All Forum Posts by: Andrew C.

Have agreed on terms on a hard money loan to an investor I know well. I can have them just setup an ACH for the monthly payments, etc...but I feel like this would be easier with some automation, and there just must be something that's already setup for this. This is our first such loan. Not sure if we'll do more, but it surely won't ever be high volume...so expensive or highly customizable solutions don't make a lot of sense. Just looking for something basic.  Any suggestions?

that sounds a lot like you're suggesting mortgage fraud. If I know I know i'm going to be renting it out by the room, sign mortgage docs that assert something else, and then immediately rent it out by the room...that's pretty sketchy.

Am penciling out a property and trying to see what our loan options are.
Post rehab, the property will be a 4bdrm 2 bath house, that's a few blocks from a college in southern WI, USA.
Would be rented to 4-6 college students (# TBD). These would be separate 12-month leases.

I'm looking for lenders willing to do a cash-out refi on this (we'd purchase and fund the rehab in cash. est purchase price 90k. rehab 60k. ARV 200k). Any suggestions on who to call?

Quote from @Nelisa Lee:

Quote from @Andrew C.:

I'm using Quickbooks to track overall finances. So I have a FixedAssets account in the chart of accounts, but that's not really usable for tracking the per-item depreciation...there's no entry for when it was placed in use, no way to state depreciation lifetime, nothing that ties loan points to the loan so you notice when you refinance that you should take all the rest of that line item as depreciation immediately, etc. You can, ofc, record the depreciation once taken so the books are accurate, but it's a lousy tool for figuring out what the depreciation should be (or, providing your accountant with the relevant info so they can do it).

What tools is everyone using for this? bonus points if it somehow links to quickbooks so it's easier to keep them aligned.

Alternative question: CPAs - what tools/formats do you prefer your clients to use to give you the information needed, so you can calculate their depreciation?

I use Stessa for this. One of the reports they have provides a capital expense schedule that includes the total amount, placed in service dates, useful life, name, categories, properties, etc. The only thing it doesn't provide is the depreciation amounts but I just manually calculate and then enter them into the "notes" section. Unfortunately, it doesn't help with the integration with QB but if you've got the amounts set up, you can always create recurring JEs in QB to automatically post the depreciation/amortization expenses as often as you prefer.

 that's interesting. That's pretty much what I ended up doing. I exported it to a SS from Steassa, added columns for the dep lifetime and dep already taken, and went from there.
Getting it back into QB wasn't that difficult, since it's just the aggregate.

Am penciling out a property and trying to see what our loan options are.
Post rehab, the property will be a 4bdrm 2 bath house, that's a few blocks from a college in southern WI, USA.
Would be rented to 4-6 college students (# TBD). These would be separate 12-month leases.

I'm looking for lenders willing to do a cash-out refi on this (we'd purchase and fund the rehab in cash. purchase price ~90k. rehab 60k. ARV 200k). Any suggestions on who to call?

Quote from @David Orr:

... One of the big ones is that accounting software can keep track of partners' contributions and partner equity.  As far as I know, I don't think software like Stessa or Baselane can really track anything related to multiple owners/partners.  And those also only have a limited ability at best to generate a balance sheet, which you generally want to include on a 1065 return.

came here looking for answers to exactly this question, and David is correct re: why. We have a partnership entity, so it has to file separately and needs balance sheet accounting. Otherwise we'd probably just use Stessa.

QBO has raised prices _again_. And because we use classes, we need the 2nd to most expensive version. It's up to 90$/month. Ugh.

Looking for options to QBO:
- supports classes, or some functional equivalent to QBO classes, which I use to sort be able to look at per-property P&L, capEx, etc.
- CPA just wants a pdf or excel SS for P&L, BalanceSheet, GL - so could use whatever I want, in theory.
- bank integration (download transactions) a must
- no employees, so don't need payroll
- if it'll bill that's awesome. But I can sort that out other ways as well.
- bonus points if I can have a separate business w/o having to pay 2x the cost, but it is what it is.
- cost is an issue. If it's not usefully less than 1100$ a year, there's no reason to switch.


sounds like Xero? Wave?  anything else I should consider?

Quote from @Erica Calella:

As far as loin points, not sure these are amortized at all for tax purposes. Since you're a cash basis taxpayer, I think the rule is that you can deduct the full amount. Either way, the accountant can pull this easily from the closing statement or 1098 from your lender.

It's really not as complicated as you think.

"But when you purchase a property, your basis for deprecation is the cost of the property to YOU"

sure. but the depreciation clock doesn't start when you purchase the property unless it's ready to be rented immediately and in the purchase year it'll be a fractional portion of 1/27.5th, so do to the calculation they'll need to know the in-service date. If you spend 2 months post purchase on rehab, it's not 'in service' till that's done and you don't calculate depreciation from the purchase date, but rather from the in service date. so they'll need more than just the closing docs.

 "As far as loin points, not sure these are amortized at all for tax purposes. Since you're a cash basis taxpayer, I think the rule is that you can deduct the full amount."

I am not a CPA, but I'm fairly sure that is not universally true. On a refi, for example, everything I can find suggests it must be amortized over the lifetime of the loan.

It's not that any of this is complicated. I'm just trying to understand what information I need to be tracking in a useful manner so someone else can do it. Hopefully something better than just 'here's the stack of all the receipts for the year...you sort it out, Mr CPA'.

Quote from @Jake Baker:

@Andrew C.

Great question. There are various ways to do this in QBO, but this is how I typically do it for myself and my clients in the Chart of Accounts.

Real Estate Owned
> Land
> Buildings
> Closing Costs

don't you need more information? for buildings, you need the in-service date, right? For closing costs, some amortize with the building (27.5 years) and some with the loan (for my typical RE loan that'd be 5 years straight-line, but ofc if you refi early than it pulls in).

I must be missing something. How does your CPA determine the depreciation amounts to take? Are they extracting the items to be depreciated from just the FixedAsset schedule? There doesn't seem to be enough information to support that.

If you purchase a property but then spend 4 months rehabbing it before its first occupancy, your depreciation starts from the date it's placed in service (first occupied) not the purchase date. But that information isn't any place in the FA account, so you must be providing it to them some other way?

Likewise, loan points are amortized over the life of the loan and I have them in a separate sub-table of the fixedAssets, but unless they pull up the original journal entry you can't tell which loan they pair with, and it seems like a stretch for the CPA to track down that the loan was refinanced and hence all the remaining depreciation should be taken now.

I'm using Quickbooks to track overall finances. So I have a FixedAssets account in the chart of accounts, but that's not really usable for tracking the per-item depreciation...there's no entry for when it was placed in use, no way to state depreciation lifetime, nothing that ties loan points to the loan so you notice when you refinance that you should take all the rest of that line item as depreciation immediately, etc. You can, ofc, record the depreciation once taken so the books are accurate, but it's a lousy tool for figuring out what the depreciation should be (or, providing your accountant with the relevant info so they can do it).

What tools is everyone using for this? bonus points if it somehow links to quickbooks so it's easier to keep them aligned.

Alternative question: CPAs - what tools/formats do you prefer your clients to use to give you the information needed, so you can calculate their depreciation?