All Forum Posts by: Max Emory

 Sure thing, Mo!

Hey @Mo Nueman, I agree with Jake on this one. QBO isn't "REI-specific" but we use it for all of our Clients and prefer it due to its superior reporting features and integration capabilities.

I use QBO for my portfolios as well (been investing since early 2019).

As long as QBO is set up correctly by someone or a firm that understands what's needed for an REI business it works great (better than the REI-specific software in my opinion).

I'm happy to discuss in more detail if you'd like.

Here to help!

We also have a Bookkeeping for Real Estate Investors Course based on using QBO for REIs who want to do their own books (prior to having the cashflow to outsource).

Hi Sainath, check our Relay bank. I don't personally use them but I've heard good things. They allow for a lot of accounts and don't charge extra fees.

Also, heed what @Bill B. said. Don't commingle between your different entities. This defeats the purpose of having entities for protection.

I'm happy to discuss further.

@Jonathan Small, depends on your risk tolerance and how much you're willing to spend to maintain all of the entities as others have said. If the SFHs are $500k+ each then maybe you have each in its own LLC. But, that's still overkill to me.

You want to have a structure that doesn't overcomplicate your accounting and is practical to operate/maintain. The more complex the higher your maintenance costs will be (bookkeeping, tax advisory, tax filing, entity fees, attorney fees, etc). It adds up and makes it not worth it very quickly.

It also makes your operations more complex to ensure you're (or, your team) never commingling between entities or flowing cash inappropriately. 

I see this a lot in my REI bookkeeping firm and it defeats the purpose of the structure.

*I'm not an attorney nor a CPA/EA/etc.

Hey @Mario Morales, yep yep. What everyone else here has said. It's deductible. It shows up on your income statement (P&L) and goes against whatever income the property generates. 

When you reference lending, if you're speaking about lending for a specific property, if the expenses for a property kill the income the property generates the DTI for that property will most likely be too low to qualify for most lenders.

If you're talking about qualifying for general lending using the income generated from a rental portfolio... 

From what I've seen both as an REI myself and the owner of a bookkeeping firm that serves REIs, it's very hard to qualify for lending using a rental portfolio's income. IRR from an investment standpoint is usually good but the cashflow that you can use to qualify for lending is usually too low. That's where the active businesses that have higher cashflow come into play (flipping/wholesaling/etc).

Happy to chat via DM if you want to expand on this.

Hope this helps!

Hey @Dumisani Thomsen, last time we used REI Hub for one of our bookkeeping clients it was missing some reporting features that QBO possesses. It was also missing some features that make it quicker to correct transactions at scale that QBO possesses.

So, we don't use REI Hub anymore (just QBO). I'm sure it's better now than it was a couple of years ago due to improvements. And, that's great if you guys are having a good experience with it!

I run a large REI bookkeeper group that I can reach out to for a bookkeeper who mainly uses REI Hub if you'd like.

Happy to help!

@Mason Myers, I can't ballpark a cost since my bookkeeping firm doesn't provide tax services but if you plan to grow your REI activities I recommend making a relationship with an REI-savvy tax professional now as you're just starting so they can follow your journey from the get-go.

That's what I did as an REI when I was first starting out and it paid off as I continued acquiring properties and needed tax guidance along the way.

Once you have more REI activity, a great REI-savvy tax strategist as well as a tax filer will be worth their weight in gold.

If you want to chat in more detail about all of this send me a DM. 

Happy to help!

@Daniel H., I'll throw @Michael Plaks as a Real Estate Investing-savvy CPA in the mix if you're still searching!

Hey @Scott K., the first step is fully separating your personal financial accounts from your property financial accounts. Even if you hold your properties in your personal name rather than an entity, it's a great idea to keep the financials separate for tax filing purposes and for your sanity.

Once you've done this, it's way easier to implement a cash flow management system such as Profit First (highly recommend) that allows you to properly budget for reserves, etc.

And, of course, it makes it easier to do the same with your personal finances once you no longer have "business" transactions commingled.

I'm happy to workshop some of this with you free of charge if you want to go deeper into these topics.

I've been through this myself.

Just let me know (DM)!

Hey @Maxine Brown, I agree with @Jon K. and @Jake Baker. I would calculate how much your time is worth as an REI (outside of your W2). Then, multiply that number by how many hours per month you're spending on bookkeeping. Then, think about how you would reallocate those hours towards revenue generating tasks for your REI business. There's probably an opportunity cost there that you're currently paying.

It may be worth it for you or it may not. Everyone's situation is different.

Hit me if you want to expand on this and get more granular. But, I think it's great you're thinking about these things!