Bookkeeping for Note Investing | Real Estate Notes Show

books yourself this is your money know how it's how it's handled know how its represented on a report and I would say yeah from my perspective when I train people on how to do things I try not to speak in accounting ease because most people out there than that bookkeepers you know that they barely get what's a debit wants a credit what the heck you know so I try and speak in the most simple level to do a most complex project and hopefully that that helps and my experience is people appreciate you know things that they could understand better so it's my goal will help you understand what you're doing you know what you're doing the operational world I hope I can help you understand it from a financial perspective wonderful once again thank you very much for all three guys join us if you had any questions definitely email them it's amazing knowledge that we can go on about after they anything else that you guys have any questions feel free reach out to me and I'll reach out to the guests vice versa for the guests as well they you know they will reach out to you guys and Astra services Ted one last good for yourself in this space would you be working with the online version or the desktop need the other two spoke about how they would share it would you be doing a desktop and sharing the file or would you be using online and kind of letting it access to it well well I'm assuming that they've already got QuickBooks if they got QuickBooks I'll work with ever version it is if they don't have QuickBooks I would say let's go with the desktop and do remote access because you know what the heck let's go with the better features up front if we if we have a choice to start that way okay thank you very much guys we appreciate it have a great night everyone enjoy about organization and while at least whoa the investors are smart and savvy about the operations of buying notes and moving notes and selling notes you know most people are clueless about the application of the QuickBooks program and basic bookkeeping it's kind of a giving so so you probably even know how to write the check and put the check in to QuickBooks you probably know that make a deposit into the bank and put a deposit into QuickBooks but in the background other tribe accounts are set up how how the customer base is set up with jobs how the class is set up from the get-go you're either going to have a successful set of books or a massive failure so and and unfortunately it's just not your fault there's really nobody out there who has written a book QuickBooks for dummies for investors yeah it just doesn't exist major fail where is the major fail stupidly at if you can pinpoint it sexy Lana look well in the world of bookkeeping you have terms like assets and liabilities and equities and these things have definitions and they they go in a certain place on a profit and loss thing they go in a certain place on a balance sheet and when done properly you can hand those reports to a CPA to another financial person to another anybody and and it's a language and it's the same across all areas when the numbers are in there and all real long there's negative numbers where there should be positive numbers yeah not speaking the same language you know we all speak English but we have to speak quick we have to not just QuickBooks we have to speak bookkeeping and financials if you're not speaking the same language then you're giving out just incorrect information unknowingly years whereas the desktop has been around for about 25 plus and it's been enhanced up and down inside ways so the reporting capabilities for the QuickBooks desktop you have a lot of report possibilities and you have a much better way to manipulate the reports and and customize them whereas in the quickbooks online you have much fewer choices as to reports you can get and the your ability to manipulate them is incredibly minimal at best so it may may not be the most ideal tool for this industry if you get a basic report that gives you what you want great but your ability to manipulate to get really to tweak it to get what you want if it's not what you want now it probably won't ever be what you want but what they don't tell you in the background is every four months they're constantly doing updates and they just make updates so you know it could be one day that you're working on a file and you see a screen and you're familiar with it and the next day that same screen all of a sudden looks slightly different then no one told you anything you weren't and what did you do wrong the reality is no they just did an update and they just didn't tell you so there they are working on all the time and maybe in the next ten years it will be as robust as a desktop but just not today and I'm gonna I'm going to definitely be going to I'll be definitely going to some of the questions in a few minutes I did see Adams question which I was answered Joe and Joshua I do want to just bring up one thing also is that when definitely you're recording something one reason said Ted got brought in here was one of the questions of when reporting a holding cost and reducing the cost of a joint venture partner and everything else how are you tipping the recording a personal note and any kind of expenses and unintentionally and I know one of the nicest features here is that I know Debbie works with desktop and she's a desktop person Yuni it prefers the online version for certain reasons and she's frustrated with the other reasons so Debbie can you share a little bit about the desktop what features you like about it what you can do with it and kind of how you structure it I don't want to talk micromanaging here but how do you structure it in the life of a note deal I guess you want to call it you know you know desktop version of QuickBooks so the nice thing about the desktop version versus the online version for me is I feel like I have more control over every transaction in the desktop version the online version in my opinion is designed for anyone to use supposed to be easy for everyone so QuickBooks tries to do a lot of things for you but when you want to drill down and find out the detail behind an entry I feel like it's very cumbersome and it's also very slow for someone like me the desktop version is much quicker and I use the accountant version so I have a lot of bells and whistles that I can utilize that make you know I can do math transactions and mass changes which comes in nicely especially if I'm taking over some bugs that are existing but even when I enter things like I enter the data for every month you know I can take all the like transactions and group them all at one time and so for me the desktop version is it's just efficient and quick and I find when I've used the online version it takes five clicks to do what I can do in one or two clicks in the desktop version you know it in the frustration that we've talked about this before if you're working with desktop there is no way for us to access that data however we can ask you for a report at any time all right Oh welcome that we're we're talking about bookkeeping today we're going to just quickly just go to some some sites we have that we often share a beginning of all of our our webinars to kind of get idea what's happening here and you probably all know we have a website where we have jkp Holdings Facebook group where we post events we also post any kind of news we get some cool stuff we got going on all kind of awesome stuff we also have a Facebook group that we also share information have discussions this group also talks about from experts to beginners we have a lot of conversations we start as backing to UM 14 or so and been doing ever since in this group we have a fill up forum for investors this is a database not to be blast email blast it out but allow you to link with other note investors across the country for opportuni of a property isn't in nearby area you can call local investor to ask them about it the local area or if you find someone in your local area that's also no investor you can go ahead and reach out to them it's