All Forum Posts by: Jake Baker

@Bao Vu 

From a bookkeeper's perspective, here's how this should be reflected:

Tax Basis for the Flip:
For tax purposes, the purchase price of the property you flipped (bought in 2023, sold in 2024) will count as part of your cost basis. This includes:
- Purchase price
- Renovation costs
- Closing costs (buying and selling)
- Holding costs

These expenses offset the selling price to calculate your taxable gain. 

QuickBooks Setup:
For flips, I’d use the following accounts:

Flips in Progress (Inventory)
FIP - Purchase Price
FIP - Buying/Closing Costs
FIP - Rehab Costs
FIP - Holding Costs
FIP - Selling/Closing Costs

Real Estate Cost of Goods Sold (COGS)
COGS - Purchase Price
COGS - Buying/Closing Costs
COGS - Rehab Costs
COGS - Holding Costs
COGS - Selling/Closing Costs

At year-end (e.g., Dec 31, 2023), move flip costs to inventory and back into COGS on Jan 1, 2024. This ensures your books match the timing of your taxable income.

It sounds like you're off to a great start—make sure everything is categorized correctly and consult a CPA to confirm your setup.

@Keetaek Hong

I use QuickBooks Online (QBO) for my flipping business, rental businesses, and bookkeeping clients.

However, many on the forums will advise against QBO. It can feel like feature overload. The main reason is that it is not initially set up for a Real Estate business like other “real estate-specific” accounting software. It takes a certain level of QB knowledge to set it up correctly.

My General Recommendation: Spreadsheets are usually fine for your first 1-3 properties. 3+ properties, you should use a software. If you plan to scale at all, I recommend QBO. If you do not like bookkeeping/accounting/technology, hire a bookkeeper specializing in real estate investors.

@Ben Trageser Stessa is an excellent platform for tracking investors' income and expenses; it is user-friendly. I believe it is now free with a BP Pro subscription. However, its downfall (and really what makes it so easy) is that it is a single-entry system. Overall, it’s an excellent solution for smaller portfolios because you can easily spot any discrepancies. However, if you have a more extensive portfolio or plan to become larger in the next year or two, I would look for a double-entry system that allows bank reconciliations. Most bookkeepers won’t work in it if you plan to outsource it in the future.

@Jonathan Greene Grant is awesome! I know him personally, and he is the reason I got into co-living. BP should have him write the co-living book. 

I recently purchased a property in Jacksonville, FL, and plan to execute a BRRRR strategy with a coliving model (renting by the room). The property is in a B-class neighborhood, and while I'm comfortable managing coliving setups, I'm curious about any potential nuances around refinancing and insurance for this type of property.

Are there specific loan types or lending policies I should know when refinancing a rent-by-the-room property?

Do lenders or appraisers treat properties with coliving setups differently?

Are there any insurance policies or providers you recommend for this unique use case?

I would love to hear from anyone with experience navigating these aspects of a coliving BRRRR strategy!

@Austin Tess

Many lenders have a seasoning period (typically 6-12 months) before you can refinance. Be sure to ask about this when talking to lenders.

Keep detailed records of your expenses during the rehab. Lenders may ask for these when determining the post-renovation value.

The After Repair Value (ARV) is key to your refinance. Research comps in the Milwaukee area or connect with a local appraiser to estimate your property's potential value.

Depending on the rental income, you might explore DSCR loans for your refinance, as they rely on property performance more than personal income.

@Seth Roland

Loans like bank statement loans or DSCR (Debt Service Coverage Ratio) loans could be great options. These focus less on personal income and more on your business cash flow or the projected rental income of the property.

If you have a rehab project, you may want to start with a hard money loan and refinance into DSCR once you are done with the rehab. Hard Money typically funds 90% of the purchase price and 100% of the rehab on a draw schedule.

@Simandu Yakubov

For my flipping business, I prefer to use fewer software programs to streamline things. My do 10+ flips/BRRRRs per year. We use DealCheck to underwrite deals and QuickBooks Online for everything else post-closing on the purchase.

Quickbooks Setup:
- Classes allow for separate P&Ls for each property.
- Products & Services enable us to track each 'phase' of the rehab.
- Projects give us visibility on my projects
- My CPA can easily access the reports for tax preparation.

I advise my bookkeeping clients the same way.

@Rick Im

I have an expense account called "Failed Real Estate Escrow Expenses " (in QuickBooks) for my flipping business and bookkeeping clients. If I cancel an escrow, inspection fees or other costs associated with that failed transaction go in here. I keep it as a general business expense and don't assign a property (class) to it. 

@Scott Trench

I see the appeal of discouraging spammers. Here are some thoughts I had.

Potential Backlash - I agree with @Erik Estrada that charging fees might draw criticism from some community corners. 

Defining Infractions Clearl: Ensure the policy defines violations explicitly. For example, what constitutes "solicitation" or "pretending to be an investor"? Providing examples can help avoid confusion and disputes, and posting them clearly in the agent finder can help. 

Communicating the Policy: Make the policy highly visible, especially to new members who may not be familiar with the forum's culture.

Escalation Process: Consider a warning system before issuing a bill. A tiered approach (e.g., first offense = warning, second = temporary ban) might feel fairer, especially to newer members who may not fully understand the rules.

The idea is understandable, given the cost and disruption spammers cause. Striking the right balance between enforcement and maintaining an inclusive, education-focused community will be crucial to its success.

@Renee R.

I know a few property managers here in SD that I can recommend. I will send you a DM.