Income Digs
"Income Diggs" is a podcast focusing on the use of technology to help real estate investors and bookkeepers expand and streamline their operations. The show provides insights into technological solutions for the real estate market.
QBO for Real Estate - Cash at Closing Does not Equal Profit
In this episode, Nick Baldo deep-dives into the difference between profit and cash at closing in real estate. He discusses factors affecting this equation, how to account for expenses and renovations, and recording property sales in QuickBooks. He also explores the significance of adjusting for financed deals, understanding balance sheets, and the implications of bank draws. Lastly, he emphasizes the importance of separating cash at closing from profit and introduces a Real Estate Accounting Boot Camp.
Key Points
- Profit on a real estate deal is not the same as the cash received at closing because profit reflects the entire project's financial outcome, while cash at closing is influenced by factors such as financing and out-of-pocket expenses.
- Whether purchasing with cash or financing, the amount spent on renovations, and construction escrow holdbacks are key factors that cause a discrepancy between cash at closing and actual profit in real estate transactions.
- The more expenses that are financed during a real estate project, the closer the cash at closing will align with the profit, as external financing reduces the amount paid out-of-pocket by the investor.
End to End QBO Training: www.incomedigs.com/reab Free QBO MiniCamp: https://bit.ly/3uNlesQ
Your cash at closing will almost never equal your profit on a deal. In this video, I break down exactly why this is the case!
Chapters
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| 1:16 | |
| 4:06 | |
| 6:29 | |
| 9:52 | |
| 14:41 | |
| 15:36 | |
| 16:30 | |
| 17:06 | |
| 18:53 | |
| 19:42 |
Transcript
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