Avoiding Bookkeeping Horrors for Note Investing | Real Estate Notes Show

Episode: Avoiding Book Keeping Horrrors for Note Investing Dave's Goals and Plans: - Running private classes teaching note creators how to structure notes for maximum buyer value - Planning Note Expo conference in May with sponsors and special content - Offering early bird tickets with $100 savings plus $200 hotel rate savings before April 30th - Delegating all bookkeeping and accounting to qualified professionals rather than handling it himself Nathan's Goals and Plans: - Participated in winter camping trip with son building quinzees as part of outdoor education program - Spent two hours with accountant explaining note investing business model to ensure proper setup - Learned that accountants and bookkeepers often don't understand note investing differs from traditional rentals - Realized personal bookkeeping attempt in Excel and QuickBooks led to discovering major errors requiring complete redo Key Recommendations: - Hire a bookkeeper and CPA who specifically understands note investing, not just traditional real estate - Don't rely on software alone - understand the backend coding and how transactions should be categorized - Educate your accountant on note investing mechanics as it's fundamentally different from rental property investing - Be transparent about what you don't know rather than hiding bookkeeping mistakes - Ensure proper gain and loss calculations which require deep analysis beyond surface-level questions Topics Discussed: - Importance of proper bookkeeping for note investors - Challenges in finding accountants who understand note investing - Software limitations (QuickBooks) without proper knowledge - Upcoming Note Expo conference and private note structuring classes - How to structure notes to maximize buyer value - Common bookkeeping horror stories and mistakes Guest Insights: - Debbie started bookkeeping in 2014 after being introduced by a tax-focused CPA, focusing exclusively on real estate investors - Most clients feel embarrassed about messy books, but bookkeeping errors are common and fixable - Gain and loss calculations on note sales are complex and require deep analysis of full transaction history - P&L and balance sheet management for note investors is intricate and requires specialized expertise Episode: Avoiding Book Keeping Horrrors for Note Investing Guest: Debbie Summary: This episode emphasizes the critical importance of proper bookkeeping and accounting practices for note investors and creators, highlighting the need for accountants who understand the unique aspects of note investing distinct from traditional real estate.

Main Topics: Bookkeeping fundamentals for note investing, Importance of proper accounting in note creation and acquisition, Educating accountants and CPAs about note investing specifics, Differences between note investing and traditional rental property investing, Structured note creation for maximum buyer value Key Takeaways: Bookkeeping is a critical but often overlooked aspect of note investing business | Most accountants and CPAs need education about note investing as it differs significantly from traditional real estate investing | Working with qualified bookkeeping professionals is essential for note investors and creators | Proper structuring of notes requires specialized knowledge distinct from rental property management | Note creators and holders must maintain solid bookkeeping practices for both business and tax purposes Keywords: bookkeeping, note investing, accounting, note creation, CPA, real estate notes, financial structure, note buyers [Music] hey everyone Dave puts from jkp Holdings alongside me Mr Nathan Turner how are you man I'm doing well how about you good man it's a rough week getting back we are on vacation last week we're gone for like a million days yeah um I I was quite Le nicely surprised uh two of uh my closest friend surprised me on a vacation and show up on the cruise ship uh and it was a shout out to Jack and Tim it was really nice right so we had a good time with the family got some warm weather um and had some good times so it was uh relaxing you know spending a lot of time with the kids that's good I had the opposite I had cold weather I went on a winter camping trip with my son well I hopefully you had a good time and from the pictures we saw it looked like a good time it was fantastic it was really he's part of this outdoor educ ation program that he had to apply to get into and all this it's a really cool thing but they uh they build quines which is where you pile up a big giant pile of snow and then you Hollow it out and you sleep in there it was really cool it was just a ton of fun and I was glad to be part of it so beautiful weather actually it was just not too far below freezing so it wasn't too too cold but yeah really nice yeah well you know we're back in the thick of things we have a few awesome things coming up um we are talking a lot of people uh before about what we're looking to do with AI and stuff like that but there's some Basics we got to get done too in the space yeah right um you know it's funny we were at note Expo back November um and we ran to Debbie who would be joining us in a few minutes and we're talking about the fact that bookkeeping is a crucial part of what we do it's it's funny you know it's one of those background things you don't necessarily think about but you have to do it it h it actually has to be there as part of your business it's it's very very important yeah and it's difficult because you know what we've found over the years is not every person understands what we do no even yeah especially like accountants and stuff I sat with my accountant when we were first hiring him for it was at least two hours just kind of going through and explaining what it is and how it works and answering questions and informing them till they finally got it to where they're like oh okay okay I get it therefore this is how we're going to set it up but like it's it's not obvious and it's not the same as a rental and it's different so you got to make sure you know make sure your accountant knows that this is not the same thing as a rental yeah absolutely right um and we've been talking about you know creating notes and um I see Marty Ching in here that uh he's a CPA which is awesome right Marty