HOW OWNER CONTRIBUTIONS FOR MULTI-PROPERTY OWNERS WORK:
First, let’s say your portfolio has two properties.
One of your properties had a repair last month that exceeded the rental income bringing the property balance down to negative $500. As a property manager, we never let properties go into the negative, so this is something we want to fix immediately.
Previously, the cleanest ways to handle this would have been to post offsetting transactions to both property ledgers to show a transfer of funds from one property to cover the loss for the other property — or you the owner send in a check to cover the negative balance. Both options required a fair amount of work.
Now, there's a new way of showing this "transfer of funds" on your accounting ledger.
When Property "A" has a positive balance after all expenses, lets say of "$1,000.00" and Property "B" has a negative balance, of "500.00" then we need to transfer $500 from property "A" to property "B" to cover the negative balance. To make the accounting correct this is how it will show on the account ledger:
Property A will show a Owner Disbursement of: $1,000.00 - Owner Disbursement
Property B will an Owner Contribution of: $500.00 - Owner Contribution
The owner will then receive an ACH payment to their bank account of $500 instead of $1,000.