a networking event so it's pretty cool as we all know also we also have a youtube channel which this will be recorded at and posted just jkp holdings LLC and lastly been at least this was a question that some of you guys weren't sure about in the opening invitation this is a website that we created allows us to email out when we have a property that's local as somebody as we as requested indicate where you're located at do not you know investment interest at we just ask you please to make sure you put where you actually know of versus where you want to invest we said it emails out asking about the area property house although kind of things we asked for you to be honest with that and we'll blast you have property when it's local to your your zip code or city or whatnot if you want JB we have the opportunity for that if nee be or want to be so I'm gonna go ahead and stop sharing that and let our guess here to adduce himself I'm Ali unis go ahead and share everyone who you are before t that for some new people year i think if you know who i am I've been doing this in the space and 2011 or so and I've been working the note since then I started with a private equity fund that was very small at the time doing due diligence and no devaluation of property valuations eventually slipped over to doing the investment side which then I learned what it didn't know and all the nuances of that which was greatly greatly affected by bookkeeping so this is something that's been overdue for me to have webinar of but now I've been buying for years now and networking and talking and sharing my information and do my best to bring it down to the least able body to understand what we're talking about so there's anything in here that you don't understand or don't know please put in the chat I'll do the best between me and the guest speakers to answer those questions so if we get a phrase please let us know so well for a do unique can you choose yourself tell who you are what you do what your background is yeah sure hi everyone um my name is uni I'm the or no expenses financial LLC and I do bookkeeping and accounting services for new investors um my background is that I have about 20 years of experience between corporate auditing and accounting some in various different kind of industries also on also adds an audible or a Wall Street broker dealer and I really I do believe in doing a bookkeeping aspect and also working with investors to help them set up their books for future growth awesome Debbie I'm gonna let you share your story how'd you get space what do you what's your experience and what can you share with the crowd tonight hello to everyone can you hear me yes okay I want to make sure I had my mute button off I apologize no video I know that's always nice to have a face with a name but I don't really have the opportunity I guess to video chat a lot so I'm excited to be here I have also been in the corporate world most of my life as an accounting manager so 20 25 years of accounting I have spent the last few years I'm just like you guys I wanted to be self-employed so I worked to build my bookkeeping business in ninety five percent of my clients are all real estate investors and that I do for other small businesses or the self-employed as well so I have spent the last few years focusing really on real estate transactions and that's where my niches and I really enjoy it so I'm looking forward to meeting everyone and Ted can you share a little bit your background history and what can you share with the group ok hi my name is Ted Jarrett I am a certified QuickBooks advisor certified in the desktop version as well as the online version I have been certified year-over-year for the last 11 years I am an accountant my deeper background also is with the corporate world and operations I worked with every industry in the last 11 years service manufacturing real estates in the last few years it seems as though I've spent a lot of time with individuals who are investing in real properties both flips and long-term investments and I've helped them to set up problem-solve and train in QuickBooks both online and desktop and that is the the crux of what I do setup problem-solve and train and hopefully I can help someone here tonight so let's start off with this we're dealing with debt versa lot of assets that's something that we kind of get over quickly this can be somewhat like a rehab property but a lot of the people in a space are doing JV investments Debbie would you share you say you were other real estate investors would you share how this is different from Trishna real estate in general well I think that might be partially a misconception as well because it's actually very similar with the assets and the liabilities with notes I think the biggest difference is obviously during the you know the course of the property the intent continued you can change along the way and so as that intent changes the way we code different transactions can also change you know but there is a backbone in a very still a very standard way of coding those assets and those liabilities and I'm going to just pop with that is what is the typical problem you see that note investors who are doing their books are doing in a global kind of idea wrong that make it difficult to work with that you have to adjust the books when you receive it I rarely received books from someone because most investors I know don't do them they just have spreadsheet view books that I have taken over you know accounting is and can be very high level and I think when I first start talking to someone they think it's just the checks they write or the people they pay in the deposits so they're always like oh I just have a handful of transactions and they think it is really that simple that each one of those things can can build and have very complicated coding behind it so I can't say that I take over books from investors very often because most just say it's not their thing right and they just don't do it you do from your experience when you're looking at these books or most people sit there to scale or is it or most of the books that are put out there more of a micro because I'm presuming everyone on the space once did not have one loan a year they want to have 10 20 30 loans eventually what is the difficulty of having one loan in bookkeeping world versus having 20 or 30 so I think a difference is really the matter of organization of how you're actually set up to report their transactions and keep records of all of your all of your transactions and invoices you know one of the most important thing that should be addressed from the beginning is really kind of organization of how investors work through the details of their of their loans because in order for you to go from like 1 to 20 within this industry it can be it can be very complex and there can be many many transactions as Debbie mentioned you know it's not just about just you know writing out a check it really is a lot about how to actually account for that which is a big investment and how to trace that forward so really kind of having you know taking the time from the beginning to actually set up a set up a efficient process setting up setting up your organization of your records correctly like all of that will provide dividends in the long run initially it's I think most people agree that it's not fun but in the long run you will definitely provide dividends because when you're going from 1 to 20 you know you're going to have to go through transactions quickly there is a constant go back important from the light information flow between the investor and the bookkeeper that can delay things just after for the investors or the bookkeeper so where can I do you have less experience in the other two speakers on tonight but your background QuickBooks is you know many years from you're now doing your experience now what are some of these you're seeing that you want to kind of advise others out there of how to answer their book setup I personally we use classes per property you know so that everything can run it's not by a JV investor or whatever it's set by property