It feels like I take one step forward and 5 steps back!

8 Replies

Am I the only one who is totally frustrated and want to quit.... sometimes!!!

I take one step forward and 5 steps back....uggghhhhh!!!

I just started my LLC to put my first rental under (it was our home that we moved out of and instead of selling we rented). We have current renters in this home and that part is going great, thank you Lord. However, when it comes to setting up/running the business, its a crap show. All this not mixing funds, insurance and administrative stuff is killing me. I can't even hire someone with out jumping through 45 hoops. I don't know if I am doing this right because of all the rules. I really want to brrrrr my way through this because I like the long-term benefits but to be honest I feel like maybe it would be better to buy and sell. I am ok with paperwork but I will admit I am not the best. I am the visionary, the creative one, the one who finds killer deals with out even trying (and I do mean killer), the one that can sell an offer in my sleep. The success is haunted in its tracks every time because of paperwork and rules that I do know how to navigate through. And I have lost some amazing opportunities because of it. Which is exceptionally disheartening. I don't shy away from work, Ill grind with the best of them but being totally honest I feel like I waste so much time running into road blocks. How do I do this? Have anyone experienced the same thing? How did you guys conquer the Admin Monster and come out alive? I have been thinking about Partnering Up, is that a good idea? I am so nervous about partnership because I don't want to be taken advantage of. Ok venting over.... Thanks in advance for listening and reading all this. If you respond you are amazing!

I am also very new to all this so I really don't no the right answer but I would talk to a cpa and a book keeper to get some answers about money transfer and paper work don't give up sounds like your got the ball rolling

It sounds like you just need to put some systems in place to organize your processes. I'm not clear what sort of paperwork overload you're encountering with just one property - is there something particularly unique about this property or is it just the initial "getting started" stuff that you may not need to repeat too often? The suggestion to meet with a tax pro and/or bookkeeper is wise. I would recommend searching the BP forums for favorite apps and tools used by those who have been at this a while. I'm sure you'll find tons of tips and best practices that way.

With the first few months of this being a rental there were 2 hail storms and a pipe burst in the home. Thank God I have a stellar property manager who took care of the pipe burst( just took money out of the profits) but the hail damage, insurance stuff and I have a mortgage on the property that I have to go threw as well. I have heard of systems but I haven't had anyone tell me how. This is the main problem I keep running into, even when I read investment books, they tell you the what not the how. Example: You need to separate all of your business income/expenses from your personnel income/expenses. How do I do that when my plan was to take 6 months of my, go to my every day income to renovate my next investment. But based on the advice above I can't because that would be mixing funds. WHAT??? This is the type of things that are super confusing. 

Originally posted by @Nacquata Bryson :

With the first few months of this being a rental there were 2 hail storms and a pipe burst in the home. Thank God I have a stellar property manager who took care of the pipe burst( just took money out of the profits) but the hail damage, insurance stuff and I have a mortgage on the property that I have to go threw as well. I have heard of systems but I haven't had anyone tell me how. This is the main problem I keep running into, even when I read investment books, they tell you the what not the how. Example: You need to separate all of your business income/expenses from your personnel income/expenses. How do I do that when my plan was to take 6 months of my, go to my every day income to renovate my next investment. But based on the advice above I can't because that would be mixing funds. WHAT??? This is the type of things that are super confusing. 

As far as mixing funds, the best way to prevent this is to have a separate bank account and a separate credit/debit card for your LLC. If you want to use money from your everyday job for renovations then you need to transfer money from your personal accounts to your business bank account. This is called a "contribution" to your LLC and should show as a contribution on your books. After the money is contributed from your personal account to your business account then your business can use the money for whatever business expenses you see fit.

Also, using an accounting software like QuickBooks or Xero to help organize income and expenses will make things 100x easier with tracking and when tax time comes. If you only have 1 property then you can probably get by with doing it yourself. But if you feel like its bogging you down too much then I would just pay a bookkeeper to keep track of everything for you so you can focus on more important things

@Nacquata Bryson The first step I would recommend, as others already mentioned, is to have separate bank and credit card account for the business and run every business transactions thru them. If you need to invest in more funds, transfer the money from your personal account to your business account then pay using the business account. Do not pay business expenses directly using your personal account (or vice versa), it has to go thru the proper channel. Doing so will save you (and your accountant) time once it's time for you to sort out your business transactions, you will only have to go thru the business account(s) since you know, that's all you've been using to pay for business stuff. The transfer between personal and business will be considered an investment or draw, depending on which direction it went. 

If you cannot avoid using credit card but you cannot open one for LLC, you can open a personal one or use existing personal credit card but make sure the card is exclusively used for the business. 

As far as documentation, mortgage and bank statements can be downloaded online where you can pull them at your convenience, all paper documents, take pictures or scan as soon as you get them and save them in a central location (google drive, dropbox, etc.). Separate the documents at least by tax year. 

I know there's more to it but these will get you to a good start. Hiring a professional will also put you on the right track. 

I am not going to repeat what everyone said already. You definitely need someone to handle your books. Get someone that understands real estate and not just data entry.

Update: I have hired a CPA to do my taxes and I am in the process of hiring a book keeper as well. I was watching youtube gaining knoweldge from those who are veterans and he said " When owning your own business don't be afraid to pay someone to do the things you aren't that great at, that way you can spend your time doing the things you enjoy" So I took his advice and hired someone to sort all y tax info, and I have to say he is pretty amazing at his job. He put me at ease straight away. Well worth the money spent, which he later told me is tax deductible.. YAY!. I am almost done dealing with the insurance claim for a roof replacement,. When that is all settled I'll be starting a new rental venture. Thank you guys for all your sound wise advice.