All Forum Posts by: Greg Widdicombe

We use 3D modelling for many of the flips we do.  After taping the inside of the house with a laser measure I build a SketchUp model, which takes a couple hours at most.  Main advantages for doing this:

• Provides an accurate record of key details of the house (square footage of rooms, number/size of windows, and so on) that allows for more accurate estimating, and is available all in one place
• Is the source for diagrams if we need to pull permits
• Allows us to visualize structural changes like moving a wall, adding a door, remodeling kitchens and bathrooms

Attached is an example of a stair rebuild we did on a deck where we demo'd the existing staircase, then rebuilt it in a different shape (L vs. U) with all components brought up to code.  I have also used SketchUp in an Instructable I wrote on building deck railings with hog panel fencing.

Last year we completed a flip as a profit sharing deal with a contractor.  We purchased and sold the property, paid holding costs, and paid for materials.  The contractor provided the sweat equity.  After sale, we cut a check and then reported the amount on a 1099 Box 7.  Is this the correct place to report proceeds from a partnership, where there is no guaranteed income?  Contractor requests we amend to a 1099 Box 3.

We normally use current asset accounts to track 'expenses' for our flips - a Construction CIP account, with a sub account for each of purchase, holding, rehab, and selling costs.  We use classes for each property, and items for recording expenses to the appropriate CIP sub account.  On sale, we move the CIP down to COGS for that property.  

We currently have a flip with loan funding both the purchase and construction hold back, and I am trying to find where the hold back fits into the purchase transaction.  Do I move it up to the CIP Rehab sub-account on purchase, then use a JE to move each rehab funding transaction from the sub-account to checking?

Good to see this thread is still generating interest.  We decided to change our process to that defined by J Scott - mainly to avoid issues related to mixing Balance Sheet and P&L Transactions.  Journal Entries cannot contain both and so we use the "$0 check from a clearing account" method, but I find that a messy workaround when a Journal Entry is really what you want.  We use classes extensively and so recording all flip-related expenses as COGS and assigning each to its own class (or sub-class) makes reporting simple.

I love the export to Excel feature, especially if you have multiple jobs and use multiple cards.  Here's why (and apologies if this is too Excel geeky):

If you do your own bookkeeping in something like QB, and can't easily import transactions, then entering them individually is a pain - especially with multiple cards/jobs, and if you want to track your expenditures at a more detailed level like Drywall, HVAC, framing, etc.

Dumping the transactions to Excel allows you to pivot the data by data elements like Month, Job, Department, so that you can generate a summarized journal entry which can then be entered into QB once - you just need to keep the detailed data somewhere accessible for backup.

Example:

If I pivot my home depot detailed data for March 2015 I see that I had expenditures for one job for the following departments:

It's pretty easy to map these to however I track expenditure in my WIP accounts in QB and then enter a single journal entry for March that balances the total charged to the card against individual items for each of the above.  No one really cares that I visited Home Deport 8 times to pickup lumber, and twice more to pickup both lumber and fasteners.  From a bookkeeping standpoint I just need to know that for job XYZ I spent $456.23 on lumber, and that it is tracked correctly as a rehab expenditure for that job.

The only issue I have with the Excel data is that the summary file contains the Job Name and Card Used - you will need to pull that into the detailed file before pivoting.

Hi - thanks for your response.  It looks like we are doing essentially the same thing, just in reverse.  I move my expenditures up to WIP and carry them there until the sale, then move to COGS, you record in COGS, then move up to WIP as you cross a tax year boundary.  I also use items extensively so I can do job costing by items, you have the same defined in COGS so that it shows the same detail in a straight P&L (probably easier) - then you filter by classes same as me to show profitability by property.

We do both property management and flips in the same LLC, and use Customer:Job:Sub-Job for both - for flips it's FLIP:Property and for Property Management it's ADDRESS:Unit:Tenant.

I managed to get the closing statement entered and am about to close out COGS so everything looks OK.

Thanks again for your response.

-- Greg

Hi many thanks for all the previous discussions on setting up QuickBooks for rehabbing, we poured through the advice and believe our setup and recording of expenditures are correct - now comes the fun part of recording the sale.

What's been done so far:

• Rehabbed property has been setup as a customer
• Current asset "WIP" account setup to track expenditures, with sub accounts to track separately: Purchase costs, rehab costs, holding costs, sale costs
• Items setup and used to record expenditure and post to the appropriate sub account (Zero-dollar check method used) - all transactions recorded against the customer above
• Classes being used to segregate income and expense for different parts of the business (property management, fix/flip)

To date, everything looks correct - all rehab transactions are hitting the balance sheet and not P&L.  Now - comes the sale.

I assume I need to move the balances in the current asset account down to COGS and record the details of the closing statement.  My questions:

• Do I use items to transfer the balances from the current asset to COGS?
• Do I use items to record the details of the closing statement?
• I assume the details of the closing statement would record the sale price, then expenditures related to closing, loan payoffs etc, netting out the cash received
• We normally track income using classes, moving payments received into undeposited funds, then recording a bank deposit.  Do we do the same for the net income from the sale?
• Finally, I assume the transaction to move WIP to COGS occurs AFTER the closing statement as some of the closing costs would be recorded against the WIP sub account for closing costs?

Thanks much for your help - we're big fans of BP and are constantly amazed at the valuable information shared.

-- Greg

I am setting up QB (vs. Excel) for a company that does both Property Management and Flips.  I want to keep the funds in the bank account separated, and so have setup sub-accounts for each, with the goal of sweeping the property management funds into the flip funds monthly (or have the property management fee 'deposited' into the Flip sub-account.

I have previously used Jonathan's guide for setting up QB for Landlords, but Property Management has me stumped (on what will probably be a simple solution).

My scenario:

• Properties are setup as Customer:Job
• Class:Sub-Class is used to track income expense by property/unit
• Beginning of month I invoice the tenants (customer:job)
• I receive payments (Rent Income) into Undeposited Funds, then make deposits into the Property Management checking sub-account
• From that sub-account, I pay:
  • HOA fees
  • 'My' property management fees
  • The property owner (the remaining balance)

If I do a P&L by class at the end of the month, each class should net out to zero, as income and expenses cancel each other.

What I can't figure out is how to address my property management fee.  I want to show each property owner his his own P&L showing how his rent income was distributed, and at the same time show my P&L having "Property Management" income.  I am thinking I would invoice the property owner and his payment would be the expense to him and income to me - but how do I get him to 'pay' with funds already in the Property Management sub-account?