A number of people ask what the best method to use to track expenses during  a flip.  There are many methods, some good, some bad, and some downright ugly.

The following lists a few methods with the most complex at the top.

  1. Quickbooks
    Utilize Quickbooks, categorize every expenditure, create sales accounts, link credit card and bank account for spending. Provide your Quickbooks file to your accountant at tax time.
    Relative Degree of Difficulty: 10
    Cost: 6
    There is a learning curve to Quickbooks and if you want to do things properly, there will be a number of hours put in for the initial company, vendor, account, and category setups.  I peg the cost at a 6 out of 10 due to the cost of the software.  Done properly, your accountant will thank you.
  2. Hire a book keeper/accountant to do the work for you. 
    Schedule a regular meeting time during the renovation. At that time you can have receipts recorded properly by your bookkeeper while keeping your work on the project.
    Relative Degree of Difficulty: 1
    Cost: 9
    The level of difficulty on your end is minimal. Keep every receipt, provide it to your bookkeeper during your scheduled meetings, and provide fast answers when questions should arise.  You will certainly be paying a decent buck for this service, but you will probably sleep better at night knowing that you are prepared and up to date.
  3. Renovation Expense Recordkeeping

    Renovation Expense Recordkeeping

    Utilize our Renovation Record Keeping Spreadsheet (perfect for flippers).  Additional file formats are listed below.
    The linked spreadsheet will make your job easy and cost little.
    Relative Degree of Difficulty: 3
    Cost: 3
    This is the method that I have used for my last 5 projects.  The attached renovators spreadsheet is simple to use and just as simple to produce detailed accounts of spending (including categories).   This is a document (or file) that you can provide to your accountant so that they can determine if your categorization, and potential write off, is accurate.  To force the recording (feels like a burden when in the middle of a flip), I make it a habit to keep receipts that have yet to be recorded, in my wallet.  Spending 5 minutes entering receipts every 3 or 4 days clears things out and keeps you on track.
    The simple spreadsheet  format provides you with a view of your running total of expenses.  Take a look at the document above.  I include every expense including the purchase details so that I have a complete handle on my profit and expenses for a given project.

  4. Throw every receipt in a shoe box,  hope that there isn’t a fire, and hand it to your accountant at tax time.
    Relative Degree of Difficulty: 1
    Cost: 10
    You are what your accountant might refer to as “a total pain in the a**”. The shoe box client is more than likely also the last minute client. If you elect to employ this method to record (I should say NOT record) expenses during your flip expect your accountant to charge you a rate that some might equate to ‘hazard pay’.

The simple spreadsheet method (Item 3, above) is the perfect balance of difficulty and cost.  Both categories fall in a low range which make this an ideal solution.  In addition to the ease, and low cost, you can host your spreadsheet with a free service such as Google Docs.  This way, you can share access, edit while in the field, and be sure that a fire or computer crash doesn’t add many more headaches to your renovation project.  Google Docs is like an automatic backup.

I hope that these documents help other renovators or flippers out there.  It is very basic stuff, but the number of times this comes up made me realize it was worth an offering:

Feel free to contact us using the comment for below if you have any questions or problems. We would be happy to help.