General Real Estate Investing

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts

BiggerPockets Book Club Real Estate by the Numbers- Part 1

Alicia Marks
  • Fort Worth, TX
Posted Nov 11 2022, 10:37

Welcome to our first ever BiggerPockets bookclub! This will be a chance for us to talk about what inspired us, where we have questions, and how we can become more effective investors. Please note our forum rules (found on the right hand side on desktop) as you engage with one another. We will be focusing on one part of the book per week, with new discussions starting on Fridays. You don't need to answer every question, just some questions you may want to reflect on. Remember there is some bonus content to help you. Info on how to receive it is found on page 29.

This week we are discussing Part 1: Personal and Business Performance

Questions to consider: Do you currently have a personal and professional P&L?

                                         Are your business and personal expenses fully separate, co-mingled, or all together?

                                         How was what you thought your personal P&L would look like vs actual look like?

                                         What do you classify as liquid assets?

                                         How do you currently track business and personal finance? Pen and paper, your own sheets, app?

                                         Do you do a personal balance sheet?

                                         Are there any P&L metrics you include not listed in the book? 

                                         Which P&L metrics do you find most valuable in your business?

                                         When evaluating a property, what factors do you weigh first? Do you have a hard pass if it doesn't meet them, or do you make adjustments and continue to evaluate?

Looking forward to hearing everyone's thoughts!

User Stats

11
Posts
8
Votes
Replied Nov 12 2022, 08:29

Yes, I separate out real estate investment income and expenses from all other income and expenses. You have to do this for tax filing. I use a spreadsheet and enter monthly amounts that totals net cash flow to year-end. I also use a system to monitor receipts and match them (bank account credits via email alerts) to statements from property managers. A mistake many RE investors make is not keeping accurate records, which can lead to over (or under) estimations of performance. I have a good a idea of my net gains since they are pretty consistent even in tough times.

Liquid assets are items that can be quickly converted to cash. This would include cash held in a checking account, stocks, ETFs, and Treasuries. 

I do keep a sort of balance sheet, but since I have no liabilities, it’s more a net worth calculation.

There is no one entry that is more useful than the other in P&L. It is only an opinion, as they say. A CEO once asked his CPA how much profit he made. The CPA replied, “How much do you want?” This is largely due to the accrual convention.

When evaluating an RE investment, the first factors are rent-to-price ie cap rate, condition of property, rent market eg location, are rents softening?, RE cycle. My benchmark is a 5% cap rate, called the ‘normal’ rate as it held up for 30 years a couple of decades ago. With repressed rates, an investor may consider any return that outperforms fixed income markets, whether investment-grade corporate debt, or risk free securities. However, RE investors should note than RE is high risk and is rated by some sources as just below derivatives (the highest) in terms of risk. This is because RE tends to be highly leveraged. It’s best not to bend your risk criteria to meet your goals. Always er on the side of caution. The best way to secure high returns is seek value. It is the best volatility and market drawdown hedge.

I’m not sure what “book” is being referred to here. Are we allowed to reference books we have authored?

User Stats

2
Posts
3
Votes
Replied Nov 12 2022, 18:12

Hey Alicia, excited you're organzing this.   

I've maintained a fairly detailed budget in Excel for a few years now. And this budget is continually evolving. A while back I added a sheet that calculates my net worth. It was just something that was thrown together and had no order or specific layout. After reading through the book 'Real Estate by the Numbers', I decided to rethink and reorganize this personal balance sheet so it was much easier to read. I've also added a net worth tracking chart to the 'dashboard' on my budget so I can hopefully see that I'm moving the needle in the right direction every month. I currently do not own any RE outside of a few REITs in my IRA as I'm still learning and saving, I can envision budgeting the expenses separately as @Victor Saumarez mentioned. This would make tax season much easier. 

