Real Estate Accounting: Flips on your P&L or Balance Sheet (Part 1)
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- เผยแพร่เมื่อ 14 ธ.ค. 2023
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It's a common debate: Should I put my flips on my Balance Sheet or P&L? It Depends! I'll walk you through how to do both and how to transfer between the two. (Part II coming in 1 week!)
Hi! I can't find a video of yours that addresses this, but I'm hoping you can help. I need a way to cross reference the projected amount a property would cost (by each vendor and as a whole) vs. the actual costs. Specifically if I'm going "under" or "over" budget. When looking into the estimate vs. actual reports on QB, it looks like those reports are geared towards contractors themselves and not investors. Any ideas?
Similar to the below response. No great way to do this in QBO itself. But you could export QBO data for powerful reporting: th-cam.com/video/sNal44_yIEI/w-d-xo.html
Hi! I can't find a video of yours that discusses this, but how would you go about keeping track of the estimated costs per property vs. the actual costs per property? When it's a set bill I can just add that for a future date, but when it's an estimated construction cost, how can I compare the two? I don't want to create a spreadsheet and enter each transaction twice. Any advise would be extremely appreciated. Thanks!
Hi! Thanks for watching! Unfortunately QBO is not very good at tracking estimated vs. actuals for projects. It does have a budgeting feature which works well on a "Big Picture" level...but not by project. You will need to use some sort of external reporting to track this. That does not mean you need to repeat transactions. You can sync with an external software (Buildertrend) or create a simple export to Google Sheet Process. Check out an example here: th-cam.com/video/sNal44_yIEI/w-d-xo.html
Hi there! This is super helpful. I've watched your previous playlist from purchase to sale of properties! I do have a question, I have 2 companies set up separately on QBO. There's this one property we purchased and flipped and a lot of the expenses incurred is recorded in Company A(because I used my CC under that company)like the payment to contractors, but the property is really under company B(even the payment sent from title company). How do I reflect everything on company B? Thank you!
Hi There! Thanks for watching! First, we discuss this type of situation in great detail in our end to end course: Real Estate Accounting Bootcamp www.incomedigs.com/reab
I'll try to explain here. You will want the expenses to show up in Company B. The "difficult" part is to indicate to QBO how those expenses were paid for. In your case, they were paid by Company A...we will deal with this with a "Equity Contribution - Company A". You can create a journal entry whereby you debit the Rehab Costs category and credit this equity account: "Equity Contribution - Company A".
On The books of company A, every transaction that is for the renovation of the property owned by Company B will be categorized as "Equity Contribution - Company B". From the perspective of Company A, the equity account will be negative. From the perspective of Company B, the equity account will be positive.
@@Incomedigs You're awesome, thank you!
@@kwatr0ems You're awesome for watching and asking questions. I appreciate you!
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So as a investor/developer do you do your own books?
Hey! I do...with the help of a VA. I would say that most of my investor students have a bookkeeper and/ or VA helping them out. My course teaches investors and their bookkeepers how to setup and manage their accounting books. Definitely check it out www.incomedigs.com/reab
I am not sure why you are booking the rehab related costs to Cost of Goods Sold on the P&L first, when you really want those cost to go into the inventory account on the balance sheet. What is the benefit of booking those rehab related costs to Cost of Good Sold on the P&L first? What is causing you to take the extra time to make the extra step of moving the costs from the P&L to the Balance Sheet when you could have just booked those cost directly into the Balance Sheet to begin with?
Hi Michael... good question! First, its definitely a matter of preference. You could definitely book everything directly to the balance sheet. The main reason I demo booking to the P&L is that the majority of flippers I work with want to see their flips in a project-based profit and loss statement: Sales Price - Purchase Price - Rehab etc etc. This is why we start with the P&l. If, for your business, you have no need to view your flips on the P&L...you can surely book everything directly to the balance sheet to begin with.
Do you offer accounting services?
Hi! Unfortunately No. I am able to teach more people through TH-cam and my courses...Within the course and the associated community, it is very likely you could network with a bookkeeper to help you out. We have many many accountants/ bookkeepers taking the course. www.incomedigs.com/reab