Rental Properties

Topic: Rental Properties

A common requirement in the Housing and Construction Industry is to control the construction and/or acquisition of Rental Properties and subsequent Rental Income generated by these properties.  The following are suggested ways of handling these activities in DATABUILD for Windows.

Construction Phase :

The control of the construction of the property would be handled as for other building contracts.

Requirements:

- a Job for each development with the Builder/Company as the Client/Debtor

- a Cost Centre Bank with just a “Sundry Income” account nominated for the default Income A/C, as this is not actually used for posting, and a default General Ledger (GL) cost account of an Asset, e.g. “Rental Properties”

- typical Cost Centres would those of a typical construction job, e.g. 1 Preliminaries; 2 Earthworks; etc. and most likely a cost centre for the Land Purchase

these cost centres would be linked to the development asset, plus there may be some cost centres linked to GL Expense accounts if appropriate, e.g. legal; interest; etc.

The cost of development including the land purchase will be reflected in the Job that was created and the total cost will also be reflected in the nominated asset account in the General Ledger.

Rental Income Phase:

This section describes the control of the rental income on the developed properties.

Requirements:

- a Job per Rental Property and a Client/Debtor being the Tenant

- a Cost Centre Bank for “Rental Properties” with default income account, e.g. “Rental Income” and default GL cost account in Cost of Sales or Expenses, e.g. “General Outgoings”.  It would be appropriate to create a group of GL cost of sale or expense accounts relating to the Rental activity and of course linked to the cost centres as discussed in the next item

- cost centres for the various forms of expenditure relating to the Rental Properties, e.g. Agents Fees; Repairs & Maintenance; Rates & Taxes; etc.

Supplier invoices are posted to the appropriate Rental Job; cost centre, and the related general ledger account.  A Claim transaction must be posted to record the income and Receipts posted for the rent received.  Job reports will provide information on the performance of the rental properties.

Simple recording of Rent:

The minimum requirement for recording Rental income and outgoings would be to have suitable cost centres and associated GL accounts to record the expenses.  The cost centres would be included in the General Ledger cost centre bank.  The rent received would be handled by a Direct GL receipt posting to a GL income account, e.g. 7.4 Rent Received.