A couple of years ago a client purchased a rental property and is using Xero as the accounting system. This month the client purchased a second rental property.
We discussed with them the various options regarding the accounting for this second property. They decided to purchase the second property using the same entity used for the purchase of the first property and to use the existing Xero account. So as to record the income and expenses for the second property, separately, they have added two new bank accounts.
Straight forward so far now the expensive but valuable lesson learned. When we set up the first rental property as there was only one property it never crossed our mind to set up a Rental Properties Tracking Category in case a there were other rental properties purchased at a later date. We have now set up a Rental Properties Tracking Category however it has come at the expense of having to edit all the Bank Rules, recode all the transactions for the last eighteen months so as to include the Rental Properties Tracking Category. If we had of set up the Rental Properties Tracking Category from day one all we would have had to now was add the new rental property.
This is written with the hope that others do not have to experience the costly exercise we went through.