Keeping Financials for A Real Estate Investing Biz… You’re Doing it Right???
For some people keeping your financials for your REI biz is easy and comes second nature.
For me… I’d rather focus on marketing and sometimes forget about keeping the financials for my businesses because it’s something that I don’t enjoy doing.
Financials are of course important for tax reasons… but are also vital for the health of your business… REI or any other kind of business out there.
Without accurate financials how are you supposed to know what your profits or losses are?
How do you know what you need to keep spending on that returns a high ROI and what is sucking the life out of your business??
I Kept Financials On Excel Forever… Now…
For a while I went the fre.e route and thought it would be easier for me to keep my company financials on an Excel spreadsheet.
It worked okay for a while… but reporting was lacking… it wasn’t all that easy… and sometimes I wouldn’t even update my financials because it was a hassle.
Anyhow, where I’m going with this is that 2 years into owning my business I finally jumped in and purchased a book keeping software to help streamline things…
… make it easier on me… and to save me time. Those excel spreadsheets were getting too complicated and didn’t quite do the job anymore.
Making that investment for Quickbooks Pro (I paid a bit over $200 for it then) to handle the accounting for my businesses is one of the best decisions I made to help make book keeping much easier and more streamlined.
I still run Quickbooks Pro and couldn’t imagine using Quicken or Excel spreadsheets anymore… my time is way more valuable than I valued it back in the day.
So… even if you’re running a small REI (or any type of biz for that matter)… keeping accurate records is vital for the health and long term success of your business. Without accurate numbers you’re running your business blind.
Action Steps:
- If you’re making more than $10,000 a year in REI (or any other biz) you need some type of book keeping software other than Excel (in my opinion).
- Determine the best software to fit your needs (I recommend Quickbooks Pro… they’re running a promotion right now… so you can get it for cheaper than I bought it for… way cheaper)
- Purchase and implement the software and at a minimum set 1 day a week to go through and do your book keeping (I use Tuesdays… just works well for me).
- Run reports monthly (at a minimum) to see your profit/loss for the month… so you can pinpoint places where you can cut back expenses… or increase expenditures that are having a high ROI
- If you own rental properties as well, I suggest keeping your business books separate from your property books… so use a rental property software for your properties… and book keeping software for your overall business.
Just to clarify… for you who own rental properties you know that there are expenses that are directly related to your property… and expenses that are directly related to your business operations.
It is important to separate these because many business expenses (copy paper, phone service, business registration w/ the state, etc.) should be written off for your business (not the property) and you’ll get a bigger write off.
So, keep your property related income/expenses in a property management software … and your business related income/expenses in a separate book keeping program like Quickbooks Pro .
Quickbooks Pro Promotion Until July…
As I said, I have Quickbooks Pro and use it for my different businesses. I’ve found that it really makes it easy, quick, and more efficient to keep my books (way better than Quicken or Excel… way better).
Anyhow, since I’m an owner I’m on their email list and they shot out an email saying they’re running
a limited time promotion on Quickbooks Pro 2008 until July that gives you a 20% discount and Free shipping on the product. This is good for you… crappy for me because I already ponied up $200 to get it.
I bought it for $200… and w/ this promotion they’ll give it to you for $159.96 … but they do say that they plan to run this only until the start of July.
Here’s a link to the promo page w/ the 20% off. .. it’s even cheaper on this page than it is being sold for on Amazon.com… which is cool.
Quickbooks Pro 2008 – 20% Discount Promo <<== Promo Price
Summary…
While keeping the books for your REI biz isn’t all that fun or exciting… it is necessary and can be a real pain in the rear if you put it off or DON’T EVEN DO IT AT ALL. So, learn from my mistakes and get away from Excel and into a real book keeping software to save you both time and money.
If you run another book keeping software and like it… let me know what you run and why you like it. I always like to hear what’s working for other people in their businesses.
Here’s that Quickbooks Pro 2008 promo link again if you missed it before… just an FYI… the email I got said it’ll run until the start of July… after that it’ll go back up to $195 and shipping will be extra. W/ this promo they’re running… it’s $159 and free shipping.
Quickbooks Pro 2008 Promo Price Link <==
Hey, my name is Trevor and I'm the founder of The REI Brain and a real estate investor since the age of 21. Right now, my focus in real estate investing is multi-family income properties and I have plans on moving more into the commercial real estate investment world in 2008 and beyond. 
Trevor,
You’re spot on, man. QuickBooks is the ONLY way to run your books for the small to medium investor. Whether you’re a buy-and-hold guy or a flipper.
I also highly recommend John Hyre’s KISS Guide to Bookkeeping for Real Estate Investors. it’s an incredible value and gives you an exact template for setting up your accounts and classes you can plug right into. And the manual kicks butt and is actually entertaining to boot!
A great companion to QB for the REI guy/gal.
…jp
Hey Jp…
Totally agree… QB is the only way to go.
I haven’t checked out John Hyre’s KISS Guide… I’ll have to give it a look. Thanks for the tip!
Chat w/ ya soon.
- Trevor