every transactions attached that property you want to kind of feed it into how you would describe it okay well you're right to suggest that everything is in the setup whether you have one note or 100 notes it's just 100 times the same thing and it's all you get cents a copy of our file and then we have to run it but we know we're running as well Yukie Cheryl about in the online version there are some hasn't seated with it however it does work so can you share about how that how your thought processes how to go from buying the note to actually discharge the note at the end kind of a quick overflow oh the online version is like that the functionalities they're not there yet I think in about 2 or 3 years it will be a lot more functional and friendly but at the moment there are some limitations but what I do like about is the fact that the investors can have access to access their book anytime they want they just log on and have specific a specific module for the hidden patient access and they can see one report by themselves but that's a positive but the other aspect is that it is there is meditation and functionality so you do have to think a little bit about how to make sure that you capture all the data that you need in specific uniform way so that you can actually run reports I would definitely say that I do a lot more exporting into Excel to research certain things which probably and would not be necessarily do it on the desktop version and in for most investors the online version allows us to access that file any moment we may not be let into the data but we can go into that and run any report we want anytime quickly Ted your impression of you know the online birds versus a desktop version it's uh maybe the pros and cons from your point of view from years of QuickBooks experience yeah at this point that was mentioned that quick the quickbooks online is a newer program in the world than QuickBooks desktop in that it's been around for under ten to that no how are you typically reporting on a more of a mass scale but without going blind my line is gonna say um it can be handled a few different ways and most of it depends on what your agreement is with your JV partner so if they have contributed specifically to holding costs then we want to be able to you know to show those deductions to that portion of the investment but the holding cost for the asset is typically where you're gonna put items that you are possibly you know repairs or things that you're putting into a property even if you're just trying to protect the asset along the way you almost have to do it in the balance sheet when you have a JV partner but that can you know it can change depending on again the status of the note whether it becomes REO along the way but yeah it has it almost have to be on the balance sheet I don't know if I'm otherwise I'm going to get into really make sure that the participants online I'm not going to go into the line item scenario I'm looking more of a global kind of idea for everyone and I also want make sure the people here know that these are not tax questions we're not talking tax strategy and whatnot here we're just talking more the bookkeeping sort of it right the one Joshua question was so what good ways to set up classes so each note have his own class under each asset I'll go ahead let's head instead do you set up each note as a class itself yeah what I do is actually break down a little bit more than that if you have investors I will create a an investor class and then under the investor I'll have a sub class for the particular note property so again it's all just for the sake of reporting so depending upon what kind of report you're looking for or you need to see or if you want to report specifically just for your investor and no one else it's just another it's an opportunity to segment the report into just a specific investor rather than having to show an entire portfolio to to someone who doesn't want to see something that's not his or hers look at the questions again Joe is there custom chart of accounts that has been found to be appropriate for note investors I know this default chart of accounts and then when I started doing my own books I thought that worked out great deduction oh no I was deleting adding deleting and look at that well you know so you know Debbie what would you say what are your typical charts or account generally speaking expenses like that how are you kind of generally putting in servicing surance all those kind of good things are you breaking it up and if the expenses are paid by the investor how you break it up versus a joint venture partner the chart of accounts I have had you know investors call and they want to do their own books but they want the QuickBooks file set up and they want a basic chart of accounts in there which you know I have done and you can do but I will say that I build my chart of accounts based on you know your transactions so I don't just sit down and start adding all of these random expenses that I think you might use I wait until it actually comes up and so the chart of accounts for me is always evolving in building but the chart of accounts actually should tie almost directly to the tax forms so a lot of times I'll also see books where people get creative and create certain expenses or names because they don't know where to you know they don't know where to put something and so those line items it's you know if you look at Schedule C of your taxes there are line items there of the expenses you can capture and so the chart of accounts has to be able to tie to that so that's kind of where they come from and then remind me your second question typical you know if you have an expense say you know you're breaking down the servicing how are you typically breaking those down as per you know how what kind of is that an expense account is that how you to be breaking it down for the joint venture partner as well as it was paid by the investor himself generally speaking again I just you have you know you have a no servicing company for example that you get a deposit from you know that's gonna be typically be broken down between the principle that goes towards the note the interest income and then that can vary depending on if you need to split it with a JV partner and then a third part of that that gets coded it's the actual note servicing expense so that one deposit can have multiple lines when it's broken out okay and are you considering each transaction a different expense or one whole transaction from a servicer and a transaction would just be the one item that actually hits your bank account so it's either a check or a deposit so the transaction is the one entry in QuickBooks but it could have multiple lines the Uni I know that a lot of us deal with a lot of different things credit cards bank statements servicing collateral files just go on and on and on for a normal investor that's a lot to keep up with is there methodology ways that you guys could log in and not touch my money but no we didn't transactionally take this up to add I know I'm taking you down to some level that some investors already know but I want to make sure that every vessel understands the benefit of having someone handle their own books so my bank statements my essence servicing my Madison whatever serves from with FCI what can you do is it bookkeeper to help me not worry about the invoicing part of it well the ones that are actually regular and steady like service and statements and collateral file charges and so forth did you actually give you a bookkeeper access to them they can definitely just go in and like pull those specific invoices but it should be clear you and your people really should have a conversation about what you are going what you're going to be responsible for and what they're going but the investors want to be responsible for because something about this industry is that there's a lot of unique transactions unlike a typical corporate corporate accounting where 80% of the activities is repetitive and 20% is unique in any given time in this particular industry it's the other way around 20 