User Stats

2
Posts
2
Votes
Replied Nov 13 2022, 17:52

Are you using Real Estate by the numbers by J Scott and Dave Meyer? I’m new so looking forward to getting started.

User Stats

44
Posts
33
Votes
Nathan Holt
  • Newark Ohio
33
Votes |
44
Posts
Nathan Holt
  • Newark Ohio
Replied Nov 13 2022, 19:00
Quote from @Victor Saumarez:

Yes, I separate out real estate investment income and expenses from all other income and expenses. You have to do this for tax filing. I use a spreadsheet and enter monthly amounts that totals net cash flow to year-end. I also use a system to monitor receipts and match them (bank account credits via email alerts) to statements from property managers. A mistake many RE investors make is not keeping accurate records, which can lead to over (or under) estimations of performance. I have a good a idea of my net gains since they are pretty consistent even in tough times.

Liquid assets are items that can be quickly converted to cash. This would include cash held in a checking account, stocks, ETFs, and Treasuries. 

I do keep a sort of balance sheet, but since I have no liabilities, it’s more a net worth calculation.

There is no one entry that is more useful than the other in P&L. It is only an opinion, as they say. A CEO once asked his CPA how much profit he made. The CPA replied, “How much do you want?” This is largely due to the accrual convention.

When evaluating an RE investment, the first factors are rent-to-price ie cap rate, condition of property, rent market eg location, are rents softening?, RE cycle. My benchmark is a 5% cap rate, called the ‘normal’ rate as it held up for 30 years a couple of decades ago. With repressed rates, an investor may consider any return that outperforms fixed income markets, whether investment-grade corporate debt, or risk free securities. However, RE investors should note than RE is high risk and is rated by some sources as just below derivatives (the highest) in terms of risk. This is because RE tends to be highly leveraged. It’s best not to bend your risk criteria to meet your goals. Always er on the side of caution. The best way to secure high returns is seek value. It is the best volatility and market drawdown hedge.

I’m not sure what “book” is being referred to here. Are we allowed to reference books we have authored?


 The book is ' Real Estate by the Numbers by Dave Meyer and J Scott, it's one of the new Biggerpockets books. They have it in the bookstore tab and it's also on Audible if you like audio books. I just ordered it on audible and plan to listen through it tomorrow.

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 14 2022, 09:15
Quote from @Victor Saumarez:

Yes, I separate out real estate investment income and expenses from all other income and expenses. You have to do this for tax filing. I use a spreadsheet and enter monthly amounts that totals net cash flow to year-end. I also use a system to monitor receipts and match them (bank account credits via email alerts) to statements from property managers. A mistake many RE investors make is not keeping accurate records, which can lead to over (or under) estimations of performance. I have a good a idea of my net gains since they are pretty consistent even in tough times.

Liquid assets are items that can be quickly converted to cash. This would include cash held in a checking account, stocks, ETFs, and Treasuries. 

I do keep a sort of balance sheet, but since I have no liabilities, it’s more a net worth calculation.

There is no one entry that is more useful than the other in P&L. It is only an opinion, as they say. A CEO once asked his CPA how much profit he made. The CPA replied, “How much do you want?” This is largely due to the accrual convention.

When evaluating an RE investment, the first factors are rent-to-price ie cap rate, condition of property, rent market eg location, are rents softening?, RE cycle. My benchmark is a 5% cap rate, called the ‘normal’ rate as it held up for 30 years a couple of decades ago. With repressed rates, an investor may consider any return that outperforms fixed income markets, whether investment-grade corporate debt, or risk free securities. However, RE investors should note than RE is high risk and is rated by some sources as just below derivatives (the highest) in terms of risk. This is because RE tends to be highly leveraged. It’s best not to bend your risk criteria to meet your goals. Always er on the side of caution. The best way to secure high returns is seek value. It is the best volatility and market drawdown hedge.

I’m not sure what “book” is being referred to here. Are we allowed to reference books we have authored?


