How Much Is Rental Accounting Software For Landlords?

If you’re looking to make the switch to rental property accounting software, your first concern, like many landlords, will likely be the cost. It can be difficult to browse the many software platforms on the market while comparing their capabilities and prices. How much is QuickBooks really? How much should you be paying? Is there any free accounting software for landlords?

We’re here to help. In this article, we’ll break down what you’re paying for with each type of software and how to find the best deal for your business. We’ll also include some pricing model insights using a QuickBooks online pricing comparison, as well as a few features to consider.

Before we dive in, remember: You want to find software that best suits your needs. You’ll need a general idea of what you’re looking for beforehand, which can depend on your number of units, staff, size, cash flow, and much more. We’ll discuss some aspects to consider when shopping for rental property accounting software, including the broader functionalities and benefits of property management software, so be sure to keep in mind the individual needs of your rental business as we do so.

What is Rental Property Accounting Software?

First things first: What is rental property accounting software?

Rental property accounting software is a specialized tool tailored for landlords and property managers. Unlike general accounting software, it focuses on the specific needs of rental properties, helping users track income and expenses, manage properties, and prepare taxes. This software is essential for anyone involved in rental property management, as it simplifies the complex financial tasks associated with owning and managing rental properties. By using rental property accounting software, you can ensure that your financial records are accurate, up-to-date, and compliant with tax regulations, making it easier to track income, manage expenses, and optimize your property performance.

Pricing Models

Rental property accounting software is typically sold in tiered systems and packages. We’ll dive into how these pricing systems work and what you’re really paying for with each plan.

It’s important to note that in most cases, rental accounting software will contain multiple different kinds of pricing systems within them—a tiered system may additionally offer the purchase of add-ons, for instance. Be sure to always read the fine print so you can avoid any extra hidden costs.

Flat-Rate Pricing

Flat-rate pricing is the simplest and easiest type of pricing you’ll see for accounting software. With this pricing model, you’ll be charged a single, flat rate each month for your software subscription. This price is the same regardless of how many units you have, and it usually includes all the software’s features. There’s no additional add-on costs or premium subscriptions.

If you’re looking for simple and affordable flat-rate pricing, this is our approach at Ledgre. We charge a simple, flat rate of $30/month for unlimited units.

Tiered Packages

The tiered pricing system is one of the most common methods across the board, and it’s used by both QuickBooks and Buildium. It provides users with different plan levels, each offering a set package of tools, reports, and other features.

In a basic or standard plan, for example, you’ll likely have access to the bare bones of the system. If you’re new to rental property accounting and aren’t sure what you want out of it yet, then a basic plan is a good place to start so that you don’t feel overwhelmed. Some bare-bones plans may even offer accounting software for landlords for free (typically with stipulations) so that users can get a feel for the platform before they commit financially.

As you would expect, more comprehensive tiers are usually more expensive, but they also grant access to more robust features. A premium or pro plan may allow you to manage an unlimited number of units on the software, generate an unlimited number of reports, and even access special training or support. QuickBooks, for example, offers three different tiers: Simple Start, Plus, and Advanced, and each tier is more expensive (while offering more features) than the last. As a result, users may be exposed to tools they never knew that they could benefit from simply because they are included in their tier. Higher tiers may also offer advanced features for tracking and managing rent payments.

However, this system can be troublesome for landlords who may only want a specific feature or two from a higher tier, as there’s rarely an a-la-carte option that will give them access without purchasing a more expensive tier in its entirety.

Unit-Based Pricing

Perhaps the second most common pricing system is based on the number of units being managed and tracked. Within a unit-based pricing system like REI Hub’s, all a software platform’s features are made available to all its users. You pay more for the ability to add more units, with a sort of pay-for-what-you-need mentality. Some pricing systems scale up accordingly in increments of around 20, so a landlord with 60 units may be paying slightly less than a landlord with 61 units.

Some software companies that use this pricing model offer a price cap for landlords who have a large number of units to address any large pricing disparities. To ensure that pricing doesn’t become an issue for landlords with growing businesses, reaching a certain threshold of units will mean that they’ve reached the maximum price, meaning no matter how many more units they add, their bill will no longer change.

Another benefit of this system is that you’re less likely to experience paywalls within your software. Tiered systems may only allow you to generate a certain number of reports each month unless you pay for the most expensive plan. Landlords looking for flat rates that give them access to the software platform’s entire functionality may prefer this model, as they won’t have to go through the trouble of upgrading their subscription every time their needs change. Unit-based pricing is also particularly beneficial for real estate investors managing multiple properties who want to track everything in one place.

Add-Ons

Add-on or a-la-carte pricing systems are less common, but it’s still important to understand how they work in case you encounter them in your search. They are sometimes offered in tandem with tiered pricing systems so that you can have access to added features.

With add-ons, you’ll pay added fees for features you want that are not included in your current package. If you want access to unlimited report generation without paying for a premium package, for example, you may be able to do so via add-on pricing.