percent is 20 percent is repetitive and about 80 percent is unique because you are all doing different things at various times so you know your booking was definitely going and put some documents for you and kind of report those but there will be other there will be other avoiding charges that you book people will have to know so yeah the communication between the investor and very important okay Ted Michael Norris has a question that you know he talked a couple different bookkeepers they got different responses should he do a course on QuickBooks you know or is that too general a three-day course kind of thing for what we're looking to do another question was if you take a property like a note and they make an REO that changed a category yeah well as far as those courses go I've taught them and they are incredibly generic will they they'll help you to maybe know how to navigate the program but this industry is so darn specific and setting up the chart of account we'll never be discussed in any of those classes because if this is such a unique industry and yeah and when it when a note morphs into something else you know it's the tribe account doesn't necessarily change because hopefully maybe you've set it up to to account for all these different things you just have to know what the entries are to to move the characteristics from from what it was to what it now is yeah and yeah and uni makes the point you know if you're gonna have a bookkeeper do it you have to have constant communication if you're gonna do it yourself yeah you just need I guess to work with a bookkeeper to really get fully trained on the process yeah sure I'm gonna go back some more questions I know someone had their first question I did not see it so I apologize Peggy what was your first question I thought it I didn't see it at all if you do see it please post it again I know somebody asked about having an account for pool purchases one asset I don't advise that I think that you should have an asset per asset class per asset because expenses are individually by asset in my understanding of things with the set up Debbie I know a lot of people are just uh Peggy asks a question her accounts is distressed notes or tree the same as discounted bonds I'm not sure if that is something for answer on here but if anyone want to jump in answer that question discount bonds I guess also borrowing you know as a lender of any kind of debt they're kind of set up the same way can you and I mean I don't know who can answer that question baby but I'll let whoever wants to jump in answer that so it's not completely the same discounted bond if I understand the way this person it this accountant answer the question discounted bond the way put the font or treated and so forth distressed notes are somewhat different because these are distress meaning the dollar value of the note itself against the UPP is significantly lower discounted bonds were talking you know 96 to 97 percent of par value that you should be expecting and so forth so the accounting is not exactly the same as as to a almost different instruments bar that is now yeah okay the next question was should we set up an unrealized gains account for the discount we gather the UPP for non-performing notes because i from iran in early mike you know career doing this my accountant when i went to file something said what was the unpaid balance when I bought it and I said I have no clue so the question was do you use the unwilling unrealized gains account for the discount Ted Debbie I'll let you guys jump in here have you an answer that one I do not and with working with two CPAs here in the Dallas area that I work with the most and one is specifically real estate investor cpa who i have much admiration for we we do not i mean basically we we put that in those in there that asset in there at the purchase value we apply that principle that you might be receiving along the way to that and at the point that you have the return of that money we begin coding that as investment income above and beyond that so i know that that's a big topic out there right now but even the two CPAs you know that I work the closest with still don't really try to touch that and realized income next question was at what point is do speakers recommend using Microsoft Excel to QuickBooks there are certain number of notes you would say to switch over can you do all this stuff in a you know Excel kind of file I said what do you want double I didn't mean to interrupt Debbie well that was just kind of a quick one for me it's like start QuickBooks from day one yes you know it 10 what would you say about that you know I always like the fact you want to grow so don't assume if you're gonna get into this that you're gonna start with one and maybe go to 50 before you know it before you even even intended so you know set up QuickBooks the effort to set up one is pretty much the same effort to set up 50 so be prepared to grow feel free to keep you in the questions going guys I don't want to you know these a lot of questions regarding this stuff from expenses to running reports one that the questions we had going into this whole thing was how to handle JV money being reduced and I know that that came directly from a post that was made of yourself of reducing the joint venture money down as being spent you want to scrub a little bit what that meant and what that was coming from ok well that that's going to be I guess set up as a sub-account of the property note itself I guess I in my books I had set up as like reserve funds so it's it's a liability that we need to keep track of in the form of not journal entries but simple transactions you know when you're cutting the check or when the check is being cut so as we spend someone did we get five Grand Prix joint venture partner to spend money down keeping track of how much money we've spent of is I believe was the question or post on there so you're keeping track but every transaction every dollar spent is a transaction so that should be entered in the system accordingly so that a report can be sent to the investor to say this is how your money got spent dollar-for-dollar this is what you started with this is what you had left and this is how the dollars get spent in the middle uni can you share a little bit about how joint venture partners reports are typically shown I know there's some question about what other ways to to use flesh books and wave um we're gonna stick with QuickBooks is this is kind of a QuickBooks kind of thing I don't like kind of going off the beaten path in it I know you can definitely go into different ways but I would say with the QuickBooks known you know mess around with your accounting numbers but for joint venture partners you know reports of whatnot you need everything you can share or talk about how a joint venture can see what's gone on in this deal to know where is that whatever thing okay so I think this is where maybe share a file just to kind of show you so let me open it up first just do a quick share screen hit the window you want to share okay it says host disabled participants I Pallas give me one second yeah that's me that's one sharing screen before God all right so this is kind of what just kind of what I would try to have for the client it kind of shows you or joint ventures exactly which is who brought in what amount of money and where they are in terms of their expenses so you know this particular client brought in 81 it's broken out between between well it's broken up between these two investors and and the capital infusion of those two investor is broken down in these three buckets and yeah it kind of shows you um a specific point in time how how good you are in terms of your investment what you spend and opening up everything what guineas showing is an Excel version that sometimes when you run the clip books online you need to use and the plus sign to the left hand side actually expands all the data that you can see what was spent what was not spend all that stuff and what can be used so it kind of narrows down or you know attracts into it Debbie you know when you guys share reports