Capitalized Archives

FLIPS and Rehabs

Question from Randy:

When I buy a house to rehab and flip, I enter the expenses of the rehab, Do I enter it as an repair expense?

I do a close out report and I am showing a Capitalized expense, I do not know how It got there. Help Please


ANSWER from Mike

I enter the expenses of the rehab "Improvements"

- NO, NO, NO - when you buy any property, everything and anything you do to or on this property...

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QUESTION: Hello Mike, I understand your reply of repair versus capital expense so my question must not have been clear... When I buy a house to resell that will need some repairs, these repairs are a capital expense as the property is not in "service". To properly see my cash flow in Investor Books PRO when I do a report, I put these fix up costs as an expense (initially).   I do this under "repairs and maintenance" The fix ups will eventually be transferred and re-characterized as a capital expense at a later date thus in the meantime allowing my cash flow report to provide useful information for me as an investor. My question is when do I transfer this to the asset? Thank you Mike, Hope that is more clearer-er Steve   ANSWER: Great Question Steve! This is probably one of those questions most investors are afraid to ask. For starters, as an investor and business owner

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