• Financial Reports

What is a General Ledger for Rental Properties?

January 22, 2025 6 min read

The Basics of Rental Property General Ledgers

Keeping a detailed record of your business’s cash flow isn’t easy. Juggling rental income, invoices, taxes, fees, and more can become overwhelming very quickly. If left unchecked (and unorganized), your business’s finances can get messy.  Luckily, keeping a general ledger is a tried-and-true method of tracking that’ll keep you organized and prepared for the future.

What is a General Ledger for Rental Properties?

A general ledger for rental properties (not to be confused with a rent roll, which exclusively tracks rental income), is a document that outlines all of your rental business’s financial transactions. It’s a document—typically in a column format—that serves as a complete bird’s eye view of where your money is coming from and where it’s going. Much like a personal ledger, it tells the nitty-gritty details of your finances, allowing you to be better in touch with your books and understand your business’s financial health.

What Can a General Ledger Tell You?

General ledgers closely monitor and detail your finances, which is important in the management of any business. They include the specific details of each transaction, serving as a paper trail for any income or expense that your rental property business sees. The details provided on a general ledger are exactly what make them so valuable—they contain the information needed for the creation of many financial reports, such as a P&L or income statement, a cash flow statement, an operating expense report, and much more. General ledgers for rental properties give you the power to generate and scrutinize your company’s financial statements and different reports, metrics, and KPIs, which will help you find a clearer path to growth and success.

Benefits of Using a General Ledger

General ledgers can be used for a variety of reasons, but they all have the same end goal: tracking your profitability. With a detailed general ledger, you’ll have a close record of your cash flow, which is important for record-keeping purposes.

If you notice a dip in profit during a particular month, then looking to your general ledger is a great place to start. There, you’ll be able to quickly scan over your list of transactions. You might notice that there are comparatively more maintenance expenses than previous periods, which is an insight you can translate into actionable items for your maintenance team. General ledgers serve as the starting point for investigation if things go awry. If you keep a detailed record of your dates, units, tenants, and expenses, then you’ll be able to refer to receipts and other records to remedy any discrepancies you notice.

Additionally, general ledgers are important if you’re looking to grow your business. Prospective lenders and partners will want to see tangible proof of your profitability and sharp property management skills. With a detailed and complete general ledger, they’ll be able to see how well you handle your business’s finances, as well as how seriously you take your rental property business.

Components of a General Ledger for Rental Properties

A general ledger is a straightforward document to work with. You can find templates online, and even general ledger software that automatically generates them for you. A typical general ledger for rental properties will consist of columns containing the following details: columns containing the following details:

• Date: Date of the transaction (depending on whether you use cash or accrual accounting, this date may not be the actual date of the transaction).
• Description: Any details relevant to the transaction that you may need later, including names, unit numbers, included fees, company names, etc.
• Transaction Type: Describes the exchange of money. Debit refers to amounts paid, whereas credit refers to amounts received.
• Balance: Your business’s balance following this transaction. Some prefer to only calculate the total balance at the end of each business day, but it’s typically a matter of preference.

Depending on how detailed you’d like your general ledger to be, you can also include the methods of payment, property name (if you manage multiple properties), financial accounts numbers, and other useful organizational components. You’ll want to record and refer back to your ledger with ease, so try to not include irrelevant details. A basic general ledger template may look like the following:

How to Create a General Ledger Your Rental Business

Think of your general ledger as a daily journal for your rental property business. You’ll want to closely record all of your transactions in yur journal entries, as well as any details pertaining to said transactions. As mentioned, general ledgers are vital to good record-keeping, since they tend to be the hub for all of your finances. That being said, it’s your job to ensure your ledger is detailed yet easy to refer back to. Tailor your general ledger to your business’s needs and include information that is relevant to you and your business.

If you’re looking to begin keeping a general ledger, you’ll want to start by choosing what details you want to track. Once that’s decided, search for a template or a general ledger accounting software that meets your needs. Beginning to use a ledger when you already have a few transactions under your belt can seem daunting since you’ll need to record all of your previous transactions. But it’s important that you do so, including as many details as you can, so that you get more accurate financial records. Alternatively, some general ledger software (such as Ledgre) allows for bank account synchronization, which will record previous transactions on your ledger for you when you make the switch.

Using Software to Automate Financial Reporting

Using rental property accounting software like Ledgre can ease the work of keeping your general ledger detailed and up to date. As you record income and expenses, Ledgre will update and securely store your information online for your convenience. You can even automate this process by linking your bank account to Ledgre via our integration with Plaid, which will simplify the process of making the switch to a digital ledger.

Conclusion

As it is one of the most important financial reports, keeping a detailed rental ledger for rental properties is vital. Without it, you may have no idea where your money is truly going and coming from, which increases your risk of mishandling your finances, and even fraud. On a ledger, you’ll find all of the details pertaining to your cash flow, as well as any data needed to generate metrics and other financial reports that will foster your business’s growth. If you haven’t already, you’ll find organization, peace of mind, and more room to grow alongside a general ledger.