please calls set up for wrong we want all the honest information we have um and what we're we've been doing a lot about is just giving information those who are just tuning in please remember this is will be put on our podcast as well as the YouTube channel um and recorded and everything else um and we've done tons of these and we're all about giving information things that we don't know and things we question and also just good solid people in the space that you can reach out to for anything you may need um and whatnot so so say again I'm just thinking you know we this is three years we've been doing this now yes and I'm just like thinking back on all the shows that we've done and about things that we didn't know about or or things that we were like kind of knew about but not really all the way uh and so this has been a great thing for us to learn yeah so I I would hope that people see the value in it there's a ton of information on here it's been really great to be doing this absolutely and I think some of it like you said we're learning is sometimes people don't want to tell people what they don't know right they feel kind of guilty being honest um which kind of throws out the window for what we're doing because I think that's how we grow yeah what we've learned about in the last three years has been awesome um I think the guest we've had are been Rock Solid we're really picking on who we have on on our calls our webinars and stuff like that um and the feedback we've gotten has been awesome we've seen numbers Rising so please share what we're doing and give us feedback on things that you you think we should touch upon um and whatnot so and then for our guest today let me give this background for myself so I have a a University degree in general business management so as part of my degree I had to take two accounting classes I got D minus and D minus I barely squeaked by barely and I remember once um it must have been my second class and the professor I saw him in the hall and chatted with him for a little bit and he said you know you know you should really look into a career in accounting that it can be a really great career and I said yeah because I'm the one paying them there's no way I am doing this ever like it's just not my bag I just I I really don't like it and so I'm more than happy to give it to somebody like Debbie or another qualified accountant they can look at it and take it over and take it off my plate yeah and we yes abely absolutely we want to just real quick some book housekeeping stuff uh me and Nathan are running a a private class for those who work creating notes Welcome to our show Welcome to our call um if you're watching live or if you're on YouTube make sure you you know do all the good stuff and comment and thumbs up we're running special classes for you guys to learn how to uh structure notes to make them what what book note buyers look for and structure it so you get the most dollar for it so please let reach out to us let us know if you need help with that structure it it's not designed for note buyers it's for note creators and most of my you know most of my clients came from referrals because we all work in these groups and network together and um and it just you know it just took off from there and and and I really enjoy it I I love it you know like a like bookkeeping for me and a p&l and a balance sheet it's like my own little art work of art so high five I'm glad for people like you Debbie I was laughing when you said you got D minuses in account I would rather throw myself off a cliff like I I like my wife and I have this conversation less now because she knows very well how I feel about it but anytime she comes in for questions I have to kind of Steal myself and say okay yep go ahead and prepare myself because I just I just don't enjoy it at all not even in the least yeah I think that that's a a really important thing to share with everybody is you know when I start talking to somebody and they need help with their books and um we're just making that connection I can tell that they they really feel bad like they almost don't even want me to see their books because they know that it's kind of a mess and I'm like you know I mean I see it all the time so don't worry about that um yeah you're you're not a bookkeeper right and you just don't know what you don't know yeah and you know there's software packages out there right like QuickBooks online and things and so people you know you think that that's going to help you um but you really still have to know the back you know what's behind all that and how to code things and it's not as simple as you think that you know that software is not going to be your 100% answer no for sure absolutely you run into so many questions I I know when I first did I started doing myself I was doing in Excel then QuickBooks and then I got to a point where I had a question and then we've been running that live class uh randomly throughout the time to help you guys out on the flip side how is our note our DME looking how's our note conference in May coming along fantastic we are so excited we've got uh all of our sponsors are starting to come in and man we've got some great sponsors this year and some really great content that we're going to be bringing I can't wait it's going to be just a ton of fun so officially we were just making some little tweaks to the website before we kind of officially said tickets are on sale tickets actually are on sale if people want to go check it out uh we'll be blasting that out early next week to just make sure everybody knows and grab your tickets early save 100 bucks if you're if you buy early bird uh and then you've got the hotel rate as well so that's an additional $200 like $200 total that you'd be saving by buying before April 30th so I know that sounds like a long way away it's not so make sure you jump on that sooner than later um yep I I believe everyone got the link in there so I know that I I don't want to hold our guest you know too much longer so we're gonna bring Miss Debbie in Miss Debbie's been someone we've known for a long time I think I got introduced to Debbie 2016 we did one bookkeeping thing years ago um so it's been a while um so but it like you said before it is so difficult to understand the space as an investor if you start taking on the bookkeeping side