Real estate investors use rental property accounting software to keep track of income and expenses, claim every possible tax deduction, and monitor property financial performance. Some investors use a basic spreadsheet, while others opt for software specifically designed for rental property owners.

FreshBooks is a popular option for real estate investors looking for a system to manage rental property income and expenses, send monthly rent statements to tenants, and collect rent online.

In this article we’ll take a look at how FreshBooks for landlords works, along with some other popular options for rental property finance software.

Key takeaways

• Landlords use spreadsheets, accounting software, and property management software to manage rental property.
• FreshBooks for landlords includes features such as double-entry accounting, tenant invoicing, and secure online rent payment.
• Landlords looking for an easy way to bill and collect the monthly rent may find FreshBooks an option to consider, but there are other alternatives to consider as well.

Options for rental property software

Even with just one rental property, accurately keeping track of income and expenses can take an incredible amount of time and effort. 

Before a landlord can begin keeping the books, a rental property chart of accounts needs to be created, then each transaction for revenues, expenses, assets, liabilities, and owner’s equity needs to be properly assigned to the correct line item.

Fortunately, there are several options for rental property software that landlords have to choose from.

Spreadsheet

One of the advantages of using a basic spreadsheet for keeping track of rental property income and expenses is that almost everyone already has the software on their computer or can access a program online for free.

Common options for spreadsheet software include Microsoft Excel, Numbers, Google Sheets, and OpenOffice Calc. It’s easy to find a rental property spreadsheet software template online, such as the Zillow Rental Income and Expense worksheet.

While using a spreadsheet for rental property may be the simplest option, there are some potential drawbacks to consider as well. A spreadsheet doesn’t automatically sync with business bank accounts and mortgage accounts, which means that every single transaction needs to be entered manually.

When entries are done by hand, it can be easy to have a valuable expense fall through the cracks. Valuable tax deductions may be overlooked, and taxes may be overpaid at the end of the year.

Accounting software

Many real estate investors choose to use accounting software for rental property instead of a spreadsheet. One of the advantages of using an accounting software package is that the rental property chart of accounts is already set up.

Accounting software uses the double-entry accounting system so that accounts are kept in balance. For example, when a tenant’s rent check is received, the business checking account balance is increased on the balance sheet and the income is recorded as revenue on the profit and loss statement.

Investors can also generate more professional looking reports with accounting software. It can be easier to make a better impression with the bank when applying to refinance a mortgage, which may increase the odds of getting approved for a loan.

Some free and paid options for accounting software include Stessa, GnuCash, QuickBooks, ZipBooks, and Wave. Of these five options, Stessa is the only free software for rental property designed by real estate investors, for real estate investors.

Property management software

Property management software bundles the features and benefits of accounting software with additional options to help make managing a rental property easier.

In addition to keeping track of the books, many property management software systems facilitate marketing vacant homes for rent, processing applications and screening tenants, executing leases, taking maintenance requests, and accepting rent payments online.

Features like these are what today’s tenants are looking for. For example, accepting online rent payments can provide tenants with an environment that’s safer and more secure, and also help to improve cash flow when rents are paid sooner.

Some good free and low-cost options for property management software for rental property include Avail, Rentler, TenantCloud, and Stessa.

FreshBooks for landlords

FreshBooks is a cloud-based accounting software system that was originally launched back in 2003 for small businesses.

The company offers all-new accounting software for rental property owners to better monitor the financial health of their business and grow revenues faster. Landlords can access FreshBooks online, and with the desktop and mobile apps.

FreshBooks may not be as well-known as some other accounting software brands. However, this bookkeeping software for rental property businesses may be a good match for both part-time real estate investors, along with property management companies and sophisticated investors with large rental property portfolios.

Rental property owners can use FreshBooks as an all-in-one accounting solution to create and send monthly rent statements to tenants, accept online rent payments, and track income and expenses.

A closer look at FreshBooks for landlords

Landlords can tell at a glance the financial status of each property, including whether a tenant has paid, how profitable the rental property is, and whether there is positive cash flow at the end of each month.

