Accounting - Filing System for Rehabbers? Need some Help Please

[Greg P.]

Hello, we are currently doing approx 40 properties each year and having a hard time keeping up with all of the paperwork. We were filing our transactions by each property and putting all information pertaining to the property in one folder per property. We found out that this is a bit difficult because there is a lot of paperwork for each property and to find a specific document could be hard to do. Any advice on a good way to file paperwork and general filing advice or accounting advice would be grateful.

Thank you.

[Bill Gulley]

I did close to the same.

In development, the most mind bending aspect, we began with the chart of accounts in the accounting system. Say 220 was roofing ststems for expenses, 221 could be felt, 222, shingles, 223, hardware (nails, screws, trim, drip trim, vents, sofit) 224, decking/lumber, 225, roll roofing (including rubber systems) 226, glue/adhesives...you get the idea.

If you are knocking out say 4 basic floor plans, different elevation but all the same materials/grades, you are buying bulk and allocating costs based on the plans per plan. So say this property is the #3 plan. It is designated by the build number 34th house that year (3-32), followed by the acct. # then the description, so...

(year) 13 (3-32) 224 Meeks Lumber (03/11) 86.52

This was in MAS-90, the cell of 13 (3-32) totals accts 224 adds to expenses and has the running total.

I didn't set it up, all I had to do was input data, I'm not a techie!

Then you have hard files;

13-3-32 3267 E. Cherry

Invoice Files, a seperate file are filed in numeric order, by date then build number, then documents in that file are filed again by date then alphabetically.

I get three invoices on 3-11. One is from Delta Hardware, another drop ship from Lowes and another from Meeks Lumber, the three hard copy invoices are filed in that order, behind an invoice received on 3-10.

This way all invoices can be located for any property.

Property Files. 3-32 3267 E. Cherry

These are about the property divided in a folder with those bend over metal stays at the top. All documents get hole punched. You can get these from some office stores, I used a "loan file" source, they are much wider for thicker files. Get dividers, blank heavy duty dividers with tabs.

There is the left side of the file and the right.

Left side was things associated acquisition with the physical property. Filed by category, from the back to the front, purchase contract, HUD-1, appraisal, inspection reports, survey, title insurance, copy of deed, note/mortgage, insurance, letters or other.

Right side was after acquisition. Building permits 3-32, inspections, loan disbursement checks (photo copy), lien waiver/pay receipts.

Accepted CG/Subs, proof of insurance, bids, Agreement. This can get thick quick for a new build or extensive rehab. Inwhich case a blank sheet is inserted indicating listing contractors having seperate files, each contractor gets a file, a folder filed behind the property folder tab notes name of contractor, the 3-32. Filed alphabetically, Allied Contractors 3-32 then Greene Plumbing 3-32, then Harris Electrical 3-32...etc.

Use a blank divider if you have a rolls of plans, filed seperately. It should have a sign-out sheet should you have to give plans out, then sign them back in when you get them back.

Plans and spec sheets 3-32

On top of lien'waivers, if seperate contractor files, additional work orders, change orders and punch list, not in contractor files otherwise you'll be going through various contractor files to see who got changes, so keep them all together.

Final inspection report/certification

Then, Listing agreement, marketing notes/coorespondence and on top other notes phone contacts.

This takes time and effort to maintain files and accounts. Regardless of what order you file things in, there will be times you need to pull everything filed on top out to get to a document to copy it for some reason. I used those big metal paper clips to secure the stack being pulled between the two holes at the top....keeps the holes lined up to be put back. Best I can recall that was the order, so the least used documents are toward the bottom.

If you get another insurance policy, after the builder's rehab policy on the left, the new one was put under the listing agreement on the right side as it becomes a final product, no longer in the build process.

If you have large prints, plans and specs in rolls, get a trash can, rubber band at the top with tags, put the number on it, 3-32.

Pretty simple really, identify the accounts, use the chart of accounts to go to a property, identify the property numerically then a property address. Inside file by category, by date then alhabetically within each category.

If files get full, 1. 3-32 and 2. 3-32, you can split files how you like, stayed close to same method, left side is usually not bad, left is in file one, spill over in file 2. is bottom side of the right and the higher docs on the right.

That's about how I remeber it, other than the accounting, not many files were noted on any computer list and never scanned, beyond my skills you know. Yes, this is the military system, adopted by corporates like General Electric, Boeing, Wal-Mart, so I've been told. Good luck... :)