Frequently asked questions
Flips and rentals
How is real estate bookkeeping different from regular small business bookkeeping?
Real estate books are set up property by property and flip by flip. Rentals need income and expenses tracked for each property, loan principal split from interest, and depreciation. Flips hold their costs on the balance sheet until the sale, then move them to cost of goods sold. A standard small business setup isn't built for either, which is why every REVI file is set up around your flips and properties.
Does a flip get depreciated?
No. Depreciation applies to property held to produce income. A flip is held for sale, so it doesn't depreciate. That's the reason flip books and rental books look nothing alike.
Are rehab costs deductible when you pay them?
Generally no. On a property held for sale, materials, labor, permits, and carrying costs get added to the cost of the property rather than deducted as paid. They come back as cost of goods sold when it sells.
Why do flip costs sit on the balance sheet?
Because until it sells, the property is inventory. If those costs hit the profit and loss as they happened, every month before the sale would show a loss and the closing month would show a windfall that isn't real.
Does a 1031 exchange apply to a flip?
No. A 1031 applies to property held for investment or productive use. A flip is held for sale, which puts it outside the rules. 1031 exchange documentation is a landlord service.
What's the difference between bookkeeping for a flip and bookkeeping for a rental?
A rental produces income every month, so its books are a profit and loss with a depreciation schedule. A flip produces nothing until it sells, so costs build up on the balance sheet and release all at once at closing. Running flips through rental-style books misstates every month in between.
Does loan principal show up on a rental's profit and loss?
No, only the interest. Principal reduces the loan balance on the balance sheet. Splitting the payment wrong makes a property look less profitable than it is.
What's the difference between a repair and a capital improvement?
A repair keeps the property in working condition and is deducted in the year it happens. An improvement adds value or extends useful life and gets depreciated over time.
Do I need separate books for flips and rentals?
Separate tracking at minimum. The two are taxed differently, and mixing them makes it harder to apply the right treatment to each. How far to take the separation, tracking versus separate entities, is a question for your CPA.
Working with REVI
Who is monthly bookkeeping built for?
Flippers doing 2 or more flips a year, and landlords with 2 or more rentals. At that point there are enough transactions each month that the books stop being a once-a-year cleanup and start being something worth keeping current. With a single property, a spreadsheet and a good CPA at year end usually covers it.
When is the right time to bring in a bookkeeper?
Usually around the second or third property, or the second flip running at the same time. One property you can track by hand. What changes is the number of transactions: more accounts, more contractor payments, draws, closing statements, and a year-end pile that stops being something you can reconstruct from memory in April.
Why hand off bookkeeping for rental properties?
Every rental adds work each month. Rent, repairs, and loan payments all need to be recorded and reconciled, with principal kept apart from interest, so you can see what each property actually makes. Kept current, the books give you NOI by property all year and a year-end package your CPA can file from.
What's the difference between a bookkeeper and a CPA?
Different jobs, and most investors need both. Bookkeeping is the month-to-month work, recording transactions, reconciling accounts, tracking costs by property, and producing the reports. A CPA takes those reports at year end, applies tax law, and files the return. The cleaner the books are, the less there is for the CPA to reconstruct.
Do you work directly with my CPA?
Yes. At year end, we put together a clean package for your CPA: Schedule E prep and depreciation schedules for rentals, per-flip cost breakdowns for sold flips, and the documentation behind the numbers.
Do you file taxes?
No. REVI is bookkeeping. The books, the monthly reports, and the year-end package come from us. The return is filed by your CPA.
How does pricing work?
Flat monthly, no hourly billing, and no add-ons for reconciliation, 1099s, or year-end reporting. Monthly bookkeeping starts at $450. The exact number comes after a review of your QuickBooks file, since transaction volume and the state of the file are what drive it. Cleanup, if there's any, is quoted separately as a one-time project.
What software do you use?
QuickBooks Online. The setup is built around your flips and properties, which is what makes per-flip and property-level reporting possible. If you're on spreadsheets or another platform, moving over is part of the setup.
How do I get started?
Use Get in Touch on any page. You'll answer some questions about your portfolio, your setup, and what you need, then book a discovery call where we go through your books together.
This page describes general bookkeeping practice for landlords and house flippers and is educational rather than individualized advice. Treatment depends on your specific facts, so review your situation with your CPA before acting on any of it.