 Great thoughts! Do you have a program you use to reconcile, or just create your own spreadsheet?

You can refer to other books that help solidify concepts. We are specifically looking at Real Estate By the Numbers for this book club.

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 14 2022, 09:16
Quote from @Miguel Fernandez:

Hey Alicia, excited you're organzing this.   

I've maintained a fairly detailed budget in Excel for a few years now. And this budget is continually evolving. A while back I added a sheet that calculates my net worth. It was just something that was thrown together and had no order or specific layout. After reading through the book 'Real Estate by the Numbers', I decided to rethink and reorganize this personal balance sheet so it was much easier to read. I've also added a net worth tracking chart to the 'dashboard' on my budget so I can hopefully see that I'm moving the needle in the right direction every month. I currently do not own any RE outside of a few REITs in my IRA as I'm still learning and saving, I can envision budgeting the expenses separately as @Victor Saumarez mentioned. This would make tax season much easier. 

Do you use any budget software that would automatically track this? I use Quickbooks for my rentals, which automatically calculates some of these metrics for me. 

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 14 2022, 09:17
Quote from @Andrew Michael:

Are you using Real Estate by the numbers by J Scott and Dave Meyer? I’m new so looking forward to getting started.


 Yes, this is the book discussion for it. We are doing one part per week.

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 14 2022, 09:27

I thought the material was laid out simply and could translate to your personal situation easily. 
Talking with a lot of new and would be investors, I stress the importance of having a solid personal finance situation before taking on risk. I think this was also emphasized in the book, and clearly spelled out the factors that may be most important. 

I made the mistake of not separating things out from the start and scaled quickly. Having to go back and correct that mistake has been a challenge made even harder because my time is spent managing our current projects and I have less time to catch up on sorting the financials. I’m headed in the right direction, and am starting to get a clearer picture with many of the metrics shared. 
Many investors do not have a business or financial background. They may be great at deal finding or rehab, but managing the financials and knowing how to run a business is just as important. I saw this working with dentists as well. Understanding the numbers in your business helps you strategize to become more profitable. 

User Stats

2
Posts
3
Votes
Replied Nov 14 2022, 15:36
Quote from @Alicia Marks:
Quote from @Miguel Fernandez:

Hey Alicia, excited you're organzing this.   

I've maintained a fairly detailed budget in Excel for a few years now. And this budget is continually evolving. A while back I added a sheet that calculates my net worth. It was just something that was thrown together and had no order or specific layout. After reading through the book 'Real Estate by the Numbers', I decided to rethink and reorganize this personal balance sheet so it was much easier to read. I've also added a net worth tracking chart to the 'dashboard' on my budget so I can hopefully see that I'm moving the needle in the right direction every month. I currently do not own any RE outside of a few REITs in my IRA as I'm still learning and saving, I can envision budgeting the expenses separately as @Victor Saumarez mentioned. This would make tax season much easier. 

Do you use any budget software that would automatically track this? I use Quickbooks for my rentals, which automatically calculates some of these metrics for me. 


Not currently. This is all done in Excel. To continue nerding out, I have a receipts sheet in the budget where I enter every transaction and assign some category to it. At the end of each month, I have a macro that dumps the receipts sheet to a PostgreSQL database and resets the monthly budget. The goal has always been to develop some nice dashboard using PowerBI or build a custom one using Python. But I would imagine that as I start buying properties I would need something already established such as Quickbooks to manage all the income and expenses.

User Stats

2
Posts
1
Votes
Replied Nov 14 2022, 16:52

Hello everyone.  I’m super green here and want to learn. 
Questions to consider: Do you currently have a personal and professional P&L? Not sure what that means. Probably no

Are your business and personal expenses fully separate, co-mingled, or all together? I had the intentions of keeping them separate but currently they are intertwined.

How was what you thought your personal P&L would look like vs actual look like?

What do you classify as liquid assets? Cash any form of assets that you can access cash from.