of it good luck right you need someone that understands it and also a CPA that really kind of dials in on the fact that what we do because we're not just traditional investor buying rental properties right so if you're creating notes this is for you if you're buying notes this is for you most of the people are talking to who are creating notes are also holding the notes so make sure you're doing The Best of Both Worlds and make sure your I realized how deep I was in it and how I did everything else wrong and I'm like holy God yeah and it's an undoing process of everything and saying oh my God what do I do now yeah and it was it was a headache yeah and that's really where it starts for me too because I'll get somebody a random question like oh you know I just need to see if my gain is correct on this I'm like okay well we have a lot of sets and that's one of the biggest things is is figuring out gain and loss in your books it goes so many levels deep I'm like I I can't just answer that question without seeing your books yeah yeah so the today's topic is all about horror stories right um you know I think a lot of people in a space we want to focus on the investing side putting money on an asset and making money that's our Focus right so for us that are looking to save a penny we're taking a penny out of another place we're really not being the investor and when it comes down to if you're taking other people's money it becomes three times four times more responsible to use someone professional to make sure everything's right you don't want someone to get upset so we were talking about the top five mistakes we have but what do you think for a brand new investor either creating a note today which are probably listening or buying their first note or going through some training courses what should they be first doing to make sure they're set up correctly to buy or originate a note in general um so the biggest thing I'll tell people is that you're not buying notes you're not investing you you are running a business and especially if you have set up an LLC I mean you can certainly do it through your Social what what can happen if we do this wrong um so I had five examples of how not having a set of books um so I have another screen over here just so you'll know um so I was going to kind of go through those and um it all talks about the amount of money that was lost or maybe even found so nothing perks us up more than when we start talking about money right yes um okay so nightmares happen when there's no checks and balances in the system right and when you don't have a formal set of books or some type of Software System then that's going to happen because there's just a lot of human error and so the thing I always say is you cannot run a business on a spreadsheet there is too much human error that happens too many things get Miss or things are just calculated wrong and sometimes they just not in the right place in the books right and so when I sit down to do the books with somebody um you know the first thing they'll tell me is okay I have everything entered and so we'll go to the balance sheet and I don't know if you can see the these little check marks that have a yellow line of vertical line well in quick hooks you actually reconcile which means you balance to your statement right and so I'll say okay well you know what your December statement say and their books don't match their December statement well that means something's missing right so now we know we know we're not accurate so this is the importance of having that that system right okay so here's some nightmares um so again I do the books for my clients but I also help people do their books and most of this comes from when I'm helping someone do their books so um and this isn't note specific but um it's investing specific but this just lets examples um yeah but they're you know they're also kind of there just like this is maybe what it would actually look like in your books versus a spreadsheet um so the first thing with trying to figure out your gain or your loss is you will have no idea what that truly is unless you know your books everything else in your books are done and correct right because we can't be missing anything to figure that out and so this gentleman used the spreadsheet and um we were going through things and breaking things out and trying to mirror what would happen in bookkeeping and he had a JB partner on this um and it was a note this was a note example and he thought he had made 5500 on it after he had paid the JB partner right so he thought he had made 55 but there were some pretty um good expenses in there that weren't captured and technically he lost $21,000 oh and he had already paid out the JV partner before doing this exercise and actually knowing that it was correct oh oh boy and it really got paid out just because um they got got the check from the you know the title company wrote the check um and didn't really you know had had not figured out the correct game which was actually a loss whoops yeah because you know sometimes these things you have these notes for a while and things get forgotten right like um because they're on a spreadsheet or you know so if you have your books you're going to have a whole history of everything that happens is going to be in your books but this one was yeah this one was pretty heartbreaking yeah and I'm sure he split that profit right well I'm gonna pay my bookkeeping is solid so without further Ado Debbie welcome hey guys thanks for having me I'm excited to be here absolutely so tell us a little bit about yourself how did you get started where are you coming from why accounting I know so I'm one of those people that love the numbers and you know I love the black and white world of accounting so I've been doing this on my own for about 10 years now and originally like a lot of people I got interested in um real estate investing and so I was going to meetings and you know groups and uh I met a CPA who who was who only did um tax returns for investors and so he had a really large book of business um but he didn't want to do the bookkeeping and I was ready to become self-employed and go out on my own so that I could kind of do a little more real estate investing as well and then I got my real estate license um so really you know I'm really thankful that we connected