All Forum Posts by: Hideyuki Gojima

@JD Gunter

Great post. Interesting point.

If you are new in real estate investing and google "Turnkey" investment, most of the definitions falsely imply as if if you buy the property, everything is ready. You will not have to do anything. Wrong.... Simply wrong.

There are things the seller will not tell you or not have to tell you. Nothing is perfect.

As you point out, negative cashflow could be a great investment. It may be difficult to see the details of accounting unless you have some kind of agreement but if you have good experience and knowledge how to read the financial information properly, you can determine if the negative cash flow is a temporary such as a big fix on the roof or backflow. Now, you should ask the seller how they fixed it. If they properly fixed it and you will not have to fix them for another 10 yrs, there is a good chance of the property will become a positive cashflow going forward. If they didnt do the good job, things will keep breaking so it could go opposite.

@Patrick M.

Managing your properties well and legally protecting you are two different topics as you know.

I think having an umbrella coverage on your property may be good enough if your portfolio is small. The bank account wise, it does not really matter if the account is business or individual. It is usually for the banks because they can offer the customers different services. If you use the account as a regular checking account, there will not be any difference.  But it is significantly better than mingling your real estate business with your personal accounts. Some of my users do it but I alway highly recommend them to have a separate bank account. 

Of course it is better to use a property management software because it makes your property management work much easier and it keeps your record safely. 

However, if it is one or two properties and you file Schedule E, excel sheet can be good enough.

Just remember to keep the record of "Everything" in case your accountant or even IRS requests evidences. 

One thing about umbrella insurance tho.

Umbrella is an insurance. The insurance company will fight and do whatever it takes not to pay for the damage you are claiming. If the damage exceeds your property's capacity, it will come to you personally.

If you have a LLC, if a really really bad thing happened, the worst case scenario, you just lose the LLC.

Umbrella insurance is a great product to protect you but you should be aware of the difference.

Good luck on your business!!!

@Brian Feeny

If it is really $500 per month, that is a good deal I think. But @Kevin S. is right. You should consider accounting aspect of your business especially if you are thinking of keeping it for several years.

As you already aware, highly leveraged = risky. If you have good vendor, property manager, broker connections, it may work as you expect but always always unexpected things happen. If you have miscalculated your numbers or budgeted the buffer, you can seriously be in trouble later.

Nowadays, you can utilize some good property management softwares to manage your properties easily if not many properties. Just use the right software to keep a clean and correct financial information for your business.

@Jonathan Vest

As everybody says, i think even 10k is too small to estimate. Based on my and users' experiences, it goes more on average because unexpected things "always" happen. haha.  

If you do not have a good amount of buffer on your budget, there is a low chance to win the game. 

If you like to raise the winning rate, you should get more good vendors who can do great jobs for good price. Don't go for the cheapest guy. If they do a crappy job, it will come back to you later. The buyer can sue you for it if the issue is significant. Also maybe some private banker or lenders to give you great rates. Lenders are pretty more flexible than you think. You should keep shopping around the refi. 

@Jeff Lappe

Welcome to BP!

I think everybody commented how you will receive deposits. 

One additional advice from me. Once you receive the deposit from your tenants, make sure you keep that money as restricted cash in your financial statement.

It is ok to be in your bank account with other cash as long as your state regulation allows but you should properly keep it separate on your book to properly record it in terms of accounting.  You should do this because the money is technically not yours unless you have significant issues with tenants. 

Good luck on your real estate investment!!

@Sean Weichel

As @Connie Chan pointed out, you need to be careful with some regulations for your deposit and property management. 

But you probably know at this point but it is always better to manage each property to manage your real estate investment separately. It is always better to show your information to others such as potential buyers or accountant every year end. Some properties under one LLC is acceptable but I highly recommend you not to use your personal bank for real estate business.

If you use a good property management software, you can manage multiple properties very easily by allocating expenses into each property's financial statement or tax document. 

@Eran Lifshitz

Hi, Accounting software may do what you are trying to do but a property management software is where you should go check out before buying an accounting software I think. It will take care of not only accounting related matters but also property management aspect of your business.

Some property management software works like quickbooks for accounting and there is a good tenant management feature attached to it such as property announcement and service request handling feature. 

I am very curious about what kind of solution you are looking for and what you are doing in excel sheet right now. If you do not mind, could you share it with me? 

@Jacob Edwards

Welcome to BP!

It seems like you already planned well on your own.

You will get lots of insights and advices from other BP users for sure but one thing I like to tell you is to look for technological solutions a lot. You had to hire a property manager or accountant before. 

We have many cheap softwares are available nowadays (Not enough tho...) and if not many properties, you can manage them by yourself. From deal source, actual purchase, property management, bookkeeping, tax filing. You can do all of this online. Deal wise, maybe you having good connections with brokers may be good tho. 

But property management, bookkeeping and tax filing, you can totally do it by your self. 

Once your investment becomes big, you will have to hire people anyways. I highly suggest you to learn how to manage properties by yourself first so that you will have good eyes to choose the right professionals for you later.

Exciting!! Good luck on your REI journey!!!

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[x] No accounting knowledge necessary

[x] Multiple LLCs and properties easily managed

[x] Auto Schedule E preparation

Only $5 per property!

We are happy to provide BiggerPockets members with 2 month free trial. Please enter this coupon code when you sign up.

Code : BPUSER

Beaver is a new property management software that serves all of a real estate investor’s needs, from bookkeeping and tax filing preparations, to tenant management such as responding to maintenance requests and scheduling repairs. Things have never been this easy for real estate investors. Beaver is all you need to start managing your new rental property.

Forget manual invoice entries. 90% of accounting and tax-related tasks are now automated with Beaver. Beaver is designed to cater to various investment structures, whether it be one LLC owning multiple properties, or one LLC per property, to serve the unique needs of real estate investors and property managers in today's business world.

Please check our website : Link