I watch cash flow like a hawk. I pay close attention to reports on income and expenses. This is a lesson I have been forced to learn when flipping houses for profit.
In the past, I would buy bank repo houses for sale assuming that I could fix it up and sell it. So I’d buy the property, fix it up, put a tenant in and they would move out. So I was forced to fix it up again and go through the same motions.
Now, if it cost me $3,000 to fix up a property every time this happened, then I have new amount of equity in the property. After the first fix up, I had a certain amount of equity. Then after the second fix up, I had $3,000 less. On the third fix, I had $3,000 less. I had a churning effect going on. I want to try to put all the expenses against the property that owns that expense so I can see whether that property is a money make or not. Naturally, you all know that there are going to be expenses with your properties. Each property is like a little business. It needs to be profitable and so these expense folders help me to figure this out.
If a tenant moved into it and then moved out, I might have to fix the place up a second time. All those expenses would go against that property. Any contractor expense, repairs, utility bills for water and trash goes into the file.
We organize them from lowest to highest.
We print the checks out from QuickBooks Pro and pay the bills. We never pay a bill without an invoice. We want to have an invoice to make sure we have everything documented. These expense reports made me analyze what was going on in the business and I realized that I needed to get out of the area where I was buying and move to a higher level. I should have been buying higher priced houses in a higher area. This way you roll around in bigger profit. I had another report a few years back that planned out our business for the next year. It showed the number of private lenders we had and the number of properties that we expected to buy. This report showed that I had so much private money coming in that I couldn’t spend it all. I had outgrown myself! I hired Kevin in September of 2003 to pick up some of these duties.
My point is you have to have reports prepared that show your problems and your successes. They should show what money you’re bringing in and what’s going out. If it’s on paper, it becomes easier to make your decisions.
In the past, I would buy bank repo houses for sale assuming that I could fix it up and sell it. So I’d buy the property, fix it up, put a tenant in and they would move out. So I was forced to fix it up again and go through the same motions.
Now, if it cost me $3,000 to fix up a property every time this happened, then I have new amount of equity in the property. After the first fix up, I had a certain amount of equity. Then after the second fix up, I had $3,000 less. On the third fix, I had $3,000 less. I had a churning effect going on. I want to try to put all the expenses against the property that owns that expense so I can see whether that property is a money make or not. Naturally, you all know that there are going to be expenses with your properties. Each property is like a little business. It needs to be profitable and so these expense folders help me to figure this out.
If a tenant moved into it and then moved out, I might have to fix the place up a second time. All those expenses would go against that property. Any contractor expense, repairs, utility bills for water and trash goes into the file.
We organize them from lowest to highest.
We print the checks out from QuickBooks Pro and pay the bills. We never pay a bill without an invoice. We want to have an invoice to make sure we have everything documented. These expense reports made me analyze what was going on in the business and I realized that I needed to get out of the area where I was buying and move to a higher level. I should have been buying higher priced houses in a higher area. This way you roll around in bigger profit. I had another report a few years back that planned out our business for the next year. It showed the number of private lenders we had and the number of properties that we expected to buy. This report showed that I had so much private money coming in that I couldn’t spend it all. I had outgrown myself! I hired Kevin in September of 2003 to pick up some of these duties.
My point is you have to have reports prepared that show your problems and your successes. They should show what money you’re bringing in and what’s going out. If it’s on paper, it becomes easier to make your decisions.
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