How do you currently track business and personal finance? Pen and paper, your own sheets, app?  Not currently.  I have tracked some expenses.

Do you do a personal balance sheet? Nope

Are there any P&L metrics you include not listed in the book?

Which P&L metrics do you find most valuable in your business?


I currently am on my first rehab and I’m about 96% finished.  I can get into the details later but this is going to be a huge learning experience based on time and finances.  Thanks. I will read part one now.

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 15 2022, 10:28
Quote from @Miguel Fernandez:
Quote from @Alicia Marks:
Quote from @Miguel Fernandez:

Hey Alicia, excited you're organzing this.   

I've maintained a fairly detailed budget in Excel for a few years now. And this budget is continually evolving. A while back I added a sheet that calculates my net worth. It was just something that was thrown together and had no order or specific layout. After reading through the book 'Real Estate by the Numbers', I decided to rethink and reorganize this personal balance sheet so it was much easier to read. I've also added a net worth tracking chart to the 'dashboard' on my budget so I can hopefully see that I'm moving the needle in the right direction every month. I currently do not own any RE outside of a few REITs in my IRA as I'm still learning and saving, I can envision budgeting the expenses separately as @Victor Saumarez mentioned. This would make tax season much easier. 

Do you use any budget software that would automatically track this? I use Quickbooks for my rentals, which automatically calculates some of these metrics for me. 


Not currently. This is all done in Excel. To continue nerding out, I have a receipts sheet in the budget where I enter every transaction and assign some category to it. At the end of each month, I have a macro that dumps the receipts sheet to a PostgreSQL database and resets the monthly budget. The goal has always been to develop some nice dashboard using PowerBI or build a custom one using Python. But I would imagine that as I start buying properties I would need something already established such as Quickbooks to manage all the income and expenses.


That's some serious nerding! :) I use Quickbooks because I have little to no time between working for BiggerPockets and managing active rehabs. Onc I have things stabilized a bit more I'm going to hire a VA who I will pass on the categorization tasks to so I can just pull reports. A single rehab easily ends up with 100-200 receipts because I pay for supplies myself.

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 15 2022, 10:31
Quote from @Carl Sliwinski:

Hello everyone.  I’m super green here and want to learn. 
Questions to consider: Do you currently have a personal and professional P&L? Not sure what that means. Probably no

Are your business and personal expenses fully separate, co-mingled, or all together? I had the intentions of keeping them separate but currently they are intertwined.

How was what you thought your personal P&L would look like vs actual look like?

What do you classify as liquid assets? Cash any form of assets that you can access cash from.

How do you currently track business and personal finance? Pen and paper, your own sheets, app?  Not currently.  I have tracked some expenses.

Do you do a personal balance sheet? Nope

Are there any P&L metrics you include not listed in the book?

Which P&L metrics do you find most valuable in your business?


I currently am on my first rehab and I’m about 96% finished.  I can get into the details later but this is going to be a huge learning experience based on time and finances.  Thanks. I will read part one now.


 Congrats on your first rehab! You no doubt will learn a lot, often more from the mistakes than the successes. I would definitely encourage you to separate the expenses ASAP. Sorting them out on the other end is especially time consuming. If you carry a balance on a credit card from the rehab and have it interspersed with personal it can be nearly impossible to sort out what the interest write off will be. Part 1 will full spell out how to do the personal and business P&L. Feel free to ask here if you have any questions a well!

User Stats

9
Posts
3
Votes
Bre Reichle
  • Investor
3
Votes |
9
Posts
Bre Reichle
  • Investor
Replied Nov 16 2022, 14:13

Thanks Alicia or taking this on. What a great gift you are giving us by running this book club. I have never been a part of a book club before. I feel it will hold me a bit more accountable to my reading goals :) 

I opened my first business just before I closed on a property at the end of last month. So, I am an infant in all of this as of date.

I do separate by personal and business expenses in separate accounting software and bank accounts.

