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Most investors think of bookkeeping as a tax-season chore. Lenders don't. When you go for a cash-out refi, a DSCR loan, or a portfolio line, underwriting starts with one question: can you show what each property actually earns?
That's where a lot of small portfolios fall apart. Three LLCs share one bank account. The management company's statements never get reconciled against deposits. Repairs, capital improvements, and owner draws all land in one "expenses" bucket. Nothing is wrong, exactly, but nobody can produce a clean rent roll and property-level P&L without a week of digging.
Four habits fix most of it:
- One bank account per entity. Commingling is the first thing a lender or auditor questions.
- Reconcile monthly against the PM statement. Match every owner distribution to rent collected, fees, and reserves.
- Split capex from repairs. It changes your NOI, your depreciation, and how a lender reads the property.
- Keep a live rent roll tied to the ledger. If occupancy in the spreadsheet doesn't match deposits in the bank, you'll find out at the worst moment.
Do this and you get more than a smoother refinance. You can see which doors carry the portfolio and which ones drag it down, and that's the data you need to decide what to sell, refinance, or buy next.
Mark Reich, CPA, is a Principal at River Edge Advisors, a 75-person fractional CFO and outsourced accounting firm that works with real estate investors nationwide.