All Forum Posts by: Jana Cain

@Michael Chizhov One option is you could create an expense account in the AirBnB books ("LTR Mortgage", for example) and use that account when you do the transfer/write the check (the entry would be a check or expense transaction with you/your LTR business as the vendor, and "LTR Mortgage" as the expense account). On your AirBnB P&L, you'll see all of those payments listed as the aggregate LTR Mortgage expense. In the LTR books, you could book it to equity as an owner contribution, or book it to wherever you currently book the mortgage payment (which will net against your usual payment out of LTR funds). If you want to see the contribution on the LTR P&L, you could create an other income account for the mortgage contribution ("Mortgage Contribution", for example).

Your original idea of booking draws/contributions between the two activities is fine, but it doesn't inherently tell you what the transfers are for, since you could transfer funds between the two activities for any variety of reasons. If you intend to do only do these transfers specifically for the mortgage, it could still work, but if you do transfers for other reasons, it may get murky. My suggestions are based on the presumption that you want to see at a glance what the AirBnB contribution is. 

I should note that if you go the income/expense route (vs draws/contributions in equity), you'll want to make sure a book-to-tax reconciliation is done at tax time to ensure the actual profit and loss of each activity is accurate. This should be done anyways as a check that everything is in order, but it's particularly important in this case since you're "mixing" transactions from two separately reported activities.

I hope this helps!

@John D. There's not much difference in someone having access to your books from across the country vs locally, though I understand the sense of security of someone sitting in your office (theoretically), or generally working with someone you've met in person. For my clients, I have restricted access to their bank accounts (I can only pull statements, I can't move money around), and I don't handle anything related to making payments or deposits - I just manage the books which includes reporting, budgeting, forecasting, analysis of the business, etc. This significantly reduces the risk one might anticipate with giving someone access to their books.

Given the current climate, whomever you bring on board is likely to be ramping up their own virtual capabilities, so it might not be as hard as sounds to find someone suitable. It's a valid question to ask any candidates you interview what systems they use/how they've responded to virtual work.

You'll for sure want language that details want happens when you are no longer partners - death, someone wants out, etc. Your agreement should also make it clear how the capital works - are you both putting money as well as expertise into this venture? Is that 50/50 also? You want for both of you to understand what you each have at stake.

I'm sure others on here who are more experienced with creating partnerships will have more specific details to suggest.

@David Straley As @Aaron K. mentioned, TurboTax has a history of not calculating depreciation correctly. This can have material consequences not only for each year you have the rentals, but also when you dispose of them. I think it would be worthwhile to either have a longer conversation with your current tax pro to confirm her experience with business assets, or look for a new pro who is better equipped to handle your particular situation. 

@Brian C. It really comes down to how the home was purchased - did the existing LLC purchase it, or did you partner with your uncles separately (either under a separate entity, or with no entity). K-1s are generated from an entity return, you don't just create one for the sake of creating one. If the LLC purchased the property, you would be added as a partner and income/expenses allocated according to the portion you own. Tracking partner basis in an entity can be tricky, but any tax preparer working with investors should understand how to do this properly. If the property was not purchased under an entity it might be somewhat less cumbersome IF your records are accurate.

@Justin Foster Good for you for recognizing that you need help! I have seen many a client file with disastrous records yet they couldn't bring themselves to appropriately outsource the work to keep everything in order.

With so many productivity apps availability, I think virtual vs local is largely dependent on your needs/comfort level. Virtual won't work if you want literally look over someone's shoulder or sit next to them to review or learn something. Local may not work if they're constrained by when you're "in the office" and/or they're not able to work on their own time at home. 

Anyone you choose, local or not, should have a preferred system in mind that they like to follow - hiring a bookkeeper to follow your system can be more challenging than adapting to a system that works for them (remember, they're the pro at this, not you). That said, if you have a particular facet of your process that is critical for other aspects of your business, your bookkeeper needs to be aware of this so they can be mindful of that as they go about the work.

I do both tax prep and bookkeeping - I'm an enrolled agent on the tax side, but I also do all of the bookkeeping work for a CPA and have a few bookkeeping clients of my own (including some that I also do the tax returns for). CPAs love clean books, and hate bookkeeping, so anyone you hire should be thinking in alignment with what your tax preparer will need at the end of the year (otherwise your tax preparer will charge you a premium for the extra work they have to do to decipher your financial statements). I have overhauled plenty of charts of accounts to be more tax preparer friendly.

Cost can vary based on the scope of work and services offered. As @Ben Day mentioned, there is a shift toward flat/package pricing vs hourly. If the package/services offered in the flat rate fit your needs, there's usually some cost savings there for you (hourly pricing is not an incentive to be speedy).

I hope this helps!

@Katie P. Totally agree! With all of the development going on all over Oakland, it's a shame more of it isn't affordable (I believe one of the two near completion near MacArthur BART has a portion allocated as "affordable", but I could be wrong). The rent control ordinances springing up certainly don't help matters (Richmond is trying to really go off the rails with ours).

The Merc did a longer piece on the situation: https://www.mercurynews.com/2019/11/18/homeless-mothers-activists-take-over-vacant-oakland-house/

I foresee a giant s*** show coming on this one...

@Account Closed I know, right? I'm sure we'll hear a response from her in due time...

TL, DR: Two homeless women moved themselves into a vacant home in West Oakland (Bay Area/CA) and intend to stay there, rent free.

This made the evening news last night. As a resident of the Bay Area, I definitely understand the struggles and frustrations. However, actively moving into a vacant property, as though it is legitimately your new home, is something I hadn't seen/heard of before. Nor the community support for the effort. Very curious to see how this turns out. [Apologies if this has already been posted - I did a search and didn't see it].

https://www.nbcbayarea.com/news/local/I-Have-a-Right-to-be-Housed-in-My-City-Homeless-Moms-Occupy-Vacant-West-Oakland-Property-565113152.html

@Matt Burr et al, in addition to asking mortgage brokers you've worked with, I also recommend asking around at your local meetups. The few HML/private lender contacts I have all came from meetups where I met the principals in person. In some cases, the lender was a presenter. In others, the lender was a sponsor of the meetup group. The meetups themselves were led by trusted organizers, so I'm less skeptical of these funders than if I just happened to stumble upon them online. I'm currently looking into a distressed property and it was nice to reach out to a "known entity" for lending insight on this particular project.