What am I actually paying for on a real estate bookkeeper's monthly invoice?

Question

Five years into running a small service business, I've found my own books are simple enough that I do them myself in an afternoon a month. Now I've picked up two rentals and a friend told me I need a "real estate bookkeeper" instead, and quoted me $350 a month for the two doors. That number felt high for what I imagine is downloading a bank feed and clicking categories.

What I don't understand is what makes the real estate version different. Someone on another forum said the whole point is depreciation schedules, but I thought depreciation was a tax return thing that my CPA does in the spring, not a monthly bookkeeping thing. So if depreciation isn't in the monthly work, what is? And is $350 buying me labor or is it buying me somebody's judgment about which account a $2,100 check goes into?

Rena Guide · Accepted Answer

You're mostly buying judgment, and the depreciation point your friend made is half right.

Depreciation is the accounting rule that spreads the cost of a building over many years instead of expensing it all at once. The actual calculation usually lands on the tax return, so your CPA is the one who does it. What the monthly bookkeeper does is keep a clean list of the things that will eventually feed that calculation. When you spend $2,100, someone has to decide whether it's a repair that hits this year's expenses or an improvement that gets added to the property's cost and depreciated. A general bookkeeper who doesn't work in real estate will often dump both into "maintenance" and nobody notices until your CPA is trying to reconstruct a year of receipts in March.

So the monthly work on two doors is roughly: pull in bank and card activity, split every dollar to the right property rather than to a company-wide bucket, code security deposits as money you owe back rather than income, reconcile each account to the statement so nothing is missing or doubled, and hand you a profit and loss per property.

The part people don't think to ask about is who owns the file. Ask whether the QuickBooks or Xero subscription is in your name with you as an admin, and get the answer in writing. Plenty of people discover at the end of a relationship that their books live inside someone else's account. Also ask what happens when you buy a third property, because per-door pricing and flat pricing behave very differently at scale.

tonyv88 · Answer

The security deposit line in that answer is the one that bites people. I see owner statements every month where a deposit got booked as rent income, so the owner's P&L looks $1,500 better than reality and then there's a hole when the tenant moves out. On two doors you'd catch it. On twenty you won't.

mitchell_ray4 · Answer

Coming from the tools side, the repair vs improvement call is genuinely hard from the invoice alone. My invoice for a water heater swap says "water heater replacement, $1,400" and nothing about whether that was a full unit or a repair on the existing one. If your bookkeeper is only reading invoices, they're guessing. Somebody has to tell them what actually happened at the property.

aliyah_b · Answer

$350 for two doors works out to $2,100 a year, which is real money against a rental that might clear $300 a month. I'd want to know what the same person charges at five doors before signing, because if it's still $350 the price makes a lot more sense in a year.

derekj19 · Answer

On the file ownership point, I've seen the reverse problem too. Owner holds the subscription, bookkeeper leaves, and nobody in the office knows the chart of accounts logic the last person invented. There were twelve variations of "repairs" by property nickname. Ask for a written note on how the accounts are structured, not just the login.

nataliehsu · Answer

Does the $350 include talking to your CPA, or is that billed separately? Thatch, that's the question I'd send back first.

angela_burke · Answer

Plumb's question is the right one and the answer is usually no. I run a small team and the year-end handoff is its own scope, because the CPA sends back adjustments and someone has to enter them so next year's opening balances match the return. If nobody does that, the books and the tax return drift apart and by year three you can't reconcile them at all. I'd ask specifically whether closing entries after the return are included or hourly.

What am I actually paying for on a real estate bookkeeper's monthly invoice?

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