All Forum Posts by: Kristen Ambrose

If you're just starting out, excel is a great budget friendly option to keep track of your expenses. 

If you have multiple properties, QuickBooks Online is great to connect bank feeds and track expenses. It also has the reporting functionality CPAs are looking for. 

I'd have to agree with the comments above. I do bookkeeping specifically for real estate investors and almost all of my new clients come to me with books done by an overseas bookkeeper that they got fed up with spending so much time answering the same questions over and over. On top of that, their books are still a mess.

The way I've seen this work from a cost savings perspective is to hire an overseas bookkeeper to do the busy work, but also have someone higher level available to answer questions and to record the more complicated transactions.

Having a bookkeeper who knows the ins and outs of real estate investing is key. It's what helps you get crystal-clear reports showing exactly how your business is doing, where it can grow, and where it needs a bit of TLC

@Mary Ciccarelli You actually do not need 2 QBO subscriptions to do the bookkeeping for all of your deals even if you have a separate partner on each one. The only reason you may need another subscription is if your partner wants access to the subscription and you don't feel comfortable with them seeing the other deal info. 

The way to do this is to purchase the Plus subscription of QBO and use the Business field for each of the different LLCs and the class field for each property. That way you can easily run reports for each deal and/or business separately. How this usually works in practice is that one partner owns the bookkeeping process and distributes monthly financial and rehab reports to the other partner so that they're both in the loop without the other partner having to log into QBO. 

Income Digs has a great course on how to do your own bookkeeping in QBO and there's a lesson on how to use the business and class fields for investors that have many LLCs. 

Congrats on starting your investing journey! It's great that you're thinking ahead on how to optimize your systems. 

If you plan to grow, it may be worth upgrading from the excel spreadsheet now to save yourself the headache later. There's nothing worse than trying to learn a new software while you're in the thick of it with a growing business. 

It's also a good time to consider what will work best for you when it comes to bookkeeping. Most of my property management clients use a PM software as well as QuickBooks, but RentManager seems to be a good option with both. 

The QuickBooks Online Plus subscription could be a great option for you. You can use the Business field to separate between your real estate agent business and your investing business. Then use the Class field for each of your rental properties and a general real estate agent class. 

That way you can run separate reports for each business and by rental property. 

I would agree that this fee seems reasonable for your personal return including the three properties. 

Always a good idea to ask though!

I find QuickBooks Online to be very simple to use and will provide exactly the reporting that your tax CPA is looking for (as long as you keep up with the bookkeeping and categorize correctly). All of my real estate clients use the Plus subscription which will run you $90/month. 

Congrats on purchasing your first property!

I agree with everyone above, you can definitely do the bookkeeping yourself at this point within excel. As long as you keep everything in a separate bank and credit card account, it should be fairly straightforward to track. You can find some good YouTube videos on the types of income and expense categories to use. 

I would hire a CPA to do your taxes as they'll make sure you are filing properly and in a way that's most advantageous for your situation.  

Quote from @Amber C.:

@Kristen Ambrose I think I got it. So bank transfers (draws for the loan) will not be recorded to the WIP account. Only the expenses for the rehab which I am already currently doing?

Yes, that's right. For example, if the lender transferred you $9,750 because the draw was $10,000 and the draw fee was $250, the entry is as follows:

DR. Cash $9,750
DR. WIP $250
CR. Construction Loan $10,000

Agree with Simon and Charles. One thing to consider, if there's a draw fee, that will be booked to the WIP account. 

You can also have multiple WIP accounts for flips if that helps with your tracking. For example:

Flips - Purchase Price

Flips - Acquisition Costs

Flips - Rehab Costs

Flips - Holding Costs

Flips - Selling Costs