Should I put property purchase + rehab costs in my P&L? Confused

[Joshua Powell]

So I'm starting to put together a fairly simple P&L in excel for the house hack I just acquired. I'll eventually move over to a more complex accounting software such as quickbooks down the line, buy I want to wait until I a have further understanding of basic accounting beforehand. This coming spring I plan on taking some accounting classes at my local community college.

My question is, how do you go about recording the actual acquisition of a property and the initial rehab that takes before you rent it out? Do you input them as expenses, just as you would anything else, or is there specific way you should record these items? And is there any resources that you would recommend to learn the accounting side of things on a more real estate specific level?

[Ashish Acharya]

Originally posted by @Joshua Powell:

So I'm starting to put together a fairly simple P&L in excel for the house hack I just acquired. I'll eventually move over to a more complex accounting software such as quickbooks down the line, buy I want to wait until I a have further understanding of basic accounting beforehand. This coming spring I plan on taking some accounting classes at my local community college.

My question is, how do you go about recording the actual acquisition of a property and the initial rehab that takes before you rent it out? Do you input them as expenses, just as you would anything else, or is there specific way you should record these items? And is there any resources that you would recommend to learn the accounting side of things on a more real estate specific level?

I would be lying if I tell you that your few accounting classes would help you understand managing your portfolio and understanding accounting.  I would take that money and hire an affordable bookkeeper. If you want to know basic accounting, reading books for investors would be more helpful compared to accounting classes. 

Regarding your question:

All the work done to the property before placing it in service would be added to the basis of the property and be reported in our Balance Sheet. Your PL should not have purchase or rehab costs. (Your cash flow statement will have those activities as cash outflow). P/L and cash flow are two different statements. P/L will have a normal rental activity (rent collection, expenses, and depreciation) .

I would suggest picking up some books.