Mikael La Ferla on Why Philadelphia Real Estate Investors Need Property-Level Accounting

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Owning five profitable rental properties does not necessarily mean all five are good investments. According to Philadelphia real estate accountant Mikael La Ferla, looking only at the combined numbers can hide problems at individual properties.

Property-level accounting means tracking the income and expenses of each property separately. Instead of seeing that a portfolio collected $30,000 in rent and spent $20,000 during the month, an owner can see exactly how much each building collected and what each building cost to operate.

One property may generate strong cash flow while another is being hurt by repairs, unpaid rent, utilities, insurance, taxes, or other expenses. If everything is grouped together, the stronger property can hide the weaker one's performance.

The Internal Revenue Service also requires rental owners to maintain records supporting rental income and expenses. According to IRS guidance on rental real estate, good records help owners monitor their rental properties, prepare financial statements, track deductible expenses, and prepare accurate tax returns.

For Mikael La Ferla, property-level reporting also makes everyday decisions easier. An owner deciding whether to renovate, refinance, sell, or continue holding a building needs to know what that particular property is actually producing. A portfolio-wide bank balance cannot answer that question.

The IRS's Schedule E instructions reinforce the importance of tracking individual properties. For individual rental owners using Schedule E, the form calls for information such as the property's address and income and expenses for each rental property. Investors with multiple properties therefore benefit from having their accounting organized at the property level before tax preparation begins.

This type of real estate accounting is a focus of La Ferla Accounting. Mikael La Ferla founded the Philadelphia-based business to provide bookkeeping and accounting support for small businesses and real estate owners, including property-level reporting, bank reconciliations, accounts payable, monthly financial statements, and multi-entity accounting.

La Ferla's broader work in financial organization includes Shopden, the personal finance and expense-tracking app he founded to help consumers better understand their everyday spending. His accounting, finance, real estate, and entrepreneurial background can also be found on Mikael La Ferla's personal website and LinkedIn.

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