I just created my personal P&L. It is close to what I had expected. A little on the lower end :( I do have a business P&L, mainly because I use Quickbooks Online. So, I just download a report. It's pretty much as expected since I am in the rehab part of the process. 

I use Quickbooks Online to track my business. I use google sheets to track my personal. 

I do like to see all three metrics in  my P&L. However, I like to see the overall aspect of the company first. So, the net profit margin would be the key one I like. This number would que me to look deeper if it changed one way or the other. 

I have only evaluated one property so far (for real) but I have practiced evaluating several prior to the actual one I purchased. I looked for both cash-flow and appreciation. In a few years, I may answer this differently when I have several to review from :) But for now, it's the cash-flow and appreciation. 

I am enjoying this book so far. The education is priceless. It's one thing to have a formula, but it's a whole nother ball game to be able to understand what each number means and how it will affect the outcome of different scenarios. 

User Stats

9
Posts
3
Votes
Bre Reichle
  • Investor
3
Votes |
9
Posts
Bre Reichle
  • Investor
Replied Nov 16 2022, 14:23
Quote from @Carl Sliwinski:

Hello everyone.  I’m super green here and want to learn. 
Questions to consider: Do you currently have a personal and professional P&L? Not sure what that means. Probably no

Are your business and personal expenses fully separate, co-mingled, or all together? I had the intentions of keeping them separate but currently they are intertwined.

How was what you thought your personal P&L would look like vs actual look like?

What do you classify as liquid assets? Cash any form of assets that you can access cash from.

How do you currently track business and personal finance? Pen and paper, your own sheets, app?  Not currently.  I have tracked some expenses.

Do you do a personal balance sheet? Nope

Are there any P&L metrics you include not listed in the book?

Which P&L metrics do you find most valuable in your business?


I currently am on my first rehab and I’m about 96% finished.  I can get into the details later but this is going to be a huge learning experience based on time and finances.  Thanks. I will read part one now.


 Carl,

I can't wait to hear how your first investment goes as we read this book. Utilizing the reading and applying it to your newly found business will only enhance the opportunity for you to be successful. So many recommendation to help you get through and understand the financials behind it. I'll be doing the same, for I recently purchased my first property as well :) 

User Stats

9
Posts
3
Votes
Bre Reichle
  • Investor
3
Votes |
9
Posts
Bre Reichle
  • Investor
Replied Nov 16 2022, 14:34
Quote from @Alicia Marks:
Quote from @Carl Sliwinski:

Hello everyone.  I’m super green here and want to learn. 
Questions to consider: Do you currently have a personal and professional P&L? Not sure what that means. Probably no

Are your business and personal expenses fully separate, co-mingled, or all together? I had the intentions of keeping them separate but currently they are intertwined.

How was what you thought your personal P&L would look like vs actual look like?

What do you classify as liquid assets? Cash any form of assets that you can access cash from.

How do you currently track business and personal finance? Pen and paper, your own sheets, app?  Not currently.  I have tracked some expenses.

Do you do a personal balance sheet? Nope

Are there any P&L metrics you include not listed in the book?

Which P&L metrics do you find most valuable in your business?


I currently am on my first rehab and I’m about 96% finished.  I can get into the details later but this is going to be a huge learning experience based on time and finances.  Thanks. I will read part one now.


 Congrats on your first rehab! You no doubt will learn a lot, often more from the mistakes than the successes. I would definitely encourage you to separate the expenses ASAP. Sorting them out on the other end is especially time consuming. If you carry a balance on a credit card from the rehab and have it interspersed with personal it can be nearly impossible to sort out what the interest write off will be. Part 1 will full spell out how to do the personal and business P&L. Feel free to ask here if you have any questions a well!


