Real Estate Accounting

Another Nerd Enterprises, Inc. Property

Chapter 2 – Buying your rental property

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Chapter two goes right into rental real estate. In the previous chapter we talked about buying a home and the “right” approach to determining how much of a home we can afford by starting with the monthly payment we can afford as well as how much of a down-payment we can come up with and then going from there to figure out what price range we should be looking at. Well since the first step in owning rental real estate will of course be to own a place we are going to talk about that a little bit more in the beginning of chapter 2. In this case there will be more dynamics to consider and we will go through how to lay out the financial plan to figure out what we can afford and also to make sure how it works. We will talk about syndicates – many times rental properties are purchase by groups who usually will form an LLC. Generally the membership is made up mostly of people who just put up the money and then there will be one managing member who handles the property management. Otherwise you have a single investor who puts up the money. Finances it with the bank and manages. Finally when the property is substantial enough you hire a property management company, but that’s chapter 3.

By the end of this chapter you will know how to plan your purchase and how to know how to make it work in terms of rents, expenses, debt management and maintenance and once again there will be links in the chapter to video tutorials demonstrating how to use MS Excel to plan everything and how to set up your property in QuickBooks so that you can do your own bookkeeping for your rental property. We will demonstrate how to book the journal for the purchase of the property using a sample Final Settlement Statement just like what you get from the escrow company.


Written by Seth David

December 13, 2009 at 9:53 pm

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