New, and nervous.

[David M Wagner]

Hey, all.  Somehow, this site has eluded me until this past week.  I have had a curiosity about real estate investing for a decade or so (I'm 53, and , but never took any action.  After AI displaced my technology role, I began searching for a new career -- and stumbled upon bookkeeping; a profession, it turns out, really fits the way my mind works. 

Now that I am confident in my bookkeeping skills, to better market myself, I spent a good deal of time thinking of different niches to specialize in.  While I am not 100% set on this decision, real estate (and specifically real estate investors) are currently very high on my list of interests (in competition with specific fields within the healthcare industry).

I am a forever learner, and recently began taking a course specifically built to address the needs of real estate investors, and it has been going well so far.

My nervousness stems from the unknown. And maybe it will be addressed later on in the course I'm taking, but what is making me hesitant is knowing how the accounting formula (assets = liabilities + equity) applies to investors? And, naturally, the list of transaction types will vary based upon the type of investment (BRRRR, STR, LTR, Fix & Flip, builders, wholesalers, etc...).

I will be searching for these answers myself, but for now I'm wondering: are there known, reputable resources that detail the type of financial information an investor will need to be mindful of, by type of investment? 

For example: mortgage, property insurance, escrow, utilities, permits, etc... 

The above expense types will presumably be different (or of different importance) for someone who's considering renting an existing property they own versus someone scoping a new property to purchase for a fix and flip.

It's just the understanding of the process that is really holding me back, so any advice or suggestions will be most welcomed.

[Scott Fuller]

Hi David,

Welcome to BP!  I recently joined as well.  I'm an accountant that works with RE investors, but I'm also interested in learning more about the industry for my own potential to invest.

Your questions are totally normal.  Generally, the expenses that you incur for the rental properties are expensed as you incur them (utilities, maintenance and cleaning, mortgage interest, insurance, etc.).  For fix and flips, you record the purchase price and closing costs, renovation costs, holding costs, etc. on the balance sheet as an asset until you sell the property.  At that point, you move the entire balance from the balance sheet to cost of sales when you record the closing.

One book that you may get some benefit from is "Profit First for Real Estate Investing" by David Richter. He takes the Profit First approach and applies it to REI specifically. There's a good chapter on setting up your balance sheet for fix and flips.

I hope that helps!