and so with that how do you kind of share with the joint venture partners with the note investors you're working with well first I have um well I won't even go there and once I update the QuickBooks file every month for my investors I send them a copy of their QuickBooks right so they can run all kinds of reports at any given time really that they want to and they can filter those reports you know by JV partner and then under that it's by class if they have multiple classes so I rarely run any type of report for my investors so we you know we do not share a QuickBooks file and honestly I did that in the beginning that unfortunately the files would just get messed up along the way and data would get changed and things would get lost so I owned the actual file but I send a copy to them you know at any point in time I guess that they want it but I don't have anyone who gets it more than monthly and because you know like this month they would get data through the end of January so that's the data that they would be reporting on awesome and it sounds to me is that any reports we mean nearly ran capital infusion or where the base is with that that just be shared with the investor you run the report and sent over to us correct yes I right now I do not break any reports down by JV partners but I send my investor the profit and loss insole and the balance sheet in fall and so then that can be filtered down is that answering your question you know when you're working with yourself and we have a ton of invoices coming out and what do I owe 100 I owe it we get trapped up some working full-time they have more problems with this is someone doing this full-time you know working full-time versus doing this full-time do you show your reports what currently invoices are due my new desktop and online version is a bit harder for online but do you show that current date to date Able's they're due where she both I'm on it I have been doing that but I think what will happen going forward is things are going to go much more towards cash basis and those specific reports are going to get separate separate sheet they're pretty excel sheet probably that's kind of provides the investor with like what they need to be paying attention to for the coming coming month because you know like I said because there's so many transactions that are unique and it's very high touch you do not want to you do not want to get lost in the forest from the trees so you just want to make sure you keep the ball in line and make sure that you have all the actuals and football and some of the other information like you know what are they get into that would be just separately awesome I see Chad had a question up there I was issued at Ted but I think that we will make sure we keep this as a general specific but I'll give it a stab and if you can kind of keep it general I appreciate it the question was if borrower start repaying and you have a JV partner with a 50/50 split where you send half the money amount the payments should all that be considered for true capital or reduce it an investment accordingly my experience depends on your joint venture agreement depends on what goes first but be one note are you returning capital to them or reducing their investments again it really is based on on the contract but generally speaking if there was no understanding I guess I would be returning capital first and once that's done then it becomes income with that said I think that I think you know Debbie wick would everything going on here there's so many difficulties you have with working with no investors of or working with you currently that you struggle with that you know someone that may want to come on use your services could just be more aware of what to expect so I daughter to show it up say hello so what would you guys say is the you know dead what would you say something that people who are new can kind of void with that can you hear me yes I can hear and I think what I've learned over the last few years is I work with a very strict process every month because that really helps keep the investor in line as well and when I first speak with someone they usually have a lot of ideas about you know what they think would work and you know what they would like to do and what they would like to see and it doesn't always line up I think with bookkeeping because there's there's two thoughts it's a great thought that then when you're even talking about the payables and being able to see what you owe you have to decide if you want an employee but keeper or you you know one of keeper who helps you each month finalize your financials because if you're looking for someone with a lot of day-to-day interaction I mean that's an employee and that can absolutely be done but you have to think about the cost what it's going to cost so you know to work with a bookkeeper that much so I have it very streamlined where you know I have access to almost I think 99% of my clients I have logins to everything their bank accounts their credit cards any type of mortgage accounts where I can see principal and interest you know I have direct access to this so every month I can be proactive and I go in and get all of that data and I then send it to the investor and they can fill in the blanks and help me in that respect because it's much more efficient then you you know as the investor you feel like you need to tell me a long history about every transaction and because you know what's going on but really once it gets to my side it's you know it's a very black-and-white it's like well was it a check or deposit and how are we going to handle that and then how does it evolve from there so I think the answer your question is a lot of streamlining and I tend to be the one to guide the monthly discussion so are they people email you invoices they receive it I know you know we drive our captain book he was crazy because we do things without thinking but are they for you an invoice is saying here you go and they only send me an invoice if I request it so once I'm familiar with somebody's you know books and the way they handle it I can code 90 80 or 90 percent of the transactions before I ever send it to the investor and then that's when we get into a little more of the nitty-gritty about well I see you purchased this note now you know what's the address who's the JV partner and those types of things to make sure we break it out correctly but a lot of times I don't need invoices now I do need something like servicing right because I need to know the breakout of principal and interest and things like that but again usually a lot of that is access online as well yeah I always tell my investors for the most part those invoices you need backup for everything if you're audited you don't care they don't merely an invoice but I'm gonna trust you know that if that transaction hit your bank account that you have the backup but again there are there are invoices and things I need to see but I try to get as much direct access I would presume if the invoice per se you know 700 Andie's and four of them are going to one JB partner you know three go another you would have to know what JV partners attached or which only I guess and in you know that can kind of be handled in different ways we usually kind of fall into a good routine with whoever the investor is depending you know that's a little bit of mix of how they work and how I work some of them just keep a list of their assets in an Excel spreadsheet and a JV partner and some people you know whenever they first do a new purchase then they sit into the details at that time and so that can vary along the way but but again I really I really try to keep it as streamlined as possible so Ted Marco asked a question and I'm gonna just make sure I kind of quickly go over to Marco he gained his first know he's gonna step in QuickBooks on that he once note you know do you set up an expense asset name expense type expenses are you breaking these down down to the nitty-gritty of you know you know our servicing are servicing invoices can be a dollar for you know mailing and you know $3 for this and then $68 for insurance are you breaking them down by expense type o expense type no you could put the type in in a quick memo but you are breaking it down based on how the bank is being affected if you're spending a dollar on a stamp and two dollars are certifying something and that's how the bank has been affected then your books have to match the bank correct well as far as expenses go it sounds like to me it's a misnomer why are these things are in fact expenses in the world world in QuickBooks they're really not identified as quote unquote expenses they are charges that will go against the the notes reserves but they're not going to be in in an expense category per se they're really sitting on the balance sheet Believer than that so while we say they are expenses that they are really from from a terminology perspective in QuickBooks they are just transactions okay so you can't pull a report and say I want to know all my mailings they use the post office for in a year 2017 importing one of them as a individual kind of expense I think you can get crazy with that cause if you really really want you had the mindset to do something like that yeah we could set the chart of accounts to do that but gosh you would probably want to stay away from this is already a highly detailed industry you know you kind of want to make this as simple as possible given the level of detail you early forced with you know how far do you break down things yourself and how far you know as Ted says this can be broken down to pennies and different kind of expenses and also how far do you typically break down your your invoices servicing probably the most common with a million different whatever's how do you typically break down your your books to show individual ones well I think at the end of the day really kind of does depend on the investor and how do you want to see their books not just for today but for the future you know being from a corporate environment I do like to break it down to the most granular level possible but it is very time consuming medium as Ted said sometimes because get in the way of just recording information accurately and correctly in time so if you don't think that you kind of have to think about when you're actually trying to try to construct your books you know also kind of the time for the vendors especially in this industry there are many vendors and they're not all equal some vendors are very detailed with the information that they're providing you and other vendors it's just one line item so there's always this you know push and pull in terms of like what what's the benefit what's the marginal benefit of to be something a certain way so I think you know that's kind of a kind of ecology you may want to have with your investor and what do you what do you want to do not just for today but for the future and I knew we would Ted would think what you need wget saying is that she breaks it down into a khajuraho entry and then puts in a memo what the expenses for versus using the expense or account part of the book field so there's not an expense kind of field it's all part of the dealing of the note in breaking it down to a memo field so I don't know what your opinions or that is I mean everyone does a different way as long as record that's the biggest factor well you know there there's so many different ways to to code and to work in QuickBooks but one of the most important things is with all of your expenses and all of your transactions is you have to be recording the name who paid you know who they do and who did you pay so and then you know when you're doing a journal entry there is a name or a payee field as well so that's you know one of the most important things you do right because at the end of the year you have to do 1099 for anybody that you paid I'm glad you brought that up too so just a note that we would pop a 1099 in a minute that's a yeah so you know however the transaction is entered you just have to be hitting all of the key point of bookkeeping and yeah I'm glad you're going to touch on the deadlines maybe in 1099 because that's probably a disconnect as investors you guys are very much well I paid this person for this you're very fun what it was for right was a bookkeeper I am more focused on not maybe not even more but equally who got it the amount and then the purpose because that purpose is going to tell me how to code it but you know so I don't use any journal entries I do direct transactions for you know everything that hits your bank account gets imported into QuickBooks and each one of those transactions is a single item and so all of those things get recorded so we recording say a dollar mailing feed at SN or - enough static charge are you breaking it down to that kind of level and in also when we were just talking about those expenses I was typing a reply but I hadn't hit Send yet and like head was saying as a lot of times those particular expenses are gonna go in that holding cost field because you have a JV partner but if this is just a note that you own yourself then those expenses again depending on the situation of the asset but chances are those expenses are going to hit your P&L directly so at that point and yes you need to have postage and yes you need to have due diligence expense so you would break them down but like Ted was saying if this was more of a collective put it in the holding cost and we're going to split this with a JV partner then you don't always have that detail but my pl is is very detailed okay so your expense field is why didn't arrow you know very deep for its effect you can report any kind of expense you may have for all your deals but you're feeling all the categories as well but you wouldn't normally have to do if you were doing your own books but because I'm sending that report to my investor I want them to be able to see the breakdown and here's something even this simple like let's say banking service charges you have some big and service charges on your bank account and maybe on your credit card I don't want them all under bank and service charges I'll do Bank and service charges with a subcategory for your bank and a subcategory for your credit card now you wouldn't normally have to do that but what I want my investor to see when I give them that P&L with detail hey here's how much my bank is charging me and here's how much I'm blowing you know when credit card fees or whatever interest and that's really just as an ease of looking at data for them and I know that I got charged back in a day for $1 for some kind of bank fee that I I totally forgot that was $1.00 off my book for a long time I couldn't fear what a while I know that you guys think is silly keeping everything has to match down to the dollar down seat on my dollar off of me you gotta be kidding me okay what's your thoughts of that you know there's different kind of school of thought of this expense sheet and it is you know breaking this down I mean that's a hard kind of conversation you know running your ports are great and it sounds to me what Debbie's saying when you think if you work with a JV party you need to have that you know level of showing that JV partner what expenses are what instead of a bowl kind of saw process yeah definitely you don't want to feel like that you're giving the jb less information than they deserve to have I my first conversation when the client is always what's your level of yes I'm open to investor client it is there is definitely a time delay with the books in this industry a lot of times some of the vendors are not sending their input inputs or their information on time so there is definitely a delay way longer than I would like but that just needs to be par for the course in the industry and my reports are basically the P&L and the balance sheet is done on a monthly basis but other special reports like member bases and so forth it gets done on a quarterly basis unless you have an investor with many many different kind of trends that kind of a punishable range means that we require that information on a monthly basis so it all kind of depends on what the client actually needs for