and he got me started um sent his clients might way and that was a that was a great way to get started and so I've just focused on investors from day one and I do some you know some of my investors have other companies as well so I'll do the f for both um but most of my clients are Real Estate Investors and most do but they they have diverse p is that's awesome very good so when did you get first started in this space 2014 okay yeah it was 2014 so um you know it's that scary transition where I started taking on clients on the side and you want to give up your full-time job right right and um and I just took the leap and as soon as I did that um Security member as a sole proprietor but that's the biggest just the verbage that we use kind of puts people headed down only the investing side of it yeah you have to have all that knowledge on how to buy what to buy and all of that but that's not running your business right so um I tell people that so of the things I would always do is like okay well when should I start keeping books right and you should start keeping books the day you open your LLC that's the day your business started because they'll be like well maybe I'll start when I get like five notes or you know so just jump in there right now I heard the word LLC right that's crucial we shouldn't be buying notes like I did my first one in your private name um I mean you don't need your social sec security number for anything in life right so you don't want things tied to your personal name um you should you know you should jump right in with an LLC or whatever entity and I'll use LLC a lot but I mean whatever entity structure works for you but most people start with an LLC right and and there's no need to over complicate that structure you're really just doing it to separate personal from business and you should do that from day one and unless maybe you're a passive truly a passive investor where you are just giving money to other people as an individual right you're not you're not buying the notes you're not managing the notes and things like that so sometimes that can just be a personal investment but um okay but even then I would want you know I would still want my own set of books and my own LLC yeah the separation it's not a bad idea ever you just have a little bit of Separation but then you know that's when you really get into bookkeeping as well because is even though people set up an LLC they completely Co mingle and still use their personal funds you know um the importance of breaking everything out is what I want to get at so this was something as simple as um but this would be for notes if you take possession and then you're selling a property and you get that closing statement will we break that closing statement out every single line that's on the statement gets broken out in your books and so I was helping a gentleman break his out and we discovered that the title company owed him $4,000 and we were probably doing the books like you know this was months six months later that I'm helping him right because he got the deposit but when we actually broke out the statement the deposit wasn't correct from closing and so I'm like okay well I'm I'm really off 4,000 here I don't I don't see what's happening he's like I think that title company owes me $44,000 and they did and as a real estate agent I can tell you a lot of cloes SC statements I see are not are not correct anyway but most people are just like okay and they just sign off right and move along so breaking out closing statements in your books you might find some money okay so this is the this is the big one um when you take owner draws from the company so this can happen and people are like what you know i' I've taken this money out of the company but now I owe the company4 some, why you know why can't I take that money out um and like I said this is this is really a big um issue that I see when you're running a business you can only take out the profit from the company that's what a draw is you're taking the profit if you don't have a profit and loss statement to see what that profit is you don't know how much you can take out and so this happens a lot and I would bet that some of you might look at JB partner X dollar based on the returns yeah he just actually lost more money than he should have because he paid his JB partner yes yes because he wrote a large check to the JB part yeah have a comment from Marty Nathan did you see that comment I did yeah that was a good point Marty's saying uh what people don't know is if you have an S or if you have a corporation s or C and you take more money than you have uh basis in your company it's actually taxable to you personally so it's like that's a double whammy so want to make sure you're doing that correctly I didn't yeah I had even thought about that much it be thank you Marty appreciate it yeah awesome yeah could become income for you yeah yeah um and I had just done that particular Zoom um with my clients that I do the books with and um even after working with people for years and years and doing their books and I'm always putting notes on there like you know hey the profit was this and you're taking this much um but just not zooming in on it right and um so that was even just really helpful for them even have to doing their books for years and years so this is the biggest thing losses right because that's what you're doing in investing yeah and these are they're very rarely correct when I review them okay so that was a big one um so this is kind of a a smaller one as well and um again this would you know you take your notes you take possession of the property and then people do rent them out right I do see that happen a lot and so you work with a property management company and you get the deposit from the property management company right they've taken the rent they've paid the expenses the repairs and you get that deposit most people just record that deposit as or they're using a credit card with their personal name on it you know but they're only using it for the company but it's still the statement I always say well what name is on the statement right so if your name is on the statement then it's still personal and now you're fing and you're breaking that corporate bail that's a big thing breaking that corporate bail means that anyone can sue you personally