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HOW TO MAKE YOUR JOB OPTIONAL”

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HOW TO MAKE YOUR JOB OPTIONAL”

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Fast FIRE Bookkeeping for Real Estate Investors

bookkeeping for rental business
[photo credit: Christina Tran]

Summary: For many business owners, bookkeeping isn’t something you embrace. It’s something to avoid and maybe even run from. That’s how it was for me for many years. It wasn’t until more recently that I realized how powerful a tool it can be for growing your rental business if done correctly. I also realized that there were very few people out there who could teach me how to do it the right way. So we collaborated with bookkeepers and accountants to develop a course that would teach me how to get my books done correctly the first time. Our course launches on October 2nd!

Few words cause more stress for business owners than “bookkeeping.” 

That’s how I felt. Stressed. Stressed about not doing it right. Definitely stressed about whether or not to hire a bookkeeper. Stressed at tax time. 

Well no more. 

I was sick of being afraid of bookkeeping, and sick of having this part of my business being an unknown. 

I was sick of making decisions without the proper information. 

After several years of inaction, I finally overcame my own fears and decided to take matters into my own hands. 

 

My personal bookkeeping journey

When I first got started, I used Excel for my properties. I was a management consultant in my former life so it was easy for me to create spreadsheets that mimicked bookkeeping software. 

This worked well enough for our first few properties but as our portfolio grew and the transactions became more complex, I could see the limitations of Excel. 

For example, if a renter didn’t pay one month, how would I track a transaction that didn’t happen? Excel is only good for tracking money coming in and money going out. It’s not good for tracking bills that I owe or people who owe me money. I couldn’t create an invoice like I could using bookkeeping software and then have the software remind me that the tenant still hasn’t paid their rent several months later. 

That’s just one simple example, but as time went on, these types of issues came up more frequently.

My next move should have been to teach myself how to do my own books using bookkeeping software but because of my fears, I decided to hire a bookkeeper.

The first bookkeeper I found, charged by the company. I immediately shot down this option because we owned over a dozen properties and they are all in separate LLCs so this meant sky high costs.

So I sought out bookkeepers who charged by the hour. I found that many in the U.S. charge $65 to $85/hour. I did briefly explore outsourcing our bookkeeping to a virtual bookkeeper for less, but I just didn’t feel comfortable having a bookkeeper outside of the U.S. having access to my financial information. 

So I finally decided on a company that charged by the hour and had them start out by doing my books for 3 months. This ended up costing $2,500. The problem was that after spending this amount, my books were only about 75% complete. Getting it to 100% would have meant more time so more like $3,500 for 3 months. I was looking at easily over $14,000 per year for bookkeeping.

But it wasn’t just about cost. An even bigger issue was that when I looked at the books, I realized that what they did was really only useful for tax filing purposes. 

I had so many questions about my rental business but the books didn’t answer any of my questions. For example, how much am I making in storage rent? How much does turnover cost me? How much am I paying for rekeying my units each year? What about my cost in damage for my rentals to be pet friendly?

 

Become the CFO of your rental business

Why don’t bookkeepers know how to do the books for rental businesses?

It took me a while to figure out the disconnect. 

What I learned was that it isn’t that they don’t have the skill. They are masters at entering transactions. They understand debits and credits and all of the other accounting jargon like the back of their hand.

The disconnect was that they didn’t know anything about running a rental business. As a result, they didn’t know how to categorize the transactions in a way that would be useful for me to run my rental business. 

Categorization is the key to getting the right optics into your business and having the right optics is essential for running your business effectively.

Imagine flying a plane without any optics. Without any of the instruments or dials that tell you your airspeed, altitude, or the amount of fuel you have left. You would never do it. 

We ran our rental business for years without the proper optics. We were flying blind. 

For example, let’s say your rental property has storage spaces and you rent them out to your tenants. A bookkeeper would normally lump the storage income together with rental income. But what if you wanted to know how your storage spaces were performing over time? 

The answer is, you wouldn’t because the data isn’t separated out to this level of detail. 

Our bookkeeper didn’t understand that I wanted this level of detail, nor should I expect them to unless they owned rentals themselves and could anticipate what I needed as a rental property owner. 

