Ep. 34 | Rent Manager 101 Part 1 – Detailed Example of PandL

On this episode of The Mobile Home Park Lawyer, Ferd shows us how to use Rent Manager software. Ferd goes through some detailed examples of Profit and Loss sheets and explains each category within them.

HIGHLIGHTS:

0:00 – Intro 2:43 – First Ferd looks at financial statements. (Report > Financial Statements > Profit and Loss > Separate by Month > View Report) 4:13 – You can email these reports to yourself 4:45 – Ferd goes through the report and describes abnormalities to look for 10:35 – Ferd looks at park-owned homes, again looking at all the money incoming and outgoing 19:03 – Ferd shows a map of a park that shows the different home types 25:05 – Ferd shows a Unit Balance Sheet as he goes through the net Profit and Loss regarding a property that he sold 35:19 – Ferd continues onto another property as they try to work out an issue with the Balance Unit Sheet 40:00 – Once you’ve finished them, you can save them and consider them audited 41:55 – Ferd looks at the Balance Sheet to again check for inaccuracies

FULL TRANSCRIPTION:

Ferd Niemann: Welcome back mobile home park nation. Here today we have an actual on-the-job learning experience. I am training some of our new staff, how to use Rent Manager. So, I figured might as well record this, and you guys can learn to use Rent Manager as well. Every month we do bank reconciliations and then we do Profit and Loss reports, Balance Sheet, Trial Balance, Summary, Rent Roll, Maps, all that kind of stuff. I’m real involved in this process, but due to workload, I’ve hired a CFA. Who’s going to come in full-house, full-time and be my in-house financial guy and guru. But for today, I’m going to teach you guys some Rent Manager. Rent Manager, you’re looking at the home screen here and it’s got all kinds of tools. This is like QuickBooks on steroids. Today we’re mostly playing with the accounting, which is bank registers to get a bank register stuff. This is one of our projects. And then you’ve got all these reports. There’s a bazillion reports in this thing. Rent Manager is an amazing tool. I don’t get paid to say that. I pay them actually, maybe I should start taking sponsors, but we pay Rent Manager, it’s like $325 a month. That includes like two or three user accounts. Every time you add a new user account, it is a seventy-five bucks, there was an onboarding fee of like $2,000. They do a lot of important stuff. It’s not based on per units, like some of the other ones, like maybe Building, or maybe AppFolio, it’s just based on the fixed fee. And I’ve got a lady Kris that does a lot of entry for me. Kristen does a lot of the entry and some of the initial stuff. I’ve been doing bank recs and P and L’s and stuff, but I’m handing off some of that work. But today we’re going to look at one of our properties. I wanted to use this property peaceful homes in Belton, Missouri, because I did another video on that, on a kind of our infill project. So, we’ll focus on that one for today in the recording. So, there’s several people on the line who are all internal to my company. So, they may ask questions. The rest of you all are just going to have to listen to the recording. So, sorry, not sorry. So first we’ll start off with financial statements and I just, I’m going to talk out loud. I’m going to go Financial Statement, Profit and Loss. And I’m going to select, today we’re going to look at three properties. These are all related. Belton Homes, Belton Land and Belton Investors. I’m going to select the month October. I’m going to separate by properties and I’m going to, that way they don’t all show up at once. I won’t separate for a second. You’ll see how messy it is. It’s like, okay, you got three of them at once. They’re all jumbled. We’re not going to do that. So, we do Report, Financial Statement, Profit and Loss, Belton Homes, Belton Investors, Belton Land, Belton Investors is the parent company. That’s where my investors put in cash. And then the two wholly owned subsidiaries. The land owns land, the homes, those homes are pretty easy. So, Belton Investors has minimal transactions every month frankly, because it’s just a holding company. It does distributions to investors. Okay. So, October separate by properties, view report. We’ll go look at investors first because it’s easy. Investors had no money, no revenue and $25 of expenses. What are those expenses? We paid the first bankers trust fee for five times, ACH, because we sent out, sent out a hundred thousand distribution that’s a beyond the normal pref. So, the preface set up on a regular ACH. They don’t charge us for that. The hundred thousand dollars extra, we added, set up a one-time ACH for that amount. I say one time, hopefully it’s every month, right? So, we had to pay a fee pretty simple. So, what I do next, I just email this, send me email. This was done. There’s nothing to it. I put it in my email and then I’m right there. And I just call it the investors deal. Then later on, that’ll end up in part of an investment report. Like there we go, send email. When I moved my controls here, my little zoom controls are slowing the pace of progress. Okay. Now let’s get into something with some real meat. This is Belton Homes for the month period. So, I look at, what I do as part of my monthly dues, I look for abnormalities. So, I say, wait a second here, we got rental income. You know what? I’m going to switch to land because, so for you guys learning because land is easier. So, we don’t have journal entries for home transaction. We’ll do homes last. So, for land, so we got rental income, park has $29,000. If I drill down on that, it’ll show you exactly who paid and what got late fees, etc. I’m not going to do that right now because there’s some tenant names in there and stuff. So just for some more privacy. A credit for work services, somebody did some work for us that, you know. Lives on the park, so we just gave him a reduction in rent, water and sewer revenue. That’s the revenue we receive from billing back water sewer, which we saw me, or you’ll see down here and expenses. We have an expensive $9,097. So, it’s either we lost some for common area leaks, but really that’s probably just an overlap that we paid last month’s bill. You paint a rear, so the water bill changes from month to month. So, we probably paid right here last month, $9,097. But we brought in seven, eight, nine, six, we collect really close to a hundred percent of water sewer because we have leaks. We fixed them. And these are actually nice PAX water lines are five or six years old. So, we don’t really have any leaks at this park. So that’s the revenue. Resident prepays, this is kind of a Rent Manager nuance, this is kind of a pain. Basically, somebody pays in advance and where the rent is just allocated. Like if they’ve got a shed rent, a pet rent, a late fee, home rent, or in this case, land rent on Belton Land, Rent Manager had kind of is like a FIFO accounting first in, first out where they attach it to different charges. So, it looks like prepay, it’s probably not people actually be paying. It’s kind of at a minute’s note. Management fees, this is what puts my kids in private school, frankly. So, this is the best part that comes to the home team. My management fees on this deal I take, it’s a calculation APM