When you outsource the management to an external company you will need to record the following transactions:
- Rental income received.
- Any expenses incurred.
- The fee that the external management company charge.
In general all the above will be combined into one lump sum.
The following is how to reconcile this transaction:
Reconciling
When receiving a lump sum which combines expenses commission charges and rental income follow the steps below:
- On the manager page create a new expense from the management company for the fee they charge (you may need to set them up as a new supplier)
- Create a payment for the charge above.
- Make sure the payment date and bank account match to the date and account you received the lump-sum incoming payment from the external company.
- Likewise, create an invoice and payment for any expenses the property incurred on the correct property page.
Banking
- Go to the income received in the bank. Select Batch Transaction.
- Under the Existing dropdown you will find all above created invoice/s payments. Select each of them to bring them into the batch.
- Now bring in all the rental payments covered by this transfer, by clicking Find Tenant for each rental payment.
- The batch balance should now be correct.
- Save
Understanding Higher Rent
One can set a higher rent option as outlined in the following article: Guaranteed rent
The gap between the higher rent and the rent to the landlord will come in to the manager account as an income.
In general the outsourced companies fee will be paid by the manager from this income received.
Passing the charge on to the owner
If you choose to pass this charge on to the landlord, in this case an invoice will need to created from the external management company to the owner directly on the owner page by clicking New Expense.