Real estate accounting that reports profit property by property

My entities and my personal accounts have got mixed up. Can you fix that?

Rationale Services separates them. Each entity gets its own books, its own bank reconciliation and its own statements, and transactions recorded in the wrong place are moved and documented. Where one entity has paid costs for another, we record the balance between them rather than leaving it unexplained.

Mixed records are the most common problem we see in property businesses, and they get more expensive the longer they continue. They make returns harder to prepare, partner reporting unreliable, and the separation between entities less convincing than it should be. Untangling it is methodical work: we go bank account by bank account, agree how to treat each type of transaction, then apply that consistently going forward.

How should owner draws and distributions be recorded?

Rationale Services records draws and distributions as what they are — movements of owner capital — not as expenses. Each owner's capital account is maintained, so contributions, draws and the share of profit allocated to them are tracked separately and the balance is correct at any point in time.

Recording draws as expenses understates profit and makes every statement you produce misleading, including the ones you give to a lender. Where there is more than one partner, maintaining capital accounts properly matters even more, because the balances determine who is owed what. We keep them current rather than reconstructing them once a year.

Can you handle security deposits, prepaid rent and tenant balances?

Yes. Rationale Services records security deposits as money held rather than income, tracks prepaid rent to the period it belongs to, and maintains a tenant balance by unit so arrears are visible. Rent roll figures are reconciled to what was actually collected in the bank.

These are small items that distort reports badly when handled casually. Deposits recorded as income inflate profit and then make a refund look like a loss. Prepaid rent in the wrong period makes one month look strong and the next weak. A reconciled rent roll, with arrears by unit, is also the report that tells a property manager who to chase this week.

How do you treat money spent on a building?

Rationale Services applies one consistent policy, agreed with you up front, to decide what spend is added to the property's cost and what is recorded as a repair in the period. That policy is written down and applied the same way across every property and period, so your numbers are comparable and supportable.

The usual problem is not the judgement itself but the inconsistency: a roof treated one way this year and another way next. We keep the invoices, the description of the work and the treatment together in the record, so the basis for each decision can be seen later. Where a particular item needs specialist input, we will say so rather than guess.

Can you work with our property management software?

Yes. Rationale Services works from the exports your property management system produces — rent roll, receipts, payables and owner statements — and reconciles them to the bank and into your accounting records, so the two systems agree rather than telling two different stories.

Most portfolios run a property system for operations and an accounting package for the books, and the gap between them is where errors live. We map the two once, agree what posts and how often, and then reconcile on a schedule. If you run several entities through one property system, we keep the accounting split by entity even when the operational reporting is not.

What does real estate bookkeeping cost?

It depends on how many properties and entities there are, whether you need investor or partner reporting, how much cleanup the existing records need, and whether return preparation is included. Rationale Services scopes that with you rather than from a list. See how we work.