All Forum Posts by: Tim M.

Using classes is different than setting up jobs. Jobs are tied to a customer - usually used more in retail or service companies. EX: You're a manufacturer that makes ABC widgets, now your biggest customer wants you to make XYZ widgets, you can set up a job that tracks the performance of the new XYZ widget - for that customer.
With classes, you simply designate a class (ex: Brick House, 123 Main St.) with any/every tranaction that is associated with it. When you turn class tracking on - a drop down box will now appear on every transaction screen (ledgers, bills, invoices etc), then you just pick from whatever property (or class) you need. This allows you to say "show me a report (P&L) that only shows transactions with Brick House (or whatever class). I've actually used QB with my manufacturing company as well as my RE deals. I've used 'jobs' in the manufacturing co. because I was tracking a particular customer job. I've never used 'jobs' in RE because there really isn't a customer involved - I suppose I could set myself (owner) up as a customer and do it. But using classes always seemed easier to me. I'm using a slightly older version of QB so I'm not sure if the newest supports jobs or not.

Dan,
You can do this by setting up "classes" and subaccounts for each property. This gives you the advantage of being able to pull out all the info (P&L, balance sheet, etc) specific to each individual property if you want, as well as having all your REI accounting in one place - to easily hand over to your tax preparer/CPA each year. If you are hiring someone to set this up for you, then they should understand exactly how this works and be able to explain it to you using your specific properties as examples. You may want to consider setting up one set of books for the LLC and another for the S corp - especially if there is different ownership interest (partners etc). You'd still want to do classes and subaccounts for each property though.

@Steven
Thanks for the info. I guess this does make it easy!

Hello all - First just want to thank everyone on BP for all the incredible info and knowledge - this is an amazing site!
I recently purchased a 4 unit rental. I took out a HELOC on my primary for the downpayment (3.75% 15 year = unreal!). I use Quickbooks and do my own accounting. This is basically a loan to the business, the business would pay me back within 3.5 years. However, since the loan is on my personal residence I would be getting a 1099 int from the HELOC towards my primary, and would deduct that interest on my personal return. I'm guessing I can not also deduct that loan interest in the business's P&L? I suppose I could charge the business ADDITIONAL interest and deduct that in P&L but thats just robbing from peter to give to paul - I'm a sole proprieter. Am I thinking correctly here? So do I just record this as a personal loan to the business as a LT liability, no interest charged? Essentially the transaction wouldn't even show up on the P&L, only the balance sheet. Also, is this actually a LT liability (3.5 yrs)? Any way to show the principal payments as expenses in P&L? Any insight or suggestions would be greatly appreciated. Specifically from Steven Hamilton - I'm a long time stalker... I mean watcher of your posts.

Thanks for the clarification Nathan(50%/NOI) - can't argue with more money in my pocket for future investments! Yes, I would have an escrow acct (repair fund) already set up for possible future expenses. I live in NJ, the property is in PA where I'm originally from, so 30% down is a requirement on < 3 units, according to brokers here. Taxes are great in northeast PA, this property is @ 1900/yr. Ugh - taxes in NJ is whats preventing me from investing here at the moment. Just much more difficult to find a property that cash flows here, and hard to even find a 2-3-4plex in this area. So since my brother (prop mgr) is in PA and that market seems to be pretty hot, thats where I'm investing. His incentive is to not charge me any property mgmt fees, and thus 'earn' equity in the property through labor, time, mgmt, etc.

Price is basically set by FEMA based on claims in the area. Premium is based on coverage amount - premium sounds about right for roughly 250k building/100k content. Keep in mind banks only require coverage in the amount of your mortgage balance - but could be risky if damages may exceed that. Also, if you're renting, perhaps think about passing some of the 'content' coverage cost to your tenants, or removing it altogether. Having said this, you can certainly still shop it - but I doubt the premium will change much.

While technically not my first deal, this may be the start of my RE portfolio. I'll run through the numbers, feel free to comment/advise,etc.
4 unit MFH, asking 105k. I will offer 97k max, I have 30% cash downpayment and have secured financing for remainder. I believe seller will accept offer. Long story short, it was previously condemned (extended vacancy led to mice/roach infestation, then taken over by township and remodeled up to code. So virtually everything is new. Walls, floors, siding, counters, utils, etc. Currently fully rented with leases for last 3-4 years. Its in a good rental area and is priced 5-15k under comps, as well as units are newer/nicer than comps. I'm guessing the township just wants it off their hands, and could probably use the lump payment. Here's some numbers:
GOI (minus vacancy) = 21240
NOI = 10620 (50% rule), however, because everything is new, NOI could actually be near 70% with no cap expenditures in the near future.
Cap rate = 11% minimum
cash on cash return = 25%
I have a side deal with my brother/partner where he would be property manager but would forgo any payment in lieu of earning equity in the property - I can explain more if anyone is interested. This would be a buy and hold for about 10 years, then we'd decide wether to sell or keep holding at tnat time depending on market. What do you think? Should I jump in? Pros, cons, questions in this scenario anyone?