A Guide to Real Estate Accounting Software

Like any business, real estate companies rely on accounting, but manual accounting is time-consuming and prone to errors.

Fortunately, there’s a host of accounting software solutions—with more hitting the market every day. WorldMetrics reported that the global accounting software market will reach $11.8 billion by 2026.

For real estate investors, the best accounting software helps analyze operational scenarios, plan strategies for better workflows, and manage taxes efficiently. This custom software also helps ensure profitability, compliance, and sustainable growth.

What Is Real Estate Accounting Software?

Realtors need real estate accounting software to track income and expenses across four phases accurately:

• Acquisition (purchase price, closing costs, and pre-rental/sale renovation expenses)
• Development (permits, construction materials, labor, and architectural fees for raw land or significant renovation)
• Property Management (rental income tracking, tenant deposits, maintenance, property taxes, insurance, utilities)
• Disposal (realtor commissions, closing costs, and capital gains taxes)

Real estate accounting software and apps are online tools that realtors and accountants use to manage bookkeeping and accounting transactions efficiently. This is why these custom software solutions have become valuable resources for modern real estate businesses.

These accounting software and applications are generally cloud-based. They’re designed to augment best operating practices. Moreover, quickly accessing accounting data through accounting software helps realtors plan better strategies, perform audits, and reduce accounting costs.

What Are the Different Types of Real Estate Accounting Software?

The accounting software needs of realtors and brokers are different from those of property managers and property management firms. A real estate app developer typically creates two types of accounting software: general accounting and property management. Some software solutions offer features that overlap.

General accounting software is best for handling standard financial tasks, including:

• Tracking income and expenses
• Creating invoices
• Creating estimates
• Managing bank accounts and reconciliations
• Generating financial reports

Property management software is specifically designed for the property management industry, offering specialized features including:

• Collecting rent
• Managing tenants
• Handling property-related expenses
• Creating online portals for tenants and owners

What Are the Benefits of Using Real Estate Accounting Software?

The best accounting software benefits for real estate investors provides the following:

Effective Bookkeeping

Real estate accounting software’s management features make entering and organizing transactions frictionless and fast. This enables you to make data-driven decisions and strategic plans for scalability. Effective bookkeeping empowers your realty business to thrive.

Efficient Payment Processing and Invoicing

The best accounting software for rental properties makes payments and billing effortless, on time, and fast. It also sends payment reminders to tenants, which helps maintain a good business relationship. It can further prompt fund transfers between various real estate properties in minutes. Using accounting software, you can easily monitor all your expenses against allocated funds, giving you instant insights into your finances.

Effortless Transaction Management

Managing real estate transactions can be overwhelming due to the sheer size of rental and property dealings. Manual management is no longer a viable option; thus, the best accounting software for real estate investors becomes a necessity. With accounting software, you can automatically track investments and be upfront with trends and possible changes during a rent hike. You can quickly analyze transactional data to evaluate the potential impact of a deal on your overall investment.

Expedited Tax Filing

Tax payments are a big part of the real estate industry. You must closely monitor all your company transactions to process prompt tax payments. Using accounting software simplifies the process so all data remains organized, current, and readily available during tax filing. Some custom accounting solutions provide access to tax professionals who can offer advice so your business can have the most tax-efficient structure. They also ensure filing accuracy, potentially saving money on taxes.

Error-Free Bank Management

Bank reconciliation is a crucial accounting task. The software connects to your bank accounts to automatically import transactions, ensuring you have the latest transaction information for reconciliation. It identifies discrepancies between your bank statement and your books. It detects errors like missing transactions, incorrect amounts, or duplicates and provides alerts to address these issues.

Expert Payroll Administration

To handle payroll, you must correctly classify contractors and employees using the US Department of Labor’s economic realities test and follow the IRS guidelines. Doing this manually is complex and can lead to mistakes. Accounting software helps simplify the payroll process and ensure everything is done on time so your workers get paid without hassle.

Easy Remote Accessibility

Most real estate accounting applications are mobile-optimized, allowing you to monitor your accounts and perform accounting tasks in the comfort of your home or while on the go.

What Features Should Developers Incorporate in Real Estate Accounting Software?

The best accounting software for real estate investors should do much more than add up the numbers. It must provide you with the following features:

Core Accounting Functions:

• General Ledger
• Accounts Payable and Receivable
• Automated Billing and Invoicing
• Bank Reconciliation Processes

Industry-Specific:

• Lease Management
• Lease Tracking
• Property Portfolio Management
• Repair and Maintenance Expenditures
• Owner and Tenant Portals
• Sublease Management

Financial Reporting:

• Timely and Customized Financial Reports
• Cash Flow Analysis
• Cash Flow Forecasting
• Performance Metrics

Compliance and Security:

• Tax Preparation and Filing
• Data Security
• Adherence to Local and National Laws
• Regular Security Updates

What Makes Real Estate Accounting Software Valuable?

Real estate accounting software alters how realtors, accountants, and owners manage real estate finances. A reputable real estate software development company understands the complexities of the industry and creates solutions to streamline the financial management process and automate repeated tasks.

Custom accounting software developed specifically for real estate significantly reduces human errors. With increased accuracy of your financial records, you can ensure full compliance with industry regulations. Real estate books that are accurate and current minimize penalties and help you make better business decisions.

Working with a real estate software company that knows your specific needs is key to achieving maximum results. Contact us to learn how we can create a custom software solution that helps you meet your business goals.