their reporting and just their you know education of what is happening with their business and if we have something to come up like a foreclosure auction typically that can be tracked down and figured out it with time of course that you can give you know two week three week notice and say listen we're gonna take this thing to foreclosure soon and we need to know what our big price should be at those cuttings can be figured out I presume for the most part long as we know all expenses keeping any kind of clients on and you know how do you work the books from your experience in the space yes I'm always taking new clients on and and my clients are generally either monthly or quarterly as a standard but everyone always has like specific needs come up if a JV calls to say hey I need to have some numbers certainly by exception all the time we can generate a set of reports update the books after one week after three days whatever is needed you know as a as bookkeepers we've become partners to detail what's your threshold are you incredibly detailed or do you want to keep this simple and based on that answer we work within the framework of what their comfort level is so yeah do you want to have like the bank Bank service charges broken down to credit card bank or does it simply the Heather of Bank service charges does that work for you well you know going either way is correct it will serve the purposes of a tax return but it comes down to what's comfortable for you if you're looking at the report there's too much information mind-blowing or is it that level of detail that you are as an individual true yeah so the question I'm gonna get to that in just a minute I wanna make sure we covered sad question about expenses to consider cogs of the note or expensed when are sold you need you were Ted or WDS one jumping in at all that you know the question is so would the expense because there'd a cogs of the new or expense when it's sold okay so okay so kind the manufacturing term but if you're asking whether it's it will go against your revenue line you know this one if I distinguish that if you actually had investment and you're the only person who who are actually managing your investment and you have no other JV partners you pretty much give your business expenses are going through your P&L in terms of under Wars you were just affected you know is the cost of the note or expense when it sold it kind of depends if it's a if it's a note that's been invested with your JD partners then it is treated as an expense when it's sold when there is when there is a specific type of expenses that you're going through for your P&L for instance if you are ordering or any titles and you actually don't know whether it is gonna actually turn into it into a deal or not you may be putting that through your P&L so it kind of depends the yes generally speaking you don't have any venture you don't have anything to record something so I want to just jump in this is the big thing it was talked about couple years ago and finally come through debug it did you know ten a knives are we issuing 1089 to joint venture part Debbi UT said what's your personal feeling about doing that kind of stuff I would say only one they were only going to get a 1099 at the point where they're sharing income in excess of six hundred dollars but the returning of an investment it does not deserve a 1099 when their profits your funds you can speak anytime here you're your free reign here well I was making I was hitting my mute button and so I lost track of whether I had it on so I I agree with Ted on the 1099 s right that's not 1099 is not for for the JV partner for the income so Gabe asked the questions is the no purchase of cogs is it is that part of the cogs no cost of goods sold assault on the profit and loss and your note purchase falls on your balance sheet with your asset so I don't think that's directly related but there may be an underlying question there that I'm missing this whole industry for the most part revolves around balance sheet transactions so of course the good soul conversation is really quite irrelevant and really has no place I from what I can see in the industry take place take place on the profit and loss statement being actually inventory they're considered inventory so should be cogs like a flip is the inventory and even a flip the flip house is an asset it's not inventory so is note an inventory inside the business I guess there's a question of Chad asking it's not inventory it's actually a liability don't you mom it's actually actually an investment it doesn't work like in a regular firm laughing firm where you actually have inventory that goes to cops when you actually sell it does not work like that it's completely different it's an investment so really the category of cops does not apply at all and the confusion might be I could see that you guys might speak about your you know the number of notes that you have as your inventory but it's not it's not the typical you know definition of inventory does not relate to the assets and the notes I guess the question you know that Mara was asking before was is considered an asset or alone in QuickBooks what is it not one or both so it's definitely an asset but you may also have a loan tight to that or a liability if you have a JV partner Lorna aids the question for that Jennifer want to fall upon the ten a nine what forms that need to be generated for jayvees partnerships profits besides 1099 I'm not sure Jeb you I expand on that a little bit were you issued I'm just a lot schedule K like what am I trying to say here Trevor you can expand it up and then I guess Bisaya tell me what forms gonna be generated for JV partners there you go is there a reporting required for profits you pay your JV investors so I guess a profit issued over 600 dollars should you be giving a JV investors any kind of forms okay one that you might want to think about but 410 a may be the only form you're giving out some showing the profit that they gained well it kind of depends on whether you actually formed a legal entity that is an LLC that you're working with your baby partner from where you actually are going to generate a schedule k-1 otherwise if you just have a joint venture which is a very generic term it just basically means that there's no defined trial by the IRS so if you're working with someone you guys have a personal contract if you deceive you but we've never actually created our legal entity then you could actually do a 1099 miscellaneous form to kind of let them know that they do see s dollar of profit on the fail that I've coded in the calendar year and you have to attend a nine into every joint venture that makes more in six hours that county air correct yes and actually I can add to that just a little bit because when I first started this it was a question that I had with the CPA I was working with because obviously we have to report interest on a 1099 int form and things like that so a lot of partners you know not set up through an entity but just private money per se you are not required to to give a 1099 to private money so that is kind of a differentiator in that ring venture money that if it's private it's not it's just a term that you guys use if it is just you know a set up between you know the two of you and here's the agreement and they're gonna get some interest and they're going to make money here we go if it's set up as a joint venture where you're splitting fifty-fifty versus an interest rate you're giving them that's where it comes to play where it's a loan for them versus being an investment the correct and it's more about the entity I believe whether it's just like Amy was saying if you actually have an entity set up then it would be more of a official set up where a schedule K would be recorded but private money if it's just between two of you and you have a document may be that you know says what you're doing but it's still private money okay so if the joint venture um 50/50 split you don't have to do to the 99 that you're saying right okay so the next question is how can you track the profitability of a note