 Definitely, a congrats! I am excited to hear of the things you are going to incorporate out of this book as you complete your first project. So far, just understanding the numbers and what they will affect in different scenarios is amazing. Keep us up to date as we continue with each week. Glad to see you joined the club :) 

User Stats

1,237
Posts
1,993
Votes
Alicia Marks
  • Fort Worth, TX
1,993
Votes |
1,237
Posts
Alicia Marks
  • Fort Worth, TX
Replied Nov 16 2022, 15:31
Quote from @Bre Reichle:

Thanks Alicia or taking this on. What a great gift you are giving us by running this book club. I have never been a part of a book club before. I feel it will hold me a bit more accountable to my reading goals :) 

I opened my first business just before I closed on a property at the end of last month. So, I am an infant in all of this as of date.

I do separate by personal and business expenses in separate accounting software and bank accounts.

I just created my personal P&L. It is close to what I had expected. A little on the lower end :( I do have a business P&L, mainly because I use Quickbooks Online. So, I just download a report. It's pretty much as expected since I am in the rehab part of the process. 

I use Quickbooks Online to track my business. I use google sheets to track my personal. 

I do like to see all three metrics in  my P&L. However, I like to see the overall aspect of the company first. So, the net profit margin would be the key one I like. This number would que me to look deeper if it changed one way or the other. 

I have only evaluated one property so far (for real) but I have practiced evaluating several prior to the actual one I purchased. I looked for both cash-flow and appreciation. In a few years, I may answer this differently when I have several to review from :) But for now, it's the cash-flow and appreciation. 

I am enjoying this book so far. The education is priceless. It's one thing to have a formula, but it's a whole nother ball game to be able to understand what each number means and how it will affect the outcome of different scenarios. 


 It's unusual that someone has a good idea of their P&L before tracking it. I help people with building personal budgets and learning about establishing and improving credit, so one of the first things I have them do is give a best guess on their budget before we run actual. It's typically pretty eye opening for most people. 

User Stats

1
Posts
2
Votes
Replied Nov 17 2022, 06:40

I have been in real estate since the end of 2016 but have been doing single family for just 3 years.  I do not a have personal P&L but I have a CPA who does my books so I do have both a balance sheet and business P&L.  Profit is usually on the positive side (yay) but less than I expect.  

Are your business and personal expenses fully separate, co-mingled, or all together?

Separate for sure.

What do you classify as liquid assets?

Liquid is anything I can turn into cash quickly. Anything in the bank obviously, stocks bonds etc.  Not real estate.

I have used Quicken in the past but finally moved to Quickbooks.  my partner is old school and still keeps personal records on pen and paper.

Do you do a personal balance sheet?   No

Are there any P&L metrics you include not listed in the book?  Not sure. I’m just joining so need to catch up in the reading. Book ordered.

Which P&L metrics do you find most valuable in your business?  

I’m pretty new at being this organized so right now it’s the bottom line.  

When evaluating a property, what factors do you weigh first? Do you have a hard pass if it doesn't meet them, or do you make adjustments and continue to evaluate?

After knowing the purchase price and looking at pictures to get an idea of rehab needed, the first thing I do is look at comps and get a good ARV. If the ARV will support the purch and my guess at rehab less closings I look further. I compare this number to the investor calculation of 70% of ARV less rehab. If it's too tight I pass.

I’ve never actually been in a book club and have been around like minded people far less than I should since Covid so I’m excited. Thanks for doing this.

Chris

    User Stats

    1,237
    Posts
    1,993
    Votes
    Alicia Marks
    • Fort Worth, TX
    1,993
    Votes |
    1,237
    Posts
    Alicia Marks
    • Fort Worth, TX
    Replied Nov 17 2022, 08:11

    @Christine Hale how does that work with a business partner that doesn't work on the same system? Where do you keep anything that is a joint holding? I'd be too afraid I'd lose my notebook, although I do still like to do some stuff with pen and paper, like planning out personal bills split between paychecks. Much easier to cross of the list as I go.

