As a house flipper, you know time is money. And when you are in the midst of flipping a house, time is the most valuable asset you bring to your business.
Many tasks of running your business take valuable time away from your work of acquiring houses, making the improvements and getting the houses sold. Keeping your financial records probably is the biggest drain on your time and the one that gives you the most headaches. But it doesn't have to be that way if you pick up a few simple habits that can save time and ensure you are recording all of your expenses.
Record Expenses Immediately
If you are in the habit of shoving receipts in your glove box or console on your vehicle, then face the daunting task weeks or months later of trying to remember what that jibberish on the receipt means, you need to get in the habit of recording those receipts immediately.
There are several ways you can go about this, depending upon your acceptance or aversion to technology.
• Get an App: Many simple software programs are available for you to quickly record expenses and have them transferred to your office computer. Cloud-based software will easily allow you to record expenses and assign them to various projects. If you have multiple houses in the works and pick up supplies for several in the same stop, you can divide those expenses. You can even divide by percentages. Say you buy a case of drywall screws, you can assign 75% to one house and 25% to another. Some programs even allow you to shoot a photo of the receipt with your phone and its automatically enters the data, then you just assign the project.
• Spreadsheet on a Tablet: If you don't feel confident working with an entire accounting software package on your phone, you could have your accountant or bookkeeper set up a simple spreadsheet you can keep on a tablet. This allows you to quickly fill out the necessary fields, then sort them later by project, date, vendor, etc.
• Put It on Paper: I you'd rather skip all the technology, keep a ledger book in your vehicle and write everything down as quickly as you can. Immediately after a purchase or delivery would be ideal, but certainly no later than the end of each day. When you're busy, you can quickly forget what various expenditures might have been for.
Track Mileage Constantly
If you vehicle has a trip mileage counter, get in the habit of punching it every time you turn the ignition switch, then record what it tells you before you shut off the engine. Mileage is one of those hidden expenses that needs to go into your cost to give your house a true price. Again, you can record your mileage on that same app you put on your phone, into your tablet or in that ledger book, but make sure you assign that mileage to the proper project too.
Count Your Hours and Minutes
Just as you pay all the workers on your houses, you need to record your own time to ensure you are putting the proper time and cost into each project. Business owners often don't value their own time the way they should, then wonder why at the end of the year they seemed like they worked so hard and have nothing to show for it.
Your phone app, tablet spread sheet and/or ledger all can be set up with a way for you to record your own time and assign it to the proper project.
As a house flipper, you know your construction skills and home-buying prowess will pay you dividends, but handling your financial records is a headache that can be eased with a few regular habits. At Center Street Lending, we also like to take away your headaches on financing both your purchase and the rehab on your flips. Contact us today about our competitive rates on loans for your flipping business.
Center Street communications are not intended to provide business, legal, tax, investment or insurance advice. No Center Street communication should be construed as a recommendation for any business or investment strategy by Center Street or any third party. You are solely responsible for determining whether any investment, investment strategy, business strategy or related transaction is appropriate for you based on your personal investment objectives, financial circumstances and risk tolerance. You should consult your legal or tax professional regarding your specific situation.