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Real estate accounting is much more complex than typical “bookkeeping.” A real estate bookkeeper needs to track income from rental properties, track expenses from all forms of maintenance, manage escrow accounts for individual or multiple properties, create property-level reporting, etc. Accuracy is key. That’s when a real estate bookkeeper can help.
If you have ever questioned; What does a real estate bookkeeper do? This article will define their roles, responsibilities, tasks, and the value they add to the success of the real estate professional.
What Does a Real Estate Bookkeeper Do?
A real estate bookkeeper is a financial professional that provides day-to-day financial record-keeping services for real estate businesses. While real estate bookkeepers provide many of the same services as a general bookkeeper, they are knowledgeable about the specific financial characteristics of property management, real estate investing, brokerage firms, and development companies.
The focus of a real estate bookkeeper is to ensure income, expenses, assets, and liabilities are correctly accounted for by either the property or the entity. In addition to providing accurate accounting information to clients, many business owners utilize real estate bookkeeping services to ensure compliance with accounting regulations and laws, increase cash flow visibility, and ultimately support long-term growth of their business.
Real Estate Bookkeeper Responsibilities and Daily Functions
A real estate bookkeeper’s responsibilities are the financial aspects of a real estate business. On a day-to-day basis, their primary responsibility is to manage the finances of a real estate business. They accomplish these objectives through managing real estate income, ensuring all costs associated with the properties are accounted for, keeping financial records organized and current, and producing financial statements that will assist an owner/investor/manager in making favorable decisions.
In addition, a real estate bookkeeper assists other accounting professionals in utilizing the data collected for auditors/tax professionals to complete required audits and tax filings.
Roles of a Real Estate Bookkeeper
A real estate bookkeeper’s role is far from simply entering numbers into an accounting system. The role of a real estate bookkeeper has direct implications regarding profit and regulatory compliance. Some examples of key roles are
- Maintaining correct financial information for each property
- Ensuring the correct classification of real estate income and expense
- Assisting with managing cash flow and creating budgets
- Providing clear financial information to owners, investors and managers.
- Assisting in regulatory compliance and audit preparation.
The duties performed by a real estate bookkeeper allow business owners to focus on growing their business as opposed to dealing with paperwork.
Real Estate Accounting: Property Bookkeeping Services
Bookkeepers in the real estate industry specialize in detailed accounting work. The main areas of responsibility for a real estate bookkeeper include:
Rent Tracking
Accurately record all rental income, including rent paid, late charges and other property income.
Expense Management
Track and record all expenses related to the property, which include but are not limited to maintenance, repairs, utilities, insurance, property taxes, and homeowner’s association fees.
Bank and Credit Card Reconciliations
Match all transactions to verify that your books match the bank statement.
Security Deposit & Escrow Accounting
Ensure that all security deposit monies collected are properly recorded as well as ensure compliance with the governing regulations.
Portfolio/Property Level Accounting Reports
Create a profit & loss statement for each individual property or portfolio of properties.
Loan/Mortgage Tracking
Record the loan payments, interest, and principal allocated to each mortgage or loan.
Real Estate Bookkeeper vs.CPA vs General Accounting
| Area | General Accounting | Real Estate Bookkeeper | Certified Public Accountant (CPA) |
| Focus | Basic income and expenses | Property-level accounting | Tax and financial strategy |
| Property-level reporting | Limited | Yes | Uses reports for analysis |
| Escrow and trust accounts | Rare | Yes | Reviews for compliance |
| Capital vs. operating expenses | Basic | Detailed classification | Reviews for tax treatment |
| Depreciation and assets | Basic tracking | Tracks and organizes data | Calculates and applies tax rules |
| Daily transaction recording | Yes | Yes | No |
| Account reconciliation | Yes | Yes | No |
| Financial report preparation | Basic | Detailed, property-level | Reviews and analyzes |
| Tax planning and filing | No | No | Yes |
| Ongoing compliance and audits | No | Limited | Yes |
When would a real estate bookkeeper be beneficial?
Below are examples of when a real estate bookkeeper may be beneficial to you:
- You have a portfolio of rental properties.
- You have numerous investment properties that you manage.
- You are a property management company.
- You are a broker/agent for residential or commercial real estate.
- You are involved with a developer or a syndicate.
If you have a lot of ongoing activity related to property, you can benefit from the services of a professional real estate bookkeeper.
Frequently Asked Questions
How much does a real estate bookkeeper do each day?
A real estate bookkeeper tracks all incoming income and outgoing expenses, reconciles bank and credit card accounts, tracks financial information for individual properties, and maintains correct financial records.
Are real estate bookkeeping services worthwhile?
Yes. A real estate bookkeeper helps you avoid errors, saves you time and provides you with a clearer picture of your financial health.
Can a real estate bookkeeper work with many different properties?
Of course. Real estate bookkeeping includes financial reporting on a property-by-property basis.
Does a real estate bookkeeper help you prepare for taxes?
No, they will prepare all necessary financial data for your CPA or tax preparer but will not prepare your actual tax returns.
Does a real estate bookkeeper’s role differ between industries?
Yes. Real estate has unique needs that include tracking asset types, loan payment tracking, maintaining an escrow account, and depreciation tracking.
Conclusion
Understanding the role of a property bookkeeper can be extremely important for anyone working in the property industry. From addressing operational financial-related transactions to producing simplified financial reports, a real estate bookkeeper enables you to make better and more compliant business decisions with long-term profitability for your enterprise.
Whether you decide to outsource your real estate bookkeeping or hire a full-time employee, you will benefit by having a clear understanding of your financial situation and having the ability to focus on growing your business instead of just dealing with numbers.
