Using quickbooks to keep track of rehab costs vs. budget

9 Replies

Is there a way to easily use Quickbooks to track expenses for a specific rehab project (flip) against an initial budget?

Let's say at the beginning of a new rehab project I have estimated amounts for the labor costs, material costs, property taxes, insurance, utilities, staging, etc.  As the rehab progresses and I incur expenses within each of those categories, I would like to be able to quickly compare the total amount incurred so far vs. the total amount estimated.  At the end of the project I can see where I over-budgeted and where I under-budgeted.  

I have each of my rehab projects set up by class.  All of the expenses for each current project are put into inventory accounts, then after the property is sold I move it all to COGS.  

I played with the "Budget" feature but it seems to be a function of expenses over time, rather than simply total expenses per project.  I realize I could do this with a spreadsheet but I'd love to keep it within QB if possible.

Any help or guidance would be appreciated!

Setup your property as a Fixed Asset

Setup the Expenses as a Fixed Asset. (Work in Progress) (SubAccount of the Rental Fixed Asset)

QuickBooks will add the expenses like an adding machine

Nancy Neville

Originally posted by @Account Closed :

Setup your property as a Fixed Asset

Setup the Expenses as a Fixed Asset. (Work in Progress) (SubAccount of the Rental Fixed Asset)

QuickBooks will add the expenses like an adding machine

Nancy Neville

 Thanks for the reply Nancy.  The way I currently have it set up is all costs associated with a property (purchase price, rehab costs, holding costs, etc) are put into the appropriate accounts which are Other Current Asset (Inventory).  Would that work any differently than if those were Fixed Asset accounts? 

QB does add the expenses up, but what I am wanting is an easy way to set a budget for each of those accounts for each specific property (which is set up as a Class), then see those running totals compared to the total amount budgeted for that particular account. 

I'm wondering if what I am looking to do using the Customer:Job features?  I don't really understand how those work.  

Hello again Cooper (I like the name)

The difference between Fixed Assets and Other Current Assets is that Fixed Assets, as you can see below,  is for buildings, land, machinery, Equipment and Vehicles.  Click on the "More" tab and it will give your more examples. 

The "Other Current Asset Account" is for Inventory. Prepaid Expenses, Employee Cash Advances and Loans. 

Brokers who deal with REO's, Foreclosure Etc., will list their properties as Inventory.

But if you are Flipping, your properties are not Inventory, they are properties you plan to fix up and later on (as soon your state law allows) you sell it. 

If you list your property as a Customer and the work you do as a job of that customer, then you can run a Profit and Loss Report by Job to get a running total of things.  But remember when you list it as a job, the Profit and Loss Report will only show you Income and not expenses.  Therefore this is not what you want to do.  (Because the Customer Center is just for Income)

Instead setup your property as a customer, e.g., 

        1622 Fixer Up Street as a Customer in the Customer Center and then link all the stuff you do to that property as a class.  Then you can run a Profit and Loss Report by Class and find out  how much income you made off of it, which may be nothing yet, and how much you spent and on what, giving you your bottom line. Since you won't be making income on it yet, you will just have an expense show up on the report, but it will still show you what you spent the money on and how much. 

As far as budgets.  I'm not good at that in QuickBooks.  I never used it.  And therefore whatever I've learned about budgets during my certification period, I have lost, due to "if you don't use it, you lose it) so I can't help you on that. 

Nancy Neville

Ok, thanks again for the response.  As I have it set up now I can run a balance sheet by class to look at incurred expenses for an ongoing project, or P&L by class after the project is sold and moved to COGS.  It works ok, but with a bunch of ongoing projects I was hoping I could get a quick idea of what has already been spent vs. what is yet to be spent all within Quickbooks.  Otherwise I find myself not having a great idea of how much cash is available for new purchases and how much needs to be in reserve to finish each of the different rehabs.  

Like I said before, I realize this could be done in excel pretty easily but as a rule I hate to spend time entering every transaction into multiple pieces of software.

All businesses and real estate investors should have a budget, track their estimates vs money spend and received in detail. You have to know where your profit is. Think Profit First.

It all depends on how your QuickBooks is setup and how you enter transactions. 

Understanding accounting, how an investors (flip, rentals, construction, developer) runs, manages their business is very important and of course QuickBooks.

I am an Accountant, Advanced Certified QuickBooks ProAdvisor since 1999 and Intuit Premier Reseller. We have addressed this in our guide Flip Real Estate using QuickBooks.

Zap Your Profits.

Cooper did you figure out how to establish a budget using Quickbooks?  If so I’m wondering if you have you an overall budget broken into smaller projects such as electrical, plumbing, roofing, windows etc?  I have found on a full rehab we have somewhere around 25 to 30 individual projects that have to be done to get the rehab to completion.  Being able to track the over all budget, broken down into projects would be awesome.

Secondly it would be really nice at the end of the year to understand how much did we spend on Electrical or any other class as a way to discover opportunity costs.

there is no way to do this unfortunately.  

You should make each property an asset account.  Then, enable class tracking and create a class for each expense category.  Then, do a report for the account from the chart of accounts, and group by class, filtered for all dates.  

This will let you know what you have spent so far but you won’t be able to compare against a budget.  To do this, create a budget spreadsheet using the same class names as Quickbooks and manually enter the amount you spent to compare against the budget.  

If you are good at spreadsheets, you should be able to create tab in the sheet that lists all expenses with a “class” column, and then sum all transactions per class in the aggregate tab using formulas with it statements.  

I'd like some clarification regarding how a real estate investor would list flips in the Chart of Accounts. Would it be "Other Current Asset" or "Fixed Asset"?  From what I've read elsewhere, my understanding is that flips are listed as Other Current Assets.  

@Kelly Cruz Rentals are classified as Fixed Assets and Flips are Current or Other Current Assets depending on how you have set up your books.

@Dustin H. Keep it simple. Create only one account as Properties that reflects on your Balance Sheet report and use Class to track each property money in and money out.

Everything is possible OK almost everything is possible in QuickBooks. 

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