    User Stats

    25
    Posts
    8
    Votes
    Barry W Bahr
    • Investor
    • Tampa, FL
    8
    Votes |
    25
    Posts
    Barry W Bahr
    • Investor
    • Tampa, FL
    Replied Nov 18 2022, 14:52

    Keeping up with my financials is my least favorite thing to do. I know it is important but I still hate it. It is labor intensive. I use Quicken for all my financials both personal and business. At one time I did hire a bookkeeper through 1800Accountant but they did a poor job. I decided to just do it myself. I want to get in the habit of producing a monthly P&L. The next step is actually reviewing it. My habit right now is simply printing the report and filing it without actually reviewing it. The book has energized me to take my P&L more seriously.

    I do separate my personal and business expenses. I have separate bank accounts for each.

    I classify liquid assets as anything that can turn into cash quickly. Quickly meaning in less than a week.

    I currently don't do a personal balance sheet but I will now.

    The most important metric is whether or not I am making a profit.

    My most important factors evaluating a property is the type of property, can it be a long term rental, purchase price, and the rehab. I prefer single family homes, purchase price below $150K, and not more than $20K of rehab. I have a hard pass on the purchase price.

    User Stats

    1,237
    Posts
    1,993
    Votes
    Alicia Marks
    • Fort Worth, TX
    1,993
    Votes |
    1,237
    Posts
    Alicia Marks
    • Fort Worth, TX
    Replied Nov 18 2022, 18:18

    Keep adding your thoughts for part 1 here, and join us for part 2 by clicking the link! https://www.biggerpockets.com/...

    User Stats

    1,237
    Posts
    1,993
    Votes
    Alicia Marks
    • Fort Worth, TX
    1,993
    Votes |
    1,237
    Posts
    Alicia Marks
    • Fort Worth, TX
    Replied Nov 21 2022, 14:46
    Quote from @Barry W Bahr:

    Keeping up with my financials is my least favorite thing to do. I know it is important but I still hate it. It is labor intensive. I use Quicken for all my financials both personal and business. At one time I did hire a bookkeeper through 1800Accountant but they did a poor job. I decided to just do it myself. I want to get in the habit of producing a monthly P&L. The next step is actually reviewing it. My habit right now is simply printing the report and filing it without actually reviewing it. The book has energized me to take my P&L more seriously.

    I do separate my personal and business expenses. I have separate bank accounts for each.

    I classify liquid assets as anything that can turn into cash quickly. Quickly meaning in less than a week.

    I currently don't do a personal balance sheet but I will now.

    The most important metric is whether or not I am making a profit.

    My most important factors evaluating a property is the type of property, can it be a long term rental, purchase price, and the rehab. I prefer single family homes, purchase price below $150K, and not more than $20K of rehab. I have a hard pass on the purchase price.


     It sounds like you have a secure buybox. Are you only using quicken for personal, or Quickbooks? It will automatically create a P&L for you.

    User Stats

    25
    Posts
    8
    Votes
    Barry W Bahr
    • Investor
    • Tampa, FL
    8
    Votes |
    25
    Posts
    Barry W Bahr
    • Investor
    • Tampa, FL
    Replied Nov 21 2022, 19:38

    Thanks for the interaction. I use Quicken for both personal and business. I thought about using Quickbooks for business. I decided to stay with Quicken so that I can view all my financials in one program.  

    User Stats

    7
    Posts
    3
    Votes
    Replied Nov 23 2022, 06:14
    Quote from @Alicia Marks:

    Welcome to our first ever BiggerPockets bookclub! This will be a chance for us to talk about what inspired us, where we have questions, and how we can become more effective investors. Please note our forum rules (found on the right hand side on desktop) as you engage with one another. We will be focusing on one part of the book per week, with new discussions starting on Fridays. You don't need to answer every question, just some questions you may want to reflect on. Remember there is some bonus content to help you. Info on how to receive it is found on page 29.