and that's the big thing here guys if you're riging one note you need to have it not in your name in a company name because if not they can go after you your family your house everything personally you need to protect yourself yes yes but that's probably the I I will tell you that's the biggest thing that that I see right um and even when you're using a line of credits A lot of people start out using a line of credit um and they'll put the line of credit you know directly in into the company and then the company will start paying the interest on that line of credit and it cannot be that direct because the minute you use your line of credit for whatever you want I'm going to buy a car or you know do some um house improvements now that interest in the LLC is not only for the note right and so you really you really have to separate those two things yeah absolutely cool so let's dive into this right this wonderful fun game of bookkeeping yeah so so it was funny because when we first talked um we're like okay so we know everybody thinks bookkeeping is boring so I'm like okay you know so we talked about the horror stories well the horror stories will scare you into you know okay I really need a set of books on this stuff right yeah so let's you know I'm looking up go ahead I'm just looking up when we actually talk last our last one was which is crazy but go ahead yeah I'm I'm curious get into this like what uh what kind of horror stories your tax returns and you might find that you have a um due from shareholder on your tax return because your CPA looked at your distributions and he's like okay there wasn't that much money to take out of the company and they recod it as due from shareholder and I saw that early on when I started doing this um and I'm like oh my gosh what's you know what's going on here and um and if you think about it you're like well I have all this money in my bank account but it might be that the JB Partners have been giving you money and so you're like seems like I have a lot of money to take out of the company but yeah you know you really don't so this is a big one and this um this hits every part of bookkeeping income expenses assets liabilities all of that factored right into this um this example so now that's one task is check out your tax returns and see if you you see any of that so this was one of those questions I get a lot that I just mentioned um you know can you help me figure out the gain or loss on this property and so I sat down make sure if you can't if you're having a hard time seeing it all just let me know is there a way debie you can make it a little bit bigger is there a view I see a view in the top left corner is there way you can make it a bigger screen does that help at all little I think so Nathan but how's it look to you yeah a little bit I can see that a little bit better just the writing is a little small yeah yeah um if you keep in that yeah if you keeping that scroll keep making it bigger which is great yeah awesome yeah and some of the you know some of those print screens are things we could get into the nitty and gritty about as income well you have to break out every line of that property management statement I mean I have some people who have multifamily so we're talking lots and lots of units and you know this the line you can have 20 30 40 you can have a lot of lines when you're breaking out that property management company because it's it's your checks and balances for one thing and I will tell you that this is the worst part of my job because wow these property managers aren't usually bookkeeping people right and they have their system so everything in their system is just money in or out Y and so it's just not always um it's just not always accurate and they don't really have a checks and balances system correct um so we find I mean I find errors probably every month on every Property Management statement it's just kind of one of those things or I get a new Property Management statement and the opening balance doesn't match um the ending balance of the month before so we know something's changed and we're trying to figure it out um but most of the time like this example when I was um helping this gentleman with his um we you know he had 12 months and the property management reports showed prent receive but it did not translate into his deposits so they owed him $700 wow so they had collected it and it you know there wasn't it wasn't intentional right it's just yeah again if they're making changes or things in their system or they just didn't quite put it in the right place then it didn't come across so we always just think that when we get these statements and we get these deposits that they're correct and it's just not always the case but I would say 2 plus two does not equal five and so on a spreadsheet it can but putting it in a system it it can't right you're always about making things faster but also about that right like oh I put the money up you know this case think the prop tax like 600 bucks almost forgot about it until our system flagged and says Hey listen this is still outstanding and we have a reminder set for every three months we got on us well you if you're doing this on spreadsheet you can easily completely forget that you pay property taxes and you're still waiting for the money to return yeah yeah and here's the other thing that people do on that is um they will take that $600 that they paid for property tax and they'll count it as a property tax expense and it shouldn't be coded like that it's almost more like esro so it should actually be sitting in like the balance sheet on holding cost and then you'll never forget about it because you you paid that 600 and now each time you get that money back from the borrower it's reducing that 600 gotcha so then you can't lose it right if it's in your books like that but if you just took it as an expense exactly now it's it's gone yeah very well said yeah yeah I mean Nathan how many times you pay property tax right like all the time especially notes in BK because what we found in the last since the pandemic is BK BK loans just are not the same as before there's so much delay now BK I found that just seems to be prolonging and just expenses add up you're paying property taxes you're paying this paying that and the BK Court's very slow to respond and if you don't