All Forum Posts by: Marian Fine Frueh

Thank you, @Markus Shobe!  I really appreciate you explaining that to me!! :-)

Thank you, Simon!! I really appreciate your help!

Thank you, @Simon W.!  Does DR mean debit?  What type of account is closing costs .. is that an expense?  I would think so, but people have told me to use a balance sheet account for the closing costs, and that is where I got confused. 

Thanks!

Thanks, @Simon W..  I'll keep that in mind re RentRedi.  I understand what you are saying, but I still do not know how to post to the GL.  

Thanks, @Chris Davidson.  That all makes sense.  I appreciate the input.

To all who have helped me on this chain, I wanted to add a couple clarifying notes / questions:

1.  I am not trying to do my books for tax purposes.  I'll let our tax accountant figure that out.  So I am not concerned with separating out land from property.  I am interested in seeing the profitability or lack thereof of our business.

2.  Several answers have mentioned basis.  I am not an accountant and do not know what that is.  I took a basic accounting course and understand debits and credits and the chart of accounts and how to do basic accounting.  That is all.

To sum up my question, this is really all I am trying to figure out is this:

Let's say, for example purposes, my purchase price is $100k. My cash to close is $12k. I have a down payment of $10k and closing costs like appraisal, etc., that total $2k.

So I would think:

credit cash for $12k

debit "name of property" asset for $100k

credit liability "name of property" mortgage for $90k

Where do I post the remaining $2k?

Thanks so much to anyone who can answer this.  Thanks to those who have already replied.  I really appreciate the helpfulness and responsiveness of forum members!  :)

Thanks, @Simon W.!  That makes sense that Escrow would be an asset.  Thanks for the correction.  Right now, we are using Buildium.  But since RentRedi is now offered to BP Pro members for free, we will likely switch to their accounting partner.

Thanks, @Markus Shobe!  What does it mean to add to the basis?  In other words, which GL accounts would I debit and credit?  Closing costs are comprised of expenses, down payment, escrow payments, and perhaps others.  Which of those costs get posted to which GL accounts?

Thank you both!

Dear BP community,

Perhaps this is a basic and easy question, but I am not an experienced bookkeeper.  I understand debits and credits and income statement accounts vs. balance sheet accounts.  But I am new to real estate investing this year and don't know how to record an initial purchase of a property.

I purchased a property with traditional financing.  How do I record the cash to close?  

I recorded some of the closing costs (prepaid interest, appraisal, etc.) as expenses.  I created a GL account called Escrow, as an equity account, and I recorded the initial escrow payment there.  I created a liability account called "Mortgage [property address]" and entered the down payment against that account.  And I created a Fixed Asset account called "Property [property address]" and recorded the value of the property there.  I got everything to balance out.

However, then my tax accountant told me something about recording the initial purchase to balance sheet accounts, and said something about cost basis.  I didn't understand what to do. (And he is $200/hour, so I didn't ask for additional details.)

Any help would be much appreciated.  Thank you!!!

Marian

This is Marian's husband. Clarification - we are most interested in covering up the smell, as well as setting us up for success afterwards in terms of using a paint type and finish that will be best for the long run.

Hello Quentin,

Thanks so much for the helpful info!  I really appreciate it!  Duly noted! :)

Hello everyone, I am jumping in a little late here.  I am a brand new property investor (my husband is a little more experienced), and we just bought an owner-occupy duplex and moved into one side.  

The tennat who had been here left the place pretty dirty.  We bought long-distance, and we knew it would be bad but didn't realize how bad until we got here. The walls were pretty trashed.  There is everything from pen and marker stains to dog pee to splattered stains (from what?), and holes in the wall, and many other stains and marks.  Luckily, we had someone clean the kitchens and bathrooms before we arrived.  But the walls are awful.

We are going to clean the walls and then paint them.  One person here recommended oil-based paint.  She said it costs 3x as much but lasts forever and is easy to wash.  She also said that it will seal in any pet odors we aren't able to remove from washing.

However, others have said it's not worth the expense, and if tenants decide to paint the wall (without permission), we will have to incur the cost to re-paint with the same expensive oil-based paint.  Also, if we use oil-based paint, my understanding is that we cannot later switch to non-oil based, if we change our minds.

I am completey green here, so I don't know if any of the paints already mentioned here are also oil-based.  

Do folks recommend oil-based paint?  Does anyone have positive or negative experiences with it that you can share?

Thanks so much for your help!

Dear @Erin Madden,

We recently moved from Salem, OR to Columbia, MO.  We debated selling what was our primary home in Salem, OR, but we decided to keep it and rent it out.  A trusted Real Estate Agent in Salem recommended makinghomeshappen4you.com.  They serve Salem, not Portland, but perhaps they might know someone in the Portland area, if you want to give them a call to find out.

I also know a few trusted Real Estate Agents in Portland who may have some good recommendations.  Would you like me to reach out to them, and/or send you their contact info?

I hope you enjoy your time in another country.  What is the reason for your travel, if you don't mind sharing?  

Best,

Marian