Balance sheet structure

[Garrett Blanchard]

I need to build a balance sheet for my properties. What I have so far... Assets, cash and the properties. Liabilities, balances owed on properties, credit cards and lines of credit. Am I missing anything there? Also, under the assets... how do I value the properties? I know they are all worth more then what I paid, but how do I figure this out for banking purposes? Local comps? Rents/expenses? Please help

[Carini Rochester]

Bookkeeping can be done for two purposes. It has to be done for tax paying purposes. The balance sheet that will result from this would have the property as an asset, plus any improvements that have to be depreciated (like a new roof, for example.) The dollar values assigned for these assets are what you pay for them, not what you guess, suppose, theorize that they are worth today. The IRS will not care about what it's worth 'today' until the 'today' that you actually sell it and know for sure that that's what it's worth. Depreciation will get included (subtracted) each year (I always date that on December 31.)  You, or your bookkeeper, or accountant should be keeping track and their software can easily print a balance sheet.

Another purpose of bookkeeping is to give you an idea of what you're worth. The main things that will change from what I've stated above is that your properties have (hopefully) gone up in value. In my experience, banks are interested in my best estimate of how much equity I have in my properties. Another difference is that the properties probably have not gone down in value as the depreciation calculation assumes. So remove depreciation. 

I only produce the balance sheet using the bookkeeping required by the IRS. I can look at it and easily add an amount I think the properties have appreciated, subtract out the depreciation and get a rough idea of what I'm really worth (financially speaking.)