How to set up Arthur for self-managed portfolios

Modified on Tue, 26 Mar at 12:23 PM

Self-managed portfolios tend to have two different scenarios:

Portfolios where all the units are owned by a single owner entity
Portfolios where there are many owner entities, all related to each other and managed by the same people
Portfolios where rent is collected by an agent and fees applied to the rent and passed over to the manager - This is dealt with by the article handling head agent comission

1. Portfolios where all the units are owned by a single owner entity

This scenario is used where one owner entity owns all the units under management. This includes A landlord where all units are owned in their own personal name or a company name. A/ Setting up Transactions for Income and Expenditure Income When setting up Arthur, ensure that all rents use transaction code Direct rent - you can make this a default setting. This means the system will assume the receipt of rent is as income and only creates transactions on the tenant statement. Additional income transaction types can also be set up. Expenditure In Arthur, any expenditure items will be payable by:

The Contractor and appear on the contractor Statement' as bills to be paid. Ensure that all payees are set up as contractors, such as tradesmen, utility companies, mortgage companies, white good suppliers etc - regardless of whether they 'complete work' for you or are simply a supplier.
The Tenant and appear on the tenant statement

B/ Reconciliation of transactions Arthur has two options to reconcile transactions against banking information.

If neither of these options is viable, users are also able to mark transactions as 'received' within the system manually. C/ Reporting on Profit & Loss Based on the information within Arthur, you are able to use the reporting area to run an Income vs Expenditure report across the whole portfolio.

2. Portfolios where there are many owner entities

This scenario is used where the units under management are owned by several different owner entities, all related to each other in some way with the rent being received into their individual bank accounts and still be considered an income. This includes A landlord where some properties are owned in their personal name and others in a limited company, A family portfolio managed centrally, but with units owned by different family members, an investment company where SPV's and JV's are used for purchasing units with all units being managed centrally afterward, etc. Depending on your setup, there are three potential routes that can be taken:

All units are managed by, and rent is collected by one management brand
All units are managed by one management brand, but rent is collected individually
Units are managed individually by each owner entity

1. All units are managed by, and rent is collected by one management brand

In this scenario, all the units are managed by one 'management brand', almost like an agency. All rents collected into one client account and 'remitted' to each individual owner entity. Any invoices are sent in the name of the management brand. Considerations

There must be one centralized bank for rents to be collected into
Money must be remitted to each owner entity on a regular basis
There may be regulatory requirements surrounding receiving monies into one account for multiple owner entities

Upside

All owner entity portfolios can be managed in one centralized Arthur account
The account can link to one Xero account or one live bank feed in Arthur

Setting up Transactions for Income and Expenditure Income When setting up Arthur ensure that all rents use transaction code Rent charge - you can make this a default setting. This means the system will assume the receipt of rent is a liability and must be remitted to the owner entity. The system will create transactions both on the tenant statement and the property owner statement. Additional income transaction types can also be set up. Expenditure In Arthur, any expenditure items will appear as bills to be paid either by the property owner or by the 'management brand'. Transactions will be located on the 'Contractor Statement' and the 'Property Owner Statement'. Where transactions appear on the 'Property Owner Statement', the money will be shown as a deduction before the money is remitted to each owner entity. Ensure that all payees are set up as contractors. Such as: tradesmen, utility companies, mortgage companies, white good suppliers, etc - regardless of whether they 'complete work' for you or are simply a supplier. Transactions can be added to both the 'Contractor Statement' and the 'Property Owner Statement' without a related transaction appearing on the other statement if required Reconciliation of transaction payable and received with the bank account using Xero or Arthur`s live bank feed

If neither of these options are viable, users are also able to mark transactions as 'received' within the system manually. How to remit to each owner entity The 'management brand' will need to remit the money to the owner entities on a regular basis, this can be done in batch, with statements sending automatically

2. All units are managed by one management brand, but rent is collected individually

In this scenario, all the units are managed by one management brand', almost like an agency. However, rents are sent directly to each owner entity's bank account and any invoices are sent in the name of the owner entity. Considerations

If there are different VAT statuses within the owner entities, there is a high risk of errors. The system will not automatically recognize the correct VAT status for each owner entity when creating transactions
Individual invoice and statement templates will need to be created for each owner entity and the correct one manually selected every time. The system will not assign specific invoice and statement templates to a specific owner entity
If each owner entity has its own Xero, Arthur cannot link to them via this one account
Generally, this setup becomes difficult to manage when there are over 5 owner entities due to the number of different bank feeds

Upside

All owner entity portfolios can be managed in one centralized Arthur accounts
All owner entity bank accounts can be reconciled in one Arthur account via the live bank feed

Setting up Transactions for Income and Expenditure Income When setting up Arthur, you should create individual transaction types for each owner entity. At a minimum, you should ensure that all owner entities have a rental transaction type that is considered an income. This means the system will assume the receipt of rent is as income and only creates transactions on the tenant statement. This is to ensure reconciliation and reporting can be completed accurately. It is also recommended that the user uses individual tenancy sub-types for each owner entity to further mark the portfolios as separate. Expenditure In Arthur, any expenditure items will be located on the 'Contractor Statement' and appear as bills to be paid. Ensure that all payees are set up as contractors. Such as: tradesmen, utility companies, mortgage companies, white good suppliers, etc - regardless of whether they 'complete work' for you or are simply a supplier. Reconciliation of transactions Arthur has two options to reconcile transactions in this scenario:

Using a live bank feed for each owner entity within Arthur
Manually mark transactions as 'received' within the system.

Reporting on Profit & Loss Based on the information within Arthur, you are able to use the reporting area to run an Income vs Expenditure report across each portfolio.

3. Units are managed individually by each owner entity

In this scenario, whilst there is some form of relationship between the owner entities (usual people in common), each is treated as its own separate brand and is managed as such. Day-to-day management is completed under each owner entity name, rents are collected directly into the owner bank account and statements and invoices are created in the name of the owner entity. Setting up these additional accounts and using our global switch mean access is straightforward with a single login. Considerations

Each owner entity will need to have its own Arthur account, this can make the completion of daily property management tasks more complicated

Upside

Consolidated reports can be run across all the owner entity accounts
The switch account feature on the web and mobile means access is easy with a single login
Reporting for individual owner entities is very simple
There is a smaller chance of human error causing problems when dealing with different owner entities
Each owner entity can integrate to their own Xero account or have their own live bank feed in Arthur

Setting up Transactions for Income and Expenditure Income When setting up Arthur, ensure that for each account all rents use transaction code Direct rent - you can make this a default setting. This means the system will assume the receipt of rent is as income and only creates transactions on the tenant statement. Additional income transaction types can also be set up. Expenditure In Arthur, any expenditure items will be located on the 'Contractor Statement' and appear as bills to be paid. Ensure that all payees are set up as contractors. Such as: tradesmen, utility companies, mortgage companies, white good suppliers etc - regardless of whether they 'complete work' for you or are simply a supplier. Reconciliation of transactions Arthur has two options to reconcile transactions against banking information.

If neither of these options is viable, users are also able to mark transactions as 'received' within the system manually. Reporting on Profit & Loss Based on the information within Arthur, you are able to use the reporting area to run an Income vs Expenditure report across the whole portfolio. Creating consolidated reports across all owner entity portfolios When a user runs a report, if the report is able to consolidate data across all portfolios, the user will be asked which portfolios should be included in the report. Note, not all reports will be able to do this.