The other issue is that most of us don’t know what we want either. We aren’t trained to think like Chief Financial Officers of our rental business. For those who don’t know what a CFO does, a CFO decides what metrics to track and then directs how the money in the business should be used. So as the CFO, you get to decide what reports you need and what metrics you want to track. 

So if you want to maximize the cashflow of your rental business (everyone should want to!), you need to become the CFO of your business. 

 

Taking matters into my own hands

I decided that instead of hiring a bookkeeper, I would commit to doing the bookkeeping myself.

However, when I looked for courses or training programs, everything out there was either 1) not specific enough for cashflowing rentals or 2) looked too academic and stodgy, like doing college accounting 101 all over again (or more like the first time).

I wanted something practical. Something that didn’t teach me accounting jargon. I wanted someone to show me what I needed to do step-by-step. 

Since I couldn’t find anything out there, I decided that I needed to create the product that I would want (with the help of a certified bookkeeper!). 

Introducing: Fast Fire Bookkeeping for Real Estate Investors

 

What is it?

It’s the only course we know of that teaches you how to do the bookkeeping for a cashflowing rental business. Not only that, it’s especially suited for owners who want to maximize their cashflow using the Fast FIRE system. 

Not only do you get 8 hours of video instruction, but you also get to be part of a community and we also give you 12 months of support in the form of monthly live Q&A sessions. 

It will take time and effort but our goal with our course is for you to feel that you’ve mastered something that might seem scary or hard right now. How great will that feel? 

Mastering bookkeeping to us means: you feel extremely satisfied and maybe it even feels fun, you don’t spend a lot of time doing it each month, and you start to see how bookkeeping is essential for becoming the CFO of your business.

 

Who is it for?

This is a course for anyone who owns rental properties and who wants to move from being an amateur investor to becoming the Chief Financial Officer of their business. Or better yet, the Chief Financial Freedom Officer!

This course is essential for anyone who is planning to claim Real Estate Professional Status. Remember, if you’re ever audited, you’re the one who has to defend yourself, not your accountant—and having professional books is half the battle!

 

How does the course work?

The course teaches you how to set up your books the right way. It’s specific for rental property owners (long term and short term rentals). It’s not for flippers or real estate developers or investors in syndications. 

The reason is that those activities require different bookkeeping. For example, it would be strange to have a line item for pet rent if you run a flipping business. A short-term rental owner likely has hot tub maintenance costs. I wouldn’t expect to see this expense line item if you’re investing passively in an apartment syndication. 

This is a step-by-step course. We specifically avoid accounting or bookkeeping jargon because you don’t need to know accounting theory to enter in a transaction. When you are just getting started, you need to know are practical questions like:

  • “What accounting software should I buy?” (there are dozens of software programs to choose from)
  • “Which of the numerous product options should I choose?” (accounting software comes in different price levels        depending on your bookkeeping needs)
  • “Once I buy the software product, what are my first steps?”
  • “How do I link my bank account to the accounting software?”

We then show you how to enter in almost every transaction type, starting with the basic entries like rental income or a repair expense. 

We then get into more complex transactions like how to handle utility reimbursements from your tenants or how to track tenant turnover costs. 

Any that we miss, we add in overtime. So the version you buy will continually improve as we find new transaction types. 

You’re not alone in this course. We don’t just give you the course and let you figure it out from there. The course comes with a community (you learn alongside your peers who probably have the same exact questions as you do!) and we also provide you with 12 months of support in the form of monthly Q&As so you have a long runway before you take off on your own.

 

How do I sign up?

You can sign up for the course waitlist HERE!

Interested in learning more about how to build a portfolio of cashflowing real estate? Be part of the conversation! Follow our general Semi-Retired MD Facebook page and then join our physicians or professionals group! After that, don’t forget to sign up for our Waitlist for the next Zero to Freedom course!

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.

Do you want to learn how to creatively fund your real estate portfolio and achieve financial freedom? Join the conversation! Follow our Semi-Retired MD  Facebook page and join our Doctors or Professionals  group!

Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.

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Hi, we’re Kenji and Leti

we provide coaching and mentorship for doctors and high-income earners

Several years ago, we were newlyweds working as full-time hospitalists. On paper, it looked like we had everything: the prestigious careers, the happy marriage, the luxurious rental home, the cars, etc.

But in reality? Despite having worked for several years, we had very little savings. Despite our high income, we had very little freedom in terms of time or money.

One thing was clear: we had to do something.

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