income and expenses). For instance, your software may categorize income as either ‘Rents,’ ‘Advance Rent,’ ‘Security Deposits,’ etc., while your expenses will be categorized as ‘Advertising,’ ‘Cleaning and maintenance,’ ‘Insurance,’ etc. You’ll be able to edit and update these transaction details as needed.

Most software platforms also allow you to set up recurring income and expenses and define the frequency and length they repeat for.

Many times, this is all completed with CPA-friendly reporting, so you can export your data and hand it off to a licensed accountant who can help you prepare Schedule E for filing.

#6 Cash Basis Accounting Support

There are two main methods of accounting: Cash basis and accrual basis. Cash basis is the simpler method used by most small real estate businesses and involves recording transactions as the actual cash is received or spent.

Most rental property accounting platforms are built with cash basis accounting in mind, while some also offer support for accrual accounting. Using a consistent, well-documented accounting method is essential for accurate tax filing, and the right software can make this process far more manageable.

#7 Financial Reporting

Financial reporting provides landlords and real estate investors with a clear picture of their rental business’s performance over time. It can help you glean insights about your properties, direct your future investments, and uncover problems before they escalate.

Most rental accounting platforms offer profit/loss (P&L) reports. Many also offer cash flow statements, rent rolls, balance sheets, and a variety of portfolio performance metrics and landlord forms.

You may want to view your financial performance over a designated period (e.g., monthly, quarterly, yearly) or focus on specific properties, units, or locations. Financial reporting makes it possible to filter reports for these variables and view the exact information you need, organized in a useful and concise format. You can then save, print, and distribute the landlord forms useful to other members of your team. Comprehensive financial reporting is a must-have rental accounting feature.

#8 Tax Form Generation

Tax form generation is an essential feature in many rental accounting platforms’ reporting suites, streamlining one of the most tedious aspects of managing rental properties: tax season.

For landlords and real estate investors, Schedule E (IRS Form 1040) is the primary form used to report rental income and expenses. A quality rental accounting platform can generate this form based on your data, including:

• Auto-populating Schedule E using your categorized income and expense data

• Allowing you to review and edit entries before filing

• Generating an IRS-compliant Schedule E that you can either pass off to your CPA or file independently

With real estate accounting software, you can be more confident in your numbers, without fear of error, oversight, or audit come tax season.

Conclusion

Utilizing the best accounting software can transform how you manage your real estate business, saving time, reducing errors, and streamlining your finances. By focusing on tools designed specifically for landlords and property managers and prioritizing the key features of an accounting software that matter most, you’ll set yourself up for smoother operations and greater peace of mind.