Andrew: Being an Accountant yourself you know the importance of figures playing a major roll in any venture thought of my man.
The first thing you do when you decide to be an investor in real estate is to see if you have enough money to buy a property, right?
So in order to see if you have enough money you look at your bank account and see how much money you have in your savings account for a deposit to place on the home or to use at an auction. Plus you need to consider how much income you make less your expenses on the purchased property to see if you can afford the mortgage, property taxes, repairs, take into account vacancies, tenant's not paying rent and evictions. (Not to mention unexpected costs). Once you are sure you can afford to go "for it", you begin.
So in order to find out whether this is feasible to pursue, you had to take a look at your finances, which is either via pencil and paper or excel or some other "money in money out" software program.
As an investor in Real Estate, you are investing in the "big guys" (gals) game. A ton of money. Not a mere hundred bucks here and there. Tens of thousands of dollars. If you're going to go "big time", you need a robust (and reasonably priced) software program that will do the trick. At the beginning you certainly don't want to spend big bucks on software programs that will eat up your Equity.
Right off the bat the moment you purchase a home you have an expense account. A huge one and a mortgage payment. As soon as you purchase the property, enter the purchase into QuickBooks, and then enter in all the expenses that's going to cost you to get it ready to rent. This way you and QuickBooks are starting together, from the very beginning, from your very first dime!
Right off the bat you have an accurate accounting from the moment you began your business to the time you call it quits of every dollar you invested in your business, to the time you sold every property.
As an Accountant you know that lenders don't want to see a Mickey Mouse Profit and Loss Report. They want to see professional stuff. They want to see you are a Professional business person.
Sure you can purchase the big expense software programs because, as you said, your inner self loves the big fancy stuff, and so do I. But we wouldn't be good business people, if we couldn't find a great software program, which only costs a couple of hundred bucks and does as much as if not more than the big fancy stuff.
The number one thing to purchase even before purchasing a house is QuickBooks or a financial software program, because then you are entering right from the start your Equity money deposited into the business, and how it's being invested, less expenses your dishing out!
More CPA's than not are using QuickBooks and are very happy when they see their clients come to them with a Profit and Loss Report printed from QuickBooks or an Accountants copy. The more info you provide your accountant, the cheaper the cost to have them do your books, because you are providing them with every single data they need to file your taxes instead of hunting and constantly having to call you for this and that.
Besides, buying QuickBooks is an expense account, so keep that in mind.
Nancy Neville
