Managing your investment property in Xero

One of the great uses of Xero, and a fun way to get started, is to manage your investment properties in Xero.

We’ve observed that many property investors are way behind with their property accounting and then have a huge job at the end of the year. Or they deluge their accountant with a shoebox containing a year’s receipts for them to untangle.  There is a better way!

Rental properties are largely cash businesses, most transactions appear on your bank statements.  As Xero allows you to import historical bank transactions you can go back and retrospectively catch up. Even a few hundred transactions you can quickly process to get back up to date and in control.

Our repeating invoices allow you to create rent schedules for all the people that are paying rent.  These can also be set up retrospectively so when you process your last 6 months of bank transactions you can match payments off what was due.  I’ve set up a few friends’ investment properties on Xero and every time we’ve discovered missing rent. And each time the amount has been more than a year’s subscription to Xero.  Instant ROI!

Once you have caught up, the repeating invoices automatically create rent transactions as they are due. This means you can match payments off and see immediately if anyone is late.

You track expenses and rent in the Profit and Loss report and use Tracking Codes to have separate reports by property.

In the Balance Sheet you can see what each property is worth, your mortgages and the amount of top up funding you are putting into your properties.

We’ve developed a guide to setting up rental properties correctly and would love your feedback.  If enough of you want a hand to get set up we’d be happy to run some workshops. Either contact your accountant or let us know.

Manage investment properties in Xero


November 8, 2013 at 10:09 am

Sorry but this is lame. The article you referenced doesn’t address the most fundamental issue of accounting for property investments – how are multiple properties segmented in the reporting? Is there some sort of class or other tag you can use or when the article says to Setup “the” Property in Xero – does it mean creating separate P&L accounts for each property.

Sandra Hunter
November 9, 2013 at 7:33 am

@Tim, a lot of small property investors do not want or need segmented reporting. However if you do want that level of detail there are great add-ons that do just that. Pocket Rent is a good example.

November 10, 2013 at 10:17 pm

We use the tracking categories in Xero for clients with multiple properties – it works fine. We can print a P&L by division at year end that gives us everything we need for tax.

Colin Middleton
November 11, 2013 at 11:54 am

Purchase Orders awesome two of my clients will be happy today also have a two clients desperately waiting for Inventory one I implemented last week on Blind faith and another waiting, using MYOB( the sooner Xero has a light inventory I am sure it will increase Xero sign ups by another 30 percent as at least 30 percent need inventory

Pennie White
December 22, 2013 at 10:28 am

Tim are the tracking features sufficient. This is how I get break down for each property. I also make an account for each expense tax code. I also use tracking for each kind of expense however I find the separate accounts in chart of accounts more useful for this separation. Does that make sense?

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