I am a data guru/excel junky and part of my professional gig is building automated tools using Excel and Access and lots of coding and macros. I have built a simple (in my highly automated subjective opinion) excel spreadsheet that allows you to add in line items/transactions through the months and monthly balance sheets and P&Ls are generated for the business as a whole AND for each property. I am just curious how my chart of accounts looks.
Too much? not enough? Should I be more detailed? Should I split some things up? Here is a list:
|Property 1 Building|
|Property 1 Land|
|Property 2 Building|
|Property 2 Land|
|Business Checking Account|
|Security Deposit Escrow Acct|
|Reserve Acct for CAPEX|
|Deferred Maintenance Acct|
|Accumulated Depreciation - Property 1|
|Accumulated Depreciation - Property 2|
|Equipment & Machinery|
|Appliances, Extra parts|
|Office Equipment & Furnishings|
|Computers, Printers, Electronics|
|Misc Office Supplies/Inventory|
|Property 1 Mortgage|
|Property 2 Mortgage|
|Security Deposit Escrow Acct|
|Short Term Loans|
|Business Credit Card 1|
|Business Credit Card 2|
|Security Deposit Forfeitures|
|Property Tax/Insurance Escrow Expense|
|Mortgage Interest Paid|
|Other Interest Paid|
|Water & Sewer Utility|
|Taxes Other than property tax|
|Depreciation Expense - Property 1|
|Depreciation Expense - Property 2|
|De Minimus Items for Rentals|
|Trash Utility Expense|
|Property Acquisition Costs|
btw, I have never used nor do I want to use Quickbooks.... :-) Please don't recommend I go to an accountant, I have a tax advisor and thats all I need. I prefer to do the accounting myself since I do this professionally for a large company and have a finance degree and MBA.
why not follow the millionaire real-estate investor?
or the standard real-estate CoA
Personally, I say add items as you need them and don't make it overly complex.
With that said, you code in excel. So,...You want to automate as much as possible, and therefore, probably enjoy fine-tuning the complexities.
I'm curious to see what you have thus far. I'm a developer trying to make it in this real estate biz as well. And why use Quickbooks, when Excel is more fun?
Ha! thanks I'm glad someone understands! Thanks for the links. I'll take a look. And yes I have it pretty automated already, just put in my transactions, which accounts to debit and credit, and the financial statements automatically populate. pretty simple really.. not any code in it (yet!)
if you do need help with the code send me a note. excel vba is my forte'
Going to start you with few more accounts:
- Start up
- Split Contribution and Draws
- Depreciation for all Fixed Assets Account
So, are you an accountant?
... or a real estate investor?
@William E. will do! I actually don't have it VBA enabled right now... just complex index/match statements and formulas.
@Gita Faust I had thought about splitting contribution and draws... is this a standard practice? benefit? Also, do you mean depreciation for something different other than what I already have?
@David Dachtera If you are trying to make the point of me spreading myself too thin point taken, however I am still a new investor with little money, so if I am able to save a significant amount of money doing something I am already good at while also learning how to run and operate my business in a hands on approach, why not?
I would add leasehold improvement accounts for each building as well.
Also, for things like your office furniture, ect.
The deminimus for 2015 was $2,500. Make sure to elect on your return to expense rather than capitalize for this (make the deminimus election) and then have a written capitalization policy for the business (stating that any thing above and beyond $2,500 will be capitalized in accordance) and most of your furniture, tools, computers ect can be expenses and not need to be added to the Balance sheet.
It's more a question of focus, really, and the value of your time.
As an employee, we learn to trade our time for dollars. As an entrepreneur, we need to un-learn that and instead trade our dollars for time.
I hope you're not a cardiac patient, because this may shock you: money is a "renewable resource" - I can always get more money. (If you need to, take a breath, wait for your heart rate and pressure to come down. Meditate, if that helps.) Yes - I CAN always get more money.
Time? Not so much.
Those who aspire to wealth trade time for money.
Those who understand wealth trade money for time.
Also, you'll want to rethink the concept of "saving", as in not spending. No one ever "saved" their way to wealth. In order to stash that much money you have to have earned it in the first place, gained an inheritance or won the lottery.
No one ever "saved" their way to wealth. You MUST invest for income.
The activities of being an investor are often a stretch outside of one's comfort zone. Those familiar skills and associated activities offer an escape to a place of "comfort", but produce little or no income or profit.
Perhaps you've heard it said:
"Everything you want lies just outside your comfort zone."
- Robert G. Allen
@David Dachtera I completely understand what you're saying and I value that very thoughtful response and wisdom. I wish I could trade my money for time and right now I am doing everything I possibly can to get to a point to where I am able to do that: I have sold my house and downsized significantly, I downsized my car, I canceled my TV, I downgraded my phone, I have been actively changing things in my life to get my mandatory monthly expenses to a point where I am able to invest more into my business. Its just at this moment right now in my real estate investing career, this is what is necessary.
And none of what you describe is out of my comfort zone. I understand how to get more money but it also involves a certain level of risk and time meeting people and building relationships, which I am completely fine with but financially, I am just tapped out right now and just making ends meet, and time, I have 2 small kids and I work full time...so yes, my time is very valuable to me right now - hence why I built an automated tool to do my accounting for me. (student loans have completely thrown a brick in my finances just to explain a little more)....
Ah, yes. The "S"-Myth, "S" for school, or the "D"-Myth, "D" for degree.
You do know that the schools and the corporations are in cahoots to determine who gets hired, who gets promoted, etc., right? The "average" college debtor hasn't got a prayer without the right connections.
Another important point - and this runs counter to what is most often heard: focus on investing for income FIRST. Use the new income to help pay down debts. When the debts are gone, the income will remain.
Learn how to attract and engage private lenders. With what's coming on Wall Street, they'll need safer, less volatile investments. That's where your deals come in.
@Sarah Miller in short you need to have it very detailed to track each every penny coming in and going out.
Remember that the more accounts you break things out into, the more difficult it gets to manage and keep track of. Some of my thoughts:
- what is the deferred maintenance account for?
- I would get rid of the appliances/extra parts account. Are you planning on buying appliances and parts in advance and then when you install them in a house, make another journal entry for the various parts? That seems like a lot of extra work
- You are missing late fee income acct.
- I would include bank fees (bounced checks, wire fees, certified checks), professional fees (think CPA, lawyer, etc), and License fees as an expense accts.
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