Hello BP Family!
So I'm closing on my first rental and plan on aggressively scaling in the next few years and beyond and am looking for a little advice from some experienced investors here at BP. I will be turning these future rentals/investments into a business and am looking to treat it as such from day 1. I have already talked to CPAs/lawyers and made a plan with how I will be structuring the investments as far as LLCs and Corporations and LLCs owned by corporations and all that legal tax mumbo jumbo (which is extremely important asset protection and tax mumbo jumo but not the root of my question).
My question has to do with the day to day managing of incoming rental income. I've heard strategies like creating different personal checking accounts for each address, using quickbooks to manage income for P and L and balance sheet purposes, or even just a base spread sheet for the same. The intention is to have hundreds of units over the course of the next few decades (god willing) and then even having this business span generations if possible. Just wanted to see if there is any income software I should be utilizing and things of that nature. The goal is to systemize and grow and eventually hire people to take over those systems as I move out of the business and like I said that is the mindset I want to use from day 1. I don't want to do what's easy now and be scrambling as I grow to develop the processes I need.
Any and all advice is appreciated! Thank you all for your consideration.
If you want to scale to hundreds fast I think the key is to outsource all of the day to day. Many of us do that by hiring 3rd party property management. They cost money, but they also take day to day tasks off of our plate. Then as folks scale sometimes they'll bring property management in house to control their costs.
I mean scaling to hundreds of units is the goal but I mean "fast" as within 5-7 years. I intend to hire and out source down the road but I still want to be the one who develops and creates the systems used within my company. Of course the given is that landscape will change as I grow and develop hopefully better and more efficient systems and skill sets. I appreciate the input!
Work with your CPA to create a strategy for bookkeeping, document retention, and tax compliance so you can scale with confidence.
Get an education by partnering with someone experienced. Separate checking accounts for each property? That won't last long. You need to learn how others have structured and copy their proven systems.
Let me slap you with a little reality check. You want a company with hundreds of properties but - according to your profile - you don't have any experience. I really don't mean to insult you but that's similar to a 10-year-old claiming he wants to be a professional basketball player and asking what shoes he should buy. First he needs to learn to dribble, shoot, run, jump, understand the rules of the game, figure out if he's got any skills, determine if he actually likes the game enough to work that hard, and maybe even wait a few years to see if he'll be taller than 5'4" by the time he's 18.
There's nothing wrong with dreams, but it would be wise to try it on a smaller scale (1-5 rentals) before you start trying to build an entire empire.
Check out stessa dot com for income and expense tracking.
Good luck and let me know if I can be of assistance.