have these flags and checks and balances or bookkeeper to kind of remind you you're going to have a lot of problems because you're going to think you're making more money and realize that you put out all this money out there that's still sitting there in like accounts receivable kind of feel m yeah yeah i' had the opposite as well where borrowers making overpayments into their escrow account for taxes and then at the end of the year we say oh look you've got an extra $2,000 in there do you want to just apply that to your payment I can't do that but they can but want to tell smarter and double-checking make sure nothing is being missed that's the biggest thing we missing we kind of get lazy at times I may we just throw it in there because we just we're looking at this one thing I think that's where most people get you know have a mistake where they forgot to log something or they didn't do something it didn't count for something or they don't know what category to put something in um they have a transaction and people get lost in that and CPAs like Marty is not their bread and butter right they're they're not built to do that they can do it but that's not what they're for it's the day-to-day transactions is where bookkeeping comes into huge play here yeah and I'm certainly not a a CPA I I I love the money side I like the bookkeeping I like this side of it but um you'll see here shortly I mean I do try to line your books up for your cpra to match the fields that they need to insert into their systems right so you know I do try to be very aware of those type of things but but now let me translate this even more into your note servicing companies so it's very similar to the property management um because these you know every month this property manager report showed that he was getting $700 a month it's on the reports but it didn't translate into his deposit oh man so you're seeing your property management report you're saying oh rent every month yeah but it but he wasn't actually getting the money because he track his bank yeah that's like when the season changes and you've got your old winter jacket back out and you stick your in the pocket and there's 20 bucks yeah this case same thing for your servicers because um at the end of the year we're we're M we're breaking out those servicing reports here's principal interest you know servicing fees um sometimes there's Force placed insurance and if you've got a hundred notes you might have aund lines on your breakout but it really has to be done because that's your only checks and balances and um and I'll have this happen all the time every month do you without naming names are there servicers that are better or worse than what they do yeah there are some that we don't um find many errors on and there's some that you know are just a struggle yeah yes for sure so listening servicers watch yourself I couldn't really put a serer up here because all of the ones I had had people's names so that's kind of why appreciate that yes Property Management um but we'll find at the end of the year the servicers have most of them have what we call a 1099 report and so it'll show for the borrower all the principal received all the interest received and then that supposedly comes to you right and so at the end of the year we that's our checks and balances okay does our principal match does our interest match and at the end of the year A lot of times it won't because how many times are you working with the servicer and during the year something was wrong and they fixed it right or they might have done something as principle when it should have been interest and so they fix it and now our totals don't match and so we have to go back and but that 1099 report spells it out for us again so we can you know make sure that it's there but there's many times there's 12 principal payments 12 interest payments and the client only got 11 so we find money all the time and one of the things we recently ran into is that we would put up you know uh pay for property taxes right and we completely forget if we ever got the money back we because we keep moving and this bid tells us Hey listen you're still pending this and ours is stuck in BK and one of our assets and we're waiting a year for that money to come back but it's really easy to forget taxes and I wasn't prepared for that and I don't know I don't know why because both years were very similar right like very similar and I said well you know W you send me both returns and I'll look at them and um I'll see if I see what the difference is and the only difference um and so so first of all I'll tell you that this little print screen I have here comes from the schedule C so I don't know if you're familiar with that but that's um that's we have an LLC that's part of your tax return right and so these are the fields that your CPA would would be working with and trying to fill in and so you know I try to line the books up to match these type of things right and so um the only difference is is the first year they had office expenses of just over $10,000 and the second year there was no office office expense I mean it was like 200 whoa so that was a huge expense the first year that they she got to take it right so she paid less taxes but I you know I'm comparing it to her books and I said we don't have $10,000 on your p&l of office expenses so I don't know what this is you need to ask your CPA what this is and just for the record her CPA's office is her uncle her uncle didn't do her taxes but um it was just a mistake like that $10,000 just should not have been there oh my gosh yeah yeah and so you know so obviously this next year she had to pay $9,000 more to the IRS than what she was planning to take and so go ahead no I say not a fun thing to have to owe the IRS anything at all but the servicer go ahead and apply that to payment and they get a break or they can catch up on payments or whatever the case might be yes yeah and so you know like I said in general you get these statements from people and you just think that they're correct right and so you have to have that checks and balances in place um yeah every they they just you know they're even their systems if it's not put in their system correctly then there's going to be an error right so even with a system you can have human error along the way yeah but those are