if it's on a balance sheet all the cash flows are on the are through the IRS this question it gave asked I'm sure to reflect the purchase and the found seat line item is going to reflect the sale so I think at the end of the deal when all the expenses are in the balance sheet line item will show either a plus or minus and what you need to do since the deal is done is is balance it to zero so at that point you're then going to transfer the funds off of the balance sheet to the profit and loss statement as a gain or loss on on the sale I mean I'm answering Karen's email questions you asking if if any of you guys work with a pipedrive or such programs to integrate with QuickBooks I don't want to get too much into that that's more of a Civic question and some people hear of Miller pipedrive some people aren't or any TAS best program I guess they're trying to link a quick way to link right into QuickBooks do you guys have any experience doing that or is that something that you just want to handle the books and not be linking to other softwares well as the third part of the application goes there's like a gazillion of them out there I'm not familiar with that particular one but if it does in fact make your life simpler and if it drills down into QuickBooks such that you don't have to do the bookkeeping fantastic it's it's it's definitely a plus but I personally am not familiar with that software but I can say all these third-party applications exist for the purposes of making your operations easier so in theory it's probably it's probably taking out the bookkeeping concept of what you're doing and more operational so it's probably a plus so me I'm going to jump Brookley the Chad question is if your expenses or legal tax are they add to the no purchase to increase the value of the asset you're decreasing the the the loan that you actually invested in your investment goes down to where you start making a profit that would be my understanding is you know when you have a newly purchased and you have an expense like legal or taxes does that increase the value of your assets so your expenses increased by your asset or decrease you know I guess the question and not scratches good job dad your asset right so you you know it's just like a flip house you you buy it and then you are adding value to that by doing the improvement right so I think what we were struggling with is you know is that adding value but in your books it is an asset and you know on your balance sheet so yes in general just make sure get a couple more questions here and we'll just bill that's a great question you're all different states do you know anyone the CPS could do well with no tax returns in different states is there a good way to find a good CPA that understands notes or a different sector of investing that would be similar to the notes that you can search for a CPA in great question bill it's such a specific industry I could see how it'd be difficult to find a CPA who's who's somewhat expert in it I am I guess what I would do is look at the larger firms or find someone who's maybe heavy in in real estate and see if they have some some cobbler common crossover knowledge two to the two notes that we might approach anyway yeah I mean my other saw is if you find someone that does lend money you know they're lending money out like crazy that they've seen the whole doctor of you know being a lender because that's what we really are we're buying a debt and you just transferring over and I don't want to carry on tube too much longer there's a lot of Pacific questions that I'm sure we can go on for three hours and I'm sure you guys can speak for three hours but I want to make sure that you know we answer most of the questions we can hear in general form I think that we've given a lot information out and I did share your condi information in our chat I'll repost that as well you definitely can reach out to anyone these speakers and ask me you know specific questions I do want to ask every one of you guys I'm sure that yes are you guys open to working with note investors without talking dollar amounts is that something you guys do and how often are you doing the books for the investor Debbie I'll let you start with that one you open for new clients and how often you giving their books you know reports back or you know however you give back to your investors okay and yes absolutely I am taking on new clients this year in expanding and growing and currently I process the books monthly for my investors but I can tell you you know I just had someone asked can it be weekly yes and there is always a cost no that really what it boils down to right is is our time and how much you want to pay so I definitely promote myself as affordable bookkeeping which is why most of my clients have selected monthly okay Unni are you open for clients and how do you typically report your books to your investors and I'll put kind of a golden othernet I'm help because the space where is our books up to date as the end of the month your to your company and we we serve your needs and as mentioned you know there's there's fees for everything but that's the cost of living is it okay um I do want to thank you guys I did again post your information in the prior chat intraday final question I'll let you guys go at it but they said we don't want to top of this forever we could definitely rehash this in the cold months we want to we want to keep this as journalist basis you know some people here don't know what a balance statement is I know when I first started I had an equal sign at the end of it equals zero other than that I knew nothing about it pls all those kind of world that investors don't we don't care about or know about we know we need it yes this thing is will be posted on the YouTube channel so wit parting words if there's something we can do better you know I use Google Drive in voice so with that is there one pointing word you can advise the investors out there to you know get on QuickBooks now and don't use Excel but you advise them to start doing to keep track of things better Debbie your experience there um I have a side note that is not directly but keeping but I want to touch base on these 1099 and w9 okay you are a business owner and a lot of times you know we think about ourselves just being someone doing something right but you are running a business and you need a w-9 on file for every vendor that you pay and you need that vendor w9 on tile before you pay them now you don't need a w9 only for someone you're sending a 1099 to that is an incorrect misconception right a w-9 information at the end of the year will tell us whether we need to send a 1099 but we aren't getting a w-9 just because we might send a 1099 hopefully that makes sense and there's a lot more to that but you w9 on file for every vendor you pay Wow yeah that's a good tip it uni anything you want to add parting word turn I think for investors that they should know you can add to those note world of being craziness and we think QuickBooks and bookkeeping be so easy just like any other real estate yes it's um there's definitely a lot in the industry I guess one of the things that I couldn't maybe kind of as a parting parting tip this too you know towards end of the year you know what actually would help with your taxes and also kind of keep you more of the rest of your financials is paying your bills because taxes taxes are done on a cash basis so what's the more cash flow data in the year some the more you will be able to take off for your home your taxes so that's one of the things that you can think of obviously it kind of depends on whether it's an investment versus your own personal personal operations but that's one of the things you can craft migos cool Ted fighting words from yourself from your 19 or 20 years or million years of experience yeah keep it simple well a lot of things really definitely if you're gonna use QuickBooks have it set up properly the first time also if you're gonna have a bookkeeper that's great probably a great time saver but know how to do it even though you're not going to do it know how to do the.