Double-entry accounting

Landlords can track business expenses automatically by connecting FreshBooks to a business bank account or credit card account. FreshBooks for landlords utilizes the industry-standard double-entry accounting system to keep debits and credits in check: 

• Cost of good sold
• General ledger
• Trial balance
• Chart of accounts
• Bank reconciliation
• Bank sheet

Invoicing software

Landlords using FreshBooks can create custom invoices and send the monthly rent statements to tenants directly from the software, along with a personalized thank-you note for paying the rent on time.

Once a rent invoice has been sent, FreshBooks will automatically send a polite late payment reminder notice. Late fees can be built into each tenant account based on the terms and conditions of the lease to help encourage tenants to pay the rent in full and on time.

FreshBooks for landlords also simplifies and streamlines billing tenants with recurring invoices for rent payments. Once a tenant is entered into the system with a recurring profile, FreshBooks will automatically send the invoices.

Secure online rent payments

Tenants can pay their monthly rent directly from an electronic invoice with just a couple of clicks. FreshBooks notes that payments are securely processed with high-level encryption and first-class security, making the software an effective way to collect rent. Tenants may also connect their credit cards to the FreshBooks accounting software to allow the auto payment of rent each and every month.

Pros and cons of FreshBooks

Setting up a tenant account is fairly easy using the FreshBooks dashboard. A tenant is created as a client, a recurring invoice is set up for the tenant, and expense details are entered into the account.

While FreshBooks for landlords may be a useful tool for invoicing, billing, and collecting the monthly rent online, there are some drawbacks to FreshBooks that landlords should be aware of. 

The system does not assign expenses to a specific property, which means that landlords will need to manually review each transaction for the year to complete Schedule E (Form 1040). So, even though income and expenses are automatically tracked, it can be easy to miss an expense or assign it to the wrong property.

Another drawback to FreshBooks is that landlords can not enter specific property details into the software, or store important real estate documents online such as leases or prior year tax returns. 

Some landlords may also argue that sending a monthly rent statement each month isn’t necessary, because the lease agreement is a contract that requires a tenant to pay the rent each month.

Best FreshBooks alternatives for landlords

Investopedia is a financial website headquartered in New York City that provides services such as investment advice, reviews, and ratings. The company recently researched the best accounting software for rental properties to help investors choose the right tools to manage rentals.

Best value

Stessa is rated by Investopedia as offering the best value for real estate investors looking for ample accounting features while keeping expenses low. Stessa is a free rental property finance software system that is easy to use, with fully automated bookkeeping and financial tracking features:

• Automated income and expense tracking
• Unlimited property tracking for single-family rentals, multifamily, and short-term rentals
• Performance dashboards at the property and portfolio level
• Informative monthly reports including income statement and net cash flow reports
• Export tax-ready financials
• Secure online document storage 
• Smartphone apps for iOS and Android
• Access 24/7 from anywhere in the world with an internet connection

Stessa was designed by real estate investors, for real estate investors, and is free, with optional premium services. 

After creating a free account, investors can access investor-only mortgage rates, claim an exclusive TurboTax discount for members of the Stessa Community, and obtain a suite of tax resources created in partnership with The Real Estate CPA.

Best for large property portfolios

Buildium is rated as the best accounting software for investors with a large number of rental properties. 

The system supports up to 5,000 properties with features such as rental listing and tenant screening, online leasing and rent collection, property and portfolio accounting, maintenance request tracking, and document storage.

Buildium offers three pricing plans ranging from $50 to $460 per month, plus a 10% discount for clients who sign up for an annual subscription.

Best for extra features

RentManager is a highly customizable property management software that works with properties of every size. 

Features include a complete accounting system, marketing and leasing, maintenance, reporting, business operations, and software customization. RentManager integrates with other providers including AmRent, Safeguard, AvidXchange, and ZeGo.

Landlords must contact RentManager directly for a pricing quote, and may also schedule an online demo by completing a registration form on the company’s website.