Real Estate Accounting, PITI, Advisors and Best Companies for New Agents

Real estate accounting is not the same as personal finance tracking. When you own rental properties or operate as a real estate agent, your income and expenses cross multiple categories — property depreciation, pass-through entity elections, self-employment tax, and deductible business expenses all require specific treatment. A real estate advisor who understands both the transaction side and the financial reporting side of the industry is more valuable than a general CPA who doesn’t specialize in property.

Understanding concepts like piti real estate, knowing when to hire a real estate advisory firm versus a solo advisor, and choosing the best real estate companies for new agents all connect to the same theme: the people and systems you work with determine your financial and career outcomes more than your individual effort alone.

Real Estate Accounting Basics for Investors and Agents

Real estate accounting for rental property investors centers on tracking five categories: rental income, operating expenses (mortgage interest, insurance, property management, repairs), depreciation (a paper deduction spread over 27.5 years for residential property), capital improvements (added to your basis, not expensed), and financing costs. Mixing capital improvements with repairs in your records creates accounting errors that can trigger IRS audit flags.

For agents, real estate accounting means tracking commission income on a 1099-NEC basis, deducting business expenses (MLS dues, marketing, mileage at $0.67/mile in 2024, home office if dedicated), and managing quarterly estimated tax payments. The self-employment tax rate (15.3% on net earnings up to $168,600 in 2024) surprises most new agents because they’ve only experienced employer-withheld taxes. Set aside 25 to 30% of every commission check for taxes and quarterly deposits until you have a full year of data to work from.

PITI Real Estate: What It Means and Why It Matters

Piti real estate refers to the four components of a monthly mortgage payment: Principal, Interest, Taxes, and Insurance. When a lender qualifies a buyer, they calculate PITI and compare it to the borrower’s gross monthly income. Most conventional loans allow a PITI-to-income ratio of up to 28% — the “front-end” debt-to-income ratio. Understanding piti real estate helps agents explain affordability to buyers and helps investors underwrite cash flow accurately.

For a rental property, piti real estate is only one component of total monthly carrying cost. You also need to budget for vacancy (typically 5 to 10% of gross rent), maintenance reserves (1% of property value annually), property management fees (8 to 12% of collected rent), and capital expenditure reserves for major items like roof, HVAC, and water heater replacement. Cash flow analysis that ignores these items consistently overestimates the profitability of rental properties.

Real Estate Advisory and Best Companies for New Agents

A real estate advisory firm provides strategic guidance to investors and institutions managing real estate portfolios. These firms differ from transaction-based brokerages — they analyze market conditions, underwrite acquisitions, and provide ongoing asset management guidance rather than facilitating individual sales. Individual agents rarely interact with real estate advisory firms unless they’re working with institutional or high-net-worth clients.

For new agents choosing the best real estate companies for new agents, the primary criteria are: training program quality, commission split structure, technology platform, and the culture of the office. The best real estate companies for new agents invest in formal training. Keller Williams’s IGNITE program, RE/MAX’s agent development curriculum, and eXp Realty’s virtual training model are all frequently cited by new agents as providing real foundational support. Avoid brokerages that offer high splits with no training — the split is meaningless if you can’t close transactions.

Key takeaways: Real estate accounting requires tracking five specific categories for investors and managing self-employment taxes carefully for agents. Piti real estate is the starting point for buyer qualification and rental underwriting. Choosing a real estate advisory partner or the best real estate companies for new agents comes down to finding expertise and support that matches your specific stage and goals.