This kind of pricing system offers a solution to the problem that tiered packages often present to users, so landlords with specific needs may prefer them.

Hybrid Pricing

Some software, such as Appfolio and DoorLoop, offer a sort of hybrid pricing system. In a model like this, you can expect to pay for both a tiered and unit-based plan.

Essentially, you’ll choose from a few (typically three) different tiers, each of which includes more than the last. Then within each package, the price will scale up with the number of units that you have. This option allows smaller landlords to save money as they continue to grow, but can still lock features behind paywalls, which isn’t ideal for landlords looking for a variety of tools.

Features to Consider

Choosing the features you most need is another important aspect of shopping for rental accounting software. There are a few key features you’ll likely want, regardless of what software you choose.

Keep in mind that tenant management features like online rent collection can be great to have but are generally associated with property management software. Some software combines these two functionalities, but others are strictly accounting-focused.

Below, we’ll give you a quick overview of some features to keep an eye out for.

Synchronization & Automation

Robust rental accounting software will offer bank synchronization and automation to save you time. Instead of inputting each transaction into your ledger, many landlords find it easier to sync their bank accounts. This way, each transaction automatically goes through your software of choice and is automatically tracked—some can even automatically manage budgets and other metrics as transactions are made.

Number of Users

For landlords with accounting staff (either year-round or seasonal), knowing how many users your software allows for is vital. Some software will only allow for a single user to have access to your books, which can become problematic if you hire a CPA or bookkeeper to handle your taxes or books. Rather than giving them full reign of your finances, some platforms allow landlords to add sub-user accounts for accountants, bookkeepers, and the like.

Reports & Metrics

If you’re looking for software that can help you generate reports such as P&Ls and Rent Rolls, then you’ll want to be sure this is a service that your software of choice will provide. Tracking income and generating financial reports are crucial for measuring your business’s financial performance and profitability. With the help of rental accounting software, these tasks can be automated, enhancing accuracy and simplifying financial management. Other metrics, such as budget tracking and portfolio performance, can be key to the growth of your business, so don’t count them out. Be sure to research all of the reports and metrics offered by each software before making a decision.

Support

As with all things, your rental property accounting may go awry. So, whether you need help understanding how a feature works or you’re having technical issues with the software, you’ll want to ensure that you have support when you need it. Some software companies offer helplines, others offer chats and forums, and some require premium memberships to access professional help. No matter the software you choose, ensure that if you encounter any problems, you can count on someone to help. Robust training and support can also help a property manager use the software more effectively, streamlining the bookkeeping process.

Training

It’s normal for there to be a learning curve when understanding how to use accounting software (especially if you’re new to it). For this reason, some software companies offer training services to you and whoever else will be playing a role in your bookkeeping. Whether you’re new to digital bookkeeping or not, a few training sessions will help you to fully understand all of the features available to you, so don’t count them out.

Billing

Understanding how billing for your service works is crucial for managing rental property expenses effectively. Aside from precisely how much each service costs, you’ll want to be aware of the payment schedule that you’ll be expected to abide by. Some services require a yearly payment, which will be a larger upfront payment, and will lock you in for an entire year of access. You may receive some sort of financial break for paying in a lump sum, but it’s typically non-refundable if you happen to change your mind mid-year. Others offer monthly or quarterly payments, which can be helpful for smaller businesses and landlords who are just getting started with software.

Tax Preparation

An occasionally overlooked feature to be on the lookout for is tax help. Some accounting software, in addition to their bookkeeping services, will offer different kinds of aid in terms of tax preparation. Ledgre, for example, offers Schedule E and Form 8825 generation, as well as a few other tips and tools meant to simplify your tax season. If you’re looking for software that will help you with your finances when it matters most, then you’ll want to be sure you consider its tax preparation capabilities.

Additional Considerations: Accounting Software vs. Bookkeeping

While bookkeeping and accounting are closely related, they serve distinct purposes. Bookkeeping involves the meticulous recording and tracking of financial transactions, whereas accounting includes financial modeling, reporting, and analysis of those transactions.

Rental property accounting software combines both functions, offering a comprehensive solution for landlords and property managers. It not only helps with income and expense tracking but also provides financial reporting and tax preparation tools. When choosing rental property accounting software, it’s crucial to consider your specific business needs and select a solution that can handle both bookkeeping and accounting tasks. This ensures that you have a complete financial management system that supports your property management efforts and keeps your finances in order.

Beginning Your Search

Finding the “best” overall rental property accounting software is impossible, but finding the best one for you isn’t. Now that you’ve got an idea of what to look out for, this task should feel much more manageable. Be sure to have a general idea of what features you’re looking for before your search so that you can ensure you get everything you want and need.

For those looking to simplify their finances and tax season year round, Ledgre offers comprehensive accounting software for landlords of all shapes and sizes. Committing to new accounting software is hard, but we’ve designed a simple and accessible platform for all landlords.