still not bookkeeping right their systems are managing what they do but you've got to put it you've got to put it in your books awesome okay here we go number five nightmare of not investing bookkeeping throw it at us hopefully I didn't I know so we have a CPA so I'm a little in a little intimidated to to talk about this a little bit but um Bar's nice yeah yeah so this is one of the struggles I even have with my clients because what happens when you get your tax return you just sign off and you send it right like very few people actually look at it and does it match my books and are all my numbers there because it's intimidating and not everybody understands the tax return right and that's why we have awesome CPAs who do that but you know you need to have a general idea of what's going on I mean there's a lot of other numbers on that tax return that you're you're not going to have any idea where they come from but you should be able to find your numbers in there somewhere right and so um this was a a girl that I was working with and I actually do her books right and so we did her books one year everything was great the next year we did her books and um she called and she said you know I have to pay $99,000 more this year in just ran differently there a lot of nuances that we just don't aren't common in our space right um and that's the biggest mistake so Bill free in the chat if you have particular questions we'd love to take some Q&A now um and just kind of go through some scenarios please don't be too specific UND deals um and whatnot so hopefully that helps out people um and whatnot so hopefully you know hopefully a few little horror stories um you know just really reiterate the importance of your bookkeeping because and it's not just because I do it but your bookkeeping is the most important part of your business because that is how you invest that's where your money goes like you just have you you just have to do it you're running a business yeah yeah so uh we got a question regarding just the webinar in general yes this will is recorded replay will be on our YouTube channel as well as our podcast um feel free to take a look at those two things I put a link in there uh you can go right to that you'll link to your podcast as well as the YouTube Channel um this will be kind of broken up and a little bit more smoothly and put on YouTube hopefully over the weekend uh my son's doing the editing so hopefully video games don't get in the way of that but it's good to see the fact that people are taking a consideration and that this is an important part of your business just like servicing just like your attorney you have your keys to your pieces that make you successful and I don't think anyone here would play attorney or play serer uh if they're doing a business entity so please take this into consideration um and I'm going to ask this question before anyone else does I'm sure they someone ask question Debbie are you taking clients right now um I am yes I yeah I have an assistant who helps me and um and I'm interested in in in adding to that so I am I am people you know my goal is that you don't have to be looking at this report every week right like I I'm doing it monthly and so once a month if my clients can sit down and look at their books some they'll look at it for three or four or five months right but but at some point you're you are looking at the nitty-gritty of your business um but I you know I do I do monthly but I can do quarterly for someone or like six times a year every other month so there's ways that it can be more AF affordable for everyone who's just starting out because let's say you just have one note maybe quarterly is plenty right you're to pay out your JB partner quarterly things like that yeah yeah absolutely it can be it can be affordable yeah so you know this is such an awesome time you so gracious with your ability to share your information share your knowledge um and open honest I think I've tagged you on a million things I'm Looking Back YouTube we did a call back in 2018 uh one of my probably one of my first uh you know videos I did uh with mle people on there um but back then you were still uh the person to go to so the notoriety and the name has been around for a while so Debbie is not a fly on the wall she's been around for a long time so please reach out to Debbie and reach out to her if you have questions reach out and ask questions um I know that the information is in the link so go ahead and do that and I'll let Nathan uh come to uh an end here see if you can twist our question to make it uh appropriate I guess so with that in mind though let me thank you for that and I I really yeah I really appreciate having the time with you guys I'm curious Debbie do you are you investing in any kind of real estate or notes yourself um so I I only do pass it right so um because I don't have time to to so yeah so I'm a passive note no especially because this you know this this was not a large investor with lots of money and when and I presume she owed my for last year too because it was not supposed to be in there yes yeah well no because she you know because she she keeps money out right and she plans she does well she plans to pay her taxes um so the the prior year was fine but this year now you know she had saved money but she was short $99,000 because she didn't plan on you know she planned on having the same book of business basically so so I really really try to encourage people like when you get your tax return you know compare your numbers like you should have your p&l and you should have your balance sheet and start looking and just have a general idea um I sent my tax return back four times last year to my CPA because just simple things on my p&l were not on there my my postage wasn't on there for example something really simple okay um so you just have to you know you really you really have to be involved in that process I guess is what I'm what yeah again you don't have to know everything about this to make sure you do it correctly you have to know the right person and the right people around you to do it correctly um and that's one thing about the space in general right knowing the person to turn to for questions and Curiosities is key in the space um and this space is small so you can ask the question of you know who's doing bookkeeping