    This week we are discussing Part 1: Personal and Business Performance

    Questions to consider: Do you currently have a personal and professional P&L?

                                             Are your business and personal expenses fully separate, co-mingled, or all together?

                                             How was what you thought your personal P&L would look like vs actual look like?

                                             What do you classify as liquid assets?

                                             How do you currently track business and personal finance? Pen and paper, your own sheets, app?

                                             Do you do a personal balance sheet?

                                             Are there any P&L metrics you include not listed in the book? 

                                             Which P&L metrics do you find most valuable in your business?

                                             When evaluating a property, what factors do you weigh first? Do you have a hard pass if it doesn't meet them, or do you make adjustments and continue to evaluate?

    Looking forward to hearing everyone's thoughts!


     Hi @Alicia Marks,

    Thanks for starting this book club. I loved this book, it has been very helpful with both personal finance and analyzing deals. I wanted to add for personal finance I have used this app called Mint for the last 5 years or so. It has been an asset for monitoring my income, expenses, net worth and so much more. I encourage others to look into it, as it has proven to be very beneficial for me. I hope others enjoy the book as much I did!

    User Stats

    1,237
    Posts
    1,993
    Votes
    Alicia Marks
    • Fort Worth, TX
    1,993
    Votes |
    1,237
    Posts
    Alicia Marks
    • Fort Worth, TX
    Replied Nov 23 2022, 07:16
    Quote from @Robert Lopez:
    Quote from @Alicia Marks:

    Welcome to our first ever BiggerPockets bookclub! This will be a chance for us to talk about what inspired us, where we have questions, and how we can become more effective investors. Please note our forum rules (found on the right hand side on desktop) as you engage with one another. We will be focusing on one part of the book per week, with new discussions starting on Fridays. You don't need to answer every question, just some questions you may want to reflect on. Remember there is some bonus content to help you. Info on how to receive it is found on page 29.

    This week we are discussing Part 1: Personal and Business Performance

    Questions to consider: Do you currently have a personal and professional P&L?

                                             Are your business and personal expenses fully separate, co-mingled, or all together?

                                             How was what you thought your personal P&L would look like vs actual look like?

                                             What do you classify as liquid assets?

                                             How do you currently track business and personal finance? Pen and paper, your own sheets, app?

                                             Do you do a personal balance sheet?

                                             Are there any P&L metrics you include not listed in the book? 

                                             Which P&L metrics do you find most valuable in your business?

                                             When evaluating a property, what factors do you weigh first? Do you have a hard pass if it doesn't meet them, or do you make adjustments and continue to evaluate?

    Looking forward to hearing everyone's thoughts!


     Hi @Alicia Marks,

    Thanks for starting this book club. I loved this book, it has been very helpful with both personal finance and analyzing deals. I wanted to add for personal finance I have used this app called Mint for the last 5 years or so. It has been an asset for monitoring my income, expenses, net worth and so much more. I encourage others to look into it, as it has proven to be very beneficial for me. I hope others enjoy the book as much I did!

    I use mint for my personal, but it doesn’t like all of my accounts since it use a few small town banks. I also forget to manually update property values. It’s great overall for a quick look tool.

    User Stats

    2
    Posts
    2
    Votes
    Replied Nov 23 2022, 07:57

    Thank you so much for launching this book study! I have been making money for other people in real estate but now I want to start doing it for myself also. 

    Do you currently have a personal and professional P&L?

    I do now!

    Are your business and personal expenses fully separate, co-mingled, or all together?

    No I have kept my Realtor business expenses and personal expenses separate for several years.

    How was what you thought your personal P&L would look like vs actual look like?

    I wasn't surprised. I knew approximately where I stood

    What do you classify as liquid assets?

    Anything I can get the cash within a week.

    How do you currently track business and personal finance? Pen and paper, your own sheets, app?

    I use Dave Ramsey's Every Dollar Program. I have one account for business and one for personal.