Over the last two to three years I have been flipping houses, and wholesaling real estate. I have done everything from acquiring a property to dispositioning property for wholesale.
I have built relationships with real estate investors. Not only locally in Phoenix, Arizona, but nationwide. After wholesaling for a little while, I eventually got into flipping.
I flipped my first property, and kind of ran into a couple problems financially.
My girlfriend, Cat, has been bookkeeping and transaction coordination for real estate investment companies over the last year and a half.
On the first property I flipped in central Phoenix. I bought it for $145,000. Then sold it for $255,000. I was 50/50 with the partner on that deal. I was using a spreadsheet for bookkeeping and accounting. I had all my expenses down to a "T".
I was super solid.... I thought.
I was taking all his receipts from Home Depot, Amazon, and other vendors, and entering them into a spreadsheet.
The day of closing, July 31st, 2020, I received a call from my partner and he says, "Matt, how much have we spent on this property?"
I gave him the number.
As I signed all the documents at the title company there were a couple thousand dollars in fees I wasn't expecting!!
About a week after closing, I started finding all these receipts that totaled $3500.
So, My partner ended up making a couple thousand dollars more than I did on this deal.
How did this happen!? After Cat helped me get setup in Quickbooks and get things dialed in, we realized a major need in the industry.
Soooo....We started a bookkeeping business for real estate investors!
one of the best decisions i made when i first started in real estate 4 years ago was to bite the bullet and buy quickbooks and learn it from the start. i figured i would tackle the learning curve early, when my business was super simple. it would be easier to grow into it rather than swap sometime down the road. after buying a quick how-to-guide, and sitting down with my accountant who took the time to teach me, i got it down pretty quickly. i still do my own bookkeeping, and i could not imagine using spreadsheets for what quickbooks does.
@Zach Westerfield , you are a rare breed. How big has your operation grown in the last 4 years?
not huge, a small property management business, a small long term rental portfolio, and a small flipping business. i keep separate books for all of them though so that they can scale into their own companies easier. i am one of the rare people who enjoys bookkeeping. however, i am looking to outsource in the next year or so as i continue to scale.
The report features in QuickBooks are pretty great. The ones in QBO are even better.
@Cara Powers i have debated about swapping to quickbooks online if i out source bookkeeping. i would still like the ability to pull reports and look at numbers without having to go to my bookkeeper. however i just paid to update to QB 2020 desktop, and in general i always prefer desktop software as i do a lot of work without internent connections (on airplanes). Any advice either way? i was thinking as long as the bookkeeper updated by books once a week, i could continue to work with desktop.
also, is the user experience different between the two? i have never used QB online
@Zach Westerfield I have used both though I hadn't upgraded Desktop since 2015; I like Online better. The bank feed functionality is superior. I like the receipts feature on the app (you can take a picture using the app and it will store it in the cloud). You can email bills and receipts to a special email address for storage in the cloud and so your bookkeeper can access and enter them. The graphics on the dashboard are superior. Instead of going to a special screen, graphic representations of sales, expense, cash balance over time, and others are on the first screen you see when you log in. The only thing that QuickBooks Desktop Contractor Edition has that I want to see in QBO is estimates. To get the same kind of reports in QBO, you have to set up individual budgets for each year for each project.
Also, it will be much easier to find a remote bookkeeper if you switch to online. QuickBooks Online Accountant is free. The latest version of QuickBooks Desktop Accountant, the first version to allow syncing with customer files without having to send each other backup files is $449 a month ($799 if you run Mac like I do). So, understandably, more bookkeepers are going to have QBO than Desktop.
You'll have to tell me what kind of work you want to do in QuickBooks on an airplane. If you're just wanting to review financials, you can set up automated emails with any reports you could want to see in either PDF or Excel. Or you can spring for in-flight wifi; it's deductible.
The real estate industry has plenty of accountants/bookkeepers, myself included lol.
Do you guys have actual accounting background in real estate besides your own portfolio, career/jobs?
Your website isn't really working unless you go to the unsecured version; may I suggest that you want the testimonial to be more formal.
@Matthew Beans thanks everyone for the insight, looks like I will be making the swap soon. One last question, is there a difference between the two in user experience? I don’t have an accounting background, so I taught myself to use QuickBooks desktop. Will it be seamless for me to swap to online? Not a show stopper for me, I am just curious. When I swap, I want to know what to expect so I don’t have any major speed bumps in my bookkeeping
@Zach Westerfield There is definitely a difference in user experience. Be sure to check out the +New button to see all the options listed there, and get to know the gear icons. QBO is set up to make migrating from Desktop relatively easy, but not everything has a one-to-one transfer. Also there is a specific order of operations when converting that I'm not sure you'll be able to find instructions for online. It might save you a lot of frustration to find an Advanced QuickBooks Online ProAdvisor to do the conversion for you. The "Advanced" in this case is important.