Accounting tips for real estate professionals
By Laura Spandrio
If you are in the real estate business—from selling homes to investing in various types of properties, or both—you will find there are specific challenges that must be addressed when doing your bookkeeping.
Two critical concepts in this industry are “leverage" and “the velocity of money.” Real estate offers exceptional wealth opportunities to leverage wealth, because there is so much low-cost financing available for real estate investors. As for velocity, by applying special techniques, it’s possible to keep your money constantly moving and growing through real estate investments.
Of course, the other key benefit to real estate investments is the tax benefits. Exploiting these fully requires the real estate professional to continually be on top their bookkeeping. You need to know precisely where you are today in order to make the right decisions, moves, or investments for tomorrow.
For lasting success, it’s essential that you regard your commission income and expenses (or your investments) as a serious business. This outlook will help you regard your investment activities as a true entrepreneurial enterprise.
The real story of real estate investment is one of personal wealth and your control of your financial growth. From setting up the correct type of entity, to proper bookkeeping, to maximizing your tax deductions, you must—at minimum—allocate time each week to update your financial picture.
- Keep proper corporate or business records. Hold necessary strategic meetings at least once per month with your personal advisors or team members.
- Keep bookkeeping tasks up-to-date to always know where you are today, so that you can make the right decisions at the right time.
- Review your financial picture and determine if you’re meeting your goals, how far you have to go to reach those goals, and what it will take to get there.
- Maximize your tax deductions in order to keep more of the velocity of money growing.
Real Estate carries unusual promise for wealth creation, and it has significant hazards and pitfalls. Consider using a professional accountant to learn how to maximize the extraordinary opportunities for building wealth through real estate investments.
Laura Spandrio, MBA, is the owner of Secure Accounting Solutions (www.secure-accounting.com), a full-service bookkeeping, accounting, and Quickbooks Consulting Firm in Northern Colorado. Laura has over 20 years accounting experience in the real estate, construction, manufacturing, and service industries. She holds a Bachelor’s degree in Accounting and a Masters of Business Administration degree from Colorado State University. In addition, she is a Robert Kiyosaki’s (Rich Dad, Poor Dad) Hall of Fame Inductee.