for a majority of people right and you're going to hear Debbie's name mentioned many many times so feel free you have to understand that bookkeeping is an art just like investing is and that what we're doing is in traditional real estate you can't bring it to your rental or your property manager CPA or bookkeeping to do it it of know what's going on we do you know we do all the breakouts before it gets to you but sometimes you know the bank has deposit and when I click on it you can't see an image so you know that's that's the kind of thing like I'm like hey here's a deposit I can't tell what this is for and so we just do a monthly a monthly cycle like that yeah so uh as you can probably see uh one of your clients uh brought his name up here uh Nick LinkedIn uh so you've saved him some nightmares um and you sa all that St Nick I appreciate the shout out to Debbie awesome so that's awesome guys you know you know when where we're buying these notes um it's very easy to get distracted um we kind of do a lot of things we're doing marketing we're doing emailing we're evaluating assets we're talking our servicers talking attorneys we need to take more things off our plate and this is one thing you take off your plate right it's simple it's easy so please feel free to reach out to Debbie um Debbie are you going to be speaking any other locations are you be are you doing kind of other future webinars or conferences I know we saw you at not Expo are you be attending anything coming up in the well it sounds like I need to check out DME for May yeah um no but I you know I'll do these podcasts in certain groups along the way um just when they're kind enough to you know to ask me to to join in so um that's awesome yeah and I enjoy that it's a great way to kind of see everybody who's who's out there because I you know work for my home office so like everyone we're not around people every day right yeah this is true and I can tell you like you know people um you know it's an expense right when you're just first starting out and now you've got this another expense to pay a bookkeeper um but for some that they've been F unfortunately Ross her fingers things kind of fix up but you know we're not sure where we're going to see so well Debbie it was a pleasure hold on for after hours everyone else feel free you catch a recording on YouTube uh we will be back next week uh we'll be having Steve Lloyd uh he's a very uh motivational speaker as well as uh he's raised hundreds of millions of dollars in capital so if that's something you want to learn about uh stay tuned this year yes awesome so I put the link in there for the webinar and podcast all stuff please feel free to take a look both of them I'm also rep putting in Debb's information there's a link there please feel free to take a look at that click on that you're going to get Debb's information um and she'll reach out to you and ask questions so is anyone out there that has some specific questions uh regarding an asset or a note or a scenario that you were just weren't sure about keep them General if you do um if we do get any questions that's fine I'm sure there'll be more and people are gonna be a little bit shy and that's when you just go ahead and fill out that quick uh form and you can ask Debbie directly and keep it private um Debbie when you get these books in hand what is the best way for the investor to kind of send the information are they giving you a log on to their Chase bank account or how does that typically work for you so the way I do it with my clients is at the end of the month um so you know I'm not involved in their day-to-day business right my goal is to get them a good profit and loss and a good balance sheet so they can review their numbers and then they'll have it when they need do their taxes right so the end of the month I usually have Bank logins credit card I have logins for all the servers so my clients don't have to send me that data unless they just want to I I do have two clients who still send it to me every month um but thanks having an accountant login right I can't I can't spend your money I can't move your money around um and so at the end of the month we download everything we put it all in the books and then I send my clients a profit and loss and a balance sheet and it's in a spreadsheet format so I can highlight things and ask questions and then they can mark it up and return it to me but you know it is a p&l and a balance sheet I can just export it to excel right um and then they'll send me the comments back but I you know I can get 80 or 90% of it done um without their input right once I kind investor yeah oh that's perfect yeah that is good yeah but no I mean no rentals or flips or you know I don't have any of that stuff going on um a lot of my clients do but okay so then as you're doing everybody's books you get to see a lot of the numbers have you seen anything any changes over the last little while and any kind of predictions for the future of where things seem to be going um no but I will say I only passively invest with my clients because I can see their books so you know like um that's how I have that Comfort level right yeah um you know I have I I have not um I'm trying to think if I I can see anything that stands out but yeah I don't that's probably a little bit more for you guys than the note you know you guys note experts because um what I'm seeing in the books as far as performing not performing like none of that seems to be different um some people obviously focus on one or the other um so no I don't really even see a change like even if they had performing notes that have stopped performing like that doesn't even see like seem like it's any more or any less just the typical you know interesting okay gotta it'll be interesting to see what happens here over time but it's good to get that perspective as well I feel like there's going to be because I'm a real estate agent I feel like there are going to be um many any more opportunities in the note world because um people have purchased homes too high in this last craziness and they're going to be upside down and I I was just dealing with um one person that they have to sell their house now after a year and they got it listed for $90,000 less than what they yeah interesting lot people yeah they're not going to be able to afford those homes.