So... I may have just made a mistake that cost me some cash. And, it's not that I lost the cash, it's that I didn't account for it properly. During a flip I had made my guys a couple checks, those checks I had thought were cashed. They weren't. So when I went to settle up and pay everything and everyone off - I forgot that I had two check still floating out there not cashed.
It's been a challenging 6 months. However, I'm finally to a stage were we have enough rental income, leases, maintenance and CapEx to track that it's beginning to get a little messy. And when I say by a little - I mean a lot. But, I feel that it's not to late. We are currently in one project, which is wrapping up and we'll be moving into another. In 2019, my business goal is to complete 12 flips and add 5 more units. My fear is that if I don't have a system now in place for managing cash flow eventually I will make a much bigger mistake.
So, to my question: What's the best way to manage a real estate business that flips 12 houses a year, currently has five units and a real estate agent that sells commercial real estate in Rochester, NY?
Open to brutal honest feedback.
Matt, consider outsourcing to a bookkeeper for the few hours a month it would take. You will get to focus on your core business and a professional can help you keep your books and from making another mistake.
Good luck!! And great goals for the year.
@Matt Honeyford You'd want to use a bookkeeper as Account Closed suggested. This bookkeeper:
1) should have experience working with other flippers
2) know how to use QB - most common bookkeeping software. While not required, it is preferred by most CPA's' when the tax season comes.
3) should ideally be communicating well with your CPA. So an option consider asking your CPA for recommendations.
Best of luck!
Ok. Welp, this is going to sound reaaaallly bad. I don't have an accountant. Anyone know a good one in Rochester, NY?
Originally posted by @Jonathan L Abbey :
@Matt Honeyford try demott and smith CPAs they are firm in rochester that have experience with apartment portfolios and property flips around the city.
Matt, John Rizzo of RDG Partners will be coming to our meeting next week. I have used Tim Hern at RDG partners for almost 13 years.
The way that I get around writing checks that go un cashed is that I use the online bill pay with my business banking account. This keeps track of that check or electronic payment that gets sent out. It also instantaneously debits my account and encumbers those funds while their automated system cuts the check and sends it out in the mail.
Trick is, you have to have contractors that can wait 7-10 days to get paid. If you spell this out in the contract on the payment terms, they should be ok with that. If they are not.... RUN! That means THEY have cash management issues and are usually using payments from your job to float other jobs.
@Matthew Drouin Thanks! I'm really looking forward to next week. This is going to become an increasingly important part of my business, I need to get a handle on things now. Perhaps I should talk to him about the cost of becoming a client. I’m currently not working with anyone.
Contractor wise, we’re doing things a little differently. I’ll have to tell you about it sometime – I’d be interested to know your opinion.