All Forum Posts by: Ben Day

Keep your overhead low until you get close to a deal - you can open an LLC in less than an hour in OK. Way, way better for you, taxes, protection to do it this way*

*Not a lawyer or a tax accountant. Just a friendly REI bookkeeper

@Cassi Justiz with Spearhead Realty (also an investor). Cassi is BP-message board savvy, she might jump on here. 

@Ron Harris and his wife Angelina own Spearhead, are investors and REI mentors local to OKC. Ron is a little less message board savvy than Cassi :)

@Thomas Pae

Financing pre-approval first usually, then I’d start the marketing/acquisition. Once you start closing in on a deal you can shop PMs to see who has a lot in your area.

Honestly, you’ll probably be doing all of this at the same time. The good news is that all of these folks know each other so they could coordinate between themselves as you get through these steps.

@Thomas Pae

Lenders - John Day at First Security Bank, or the whole team at Stout Lending (Rockford Steele or Brighton Godwin are my favorite on that team)

Realtors - anyone out of Spearhead Realty, brokerage specializing in REI. They can also help with leasing if you decide to try and keep prop mgmt in house

Property Managers - Tarek Saad with CedarLand Investments

@Maggie L.

This is a great question!

When I think about picking a technology solution for my business, cost is definitely a factor. The other things you may want to consider are things like system integration and the long term plan of your business. Most alternative softwares (Buildium, Stessa) don’t “play well” with other apps that might make your life easier. Further, if accounting and bookkeeping are something you don’t want to do yourself forever, keeping your systems in a popular setup is key. My biggest point here though is the long term effect of scaling. As you add more business entities, your overhead will continue to rise in legal and filing fees as well as system fees. If you have a dozen tiny businesses, how long until that gets too expensive or complicated to sustain? If you can figure out a simple solution to your holding and reporting strategy, it sounds like QBO will be the best fit.

As always, check with a lawyer, a tax specialist, and any other professionals familiar with real estate to get the whole picture. Congratulations on the growing business!

Hey Jason! 

Quickbooks Online is great at showing all of this information. You'll need to be able to identify the Sales Price, amount spent on labor & materials, amount spent on carrying costs, amount spent purchasing the property, and any other selling costs. Most QBO geeks I know (quite a few) suggest using "classes" in Quickbooks to separate your deals. 

As for your setup question - how familiar are you with Quickbooks? It's built to pretty fairly easy to use, but not easy to use for house flipping unless you have an accounting background or are willing to learn accounting instead of finding your next deal. 

100% agree with Natalie. Tax planners are great at exactly that - big picture strategy and research. A bookkeeper will need to be timely, consistent, accurate, and understand the real estate biz. Ask either one to do the other's job, and your results diminish. You should also be able to depend on your team to give you advice beyond "just" bookkeeping and into things like financing and other advisory services. 

The popular thing in bookkeeping/accounting right now is flat rate billing. In fact, it's so popular that Quickbooks is hiring people to help customers with their bookkeeping. They keep changing the price and scope of their offering, but you should expect outsourced bookkeeping to start in the $300-500 per month range and go up depending on how complicated or frequent you would like financial information. Of course, Quickbooks is just hiring warm bodies with no guaranteed REI accounting experience - choosing a niche small business is your best bet.

thanks for the tag @Cassi Justiz!

@Tarek Saad - Buildium is a great tool for property management. In my opinion, it's not a great accounting tool. I usually recommend my clients use Buildium or Cozy.co for their PM systems, and something like Quickbooks Online for accounting. By doing this, you can get all of the features you need in your day-to-day operations, and have a software that most/all accountants are familiar with. The key element here is using a bookkeeper that understands real estate, Buildium, Quickbooks, and can bridge the gap between them. The end result is easy property management, consistent financial reporting and feedback, and maximizing your CPA's time by only engaging them for what they are best at - tax planning. 

Hey @Eric Chappell  

You've absolutely nailed it - "class tracking" or the equivalent somewhere else is usually a top dollar feature.

I haven't used rentalhero (yet, thanks for the tip!) but generally - new accounting and property tracking softwares fall short in one of two places: 

1) they don't actually generate financial statements that a CPA or Lender will approve, or 
2) They can, but the learning curve is so steep or convoluted it's impossible for you to get help if/when you need it (I imagine this is why this thread is a little slow right now)

Have you asked your accountant what they think will work best? Select accounting and bookkeeping firms have access to software like Quickbooks Online at a discount, and a few of them even pass those discounts along directly to the customer! 

Food for thought. Good luck! 

@Sterling Fields Great Thread! 

Without knowing anything about your acquisition strategy, I would still recommend hiring a great bookkeeper.

In my home market prices are fairly low to average, so a lot of local investors use community banks for their financing. This is great up until that magic limit, at which point the bank will ask for financial statements they can use. 

Others use private money, either loans or equity, for their financing. In this case, you're maintaining very important relationships with your partners who may want details on the deal, and you'll definitely want to be tracking their distributions. 

Having a bookkeeper that not only understands "debits and credits", but also understands the various operational, financing, and investing activities specific to each "type" of real estate activity is worth their weight in gold. They should be more than capable of creating in-house or "management" books that will appease your partners on a day-to-day basis, and will make your CPA focus on tax planning instead of tax preparation. Bonus points if the bookkeeper speaks a little plain English instead of just speaking accounting :)

The other strength to having a rockstar bookkeeper is a kind of checks and balances. Bad CPA's exist, and sometimes they don't see the whole picture or slow down to really understand your situation. A great bookkeeper should be speaking with you very regularly and will have a deep understanding of your business. 

Finally, established bookkeepers should have great systems backing their business. No guesswork, no missing paperwork, just a seamless system that is easy to use and gets you your reports and a consultation on time, every time. 

Big picture - the right bookkeeper can absolutely help you scale at 10+ acquisitions a year. Depending on the bookkeeper, that first acquisition or refi may recoup your annual cost and open up additional growth. 

100% do recommend cloud accounting software like Quickbooks Online, 100% do not recommend hodgepodging a system together yourself. That just sounds like more training and headaches down the road.