How we think about real estate investors
A rental portfolio is several small businesses that happen to share an owner. Each property has its own rent, mortgage, property tax, insurance and repairs, and the owner needs to see each one separately before the totals mean anything. We set up the books so every property is its own class or tracking category, and every company that holds property has its own file.
In Abbotsford the mix is often wide. It might be a few suites or townhouses rented near the University of the Fraser Valley's Abbotsford campus, a commercial unit or apartment in Historic Downtown, and a parcel of farmland held in one company while the farm itself runs in another.
What makes the books different
- Property-by-property reconciliation. Rent, damage deposits, mortgage payments and repairs are matched to the right unit. A house near UFV with several suites shows its own net income, and a vacancy or a late payment shows up in the month it happens, not at year-end.
- Farmland held apart from the farm. When land on Matsqui Prairie or Sumas Prairie sits in one company and is farmed by another, there is usually a rent or land-use charge between them. We keep both sets of books and make sure the charge in one equals the income in the other. Whether that structure suits you, and how the rent is treated for tax, is for your CPA.
- HoldCo and OpCo books that agree. Dividends, management fees and loans moving between a holding company and an operating company are recorded on both sides in the same close. A running intercompany schedule shows every balance and should net to zero.
- Mortgages and prepaid costs split correctly. Each mortgage payment is split into interest and principal from the lender's statement, and renewals and refinancing are recorded when they happen. City of Abbotsford property tax, insurance and strata fees are spread over the months they cover.
What a monthly close looks like for you
By the 10th, each bank account, credit card and mortgage is reconciled for the month before. Rent received is matched to the rent roll, tenant deposits are held as liabilities, and repairs are coded to the property they belong to. Larger jobs are flagged so your accountant can decide whether they are repairs or improvements.
You receive a statement for each property, a combined view of the portfolio, and an intercompany loan schedule. If a property manager runs the units, we reconcile their monthly owner statement to the bank deposit rather than re-entering every line. Whether GST applies to a particular rent, or to a new build, is a question for your CPA. We keep the records they need to answer it.
Tools we commonly use for real estate investor clients
QuickBooks Online or Xero as the ledger, with a class, location or tracking category for each property. Dext to capture repair invoices, insurance renewals and property tax notices. Plooto for paying contractors and strata fees on approval. Where a property manager sends owner statements, those become the source document for that building. Wagepoint only if the portfolio has its own staff, such as a resident caretaker.
Partners we work with
CPAs prepare the rental schedules and corporate returns and advise on structure. Real estate and corporate lawyers handle purchases, transfers between companies and reorganisations. Mortgage brokers and lenders ask for current statements at renewal or refinance, and current statements from monthly bookkeeping are far easier to hand over than a year-old file. Property managers run the units day to day, and we work from their reports.
A good fit if
- You own several rental properties in Abbotsford or nearby, personally or through one or more companies
- You hold farmland in a company separate from the farm, or plan to
- You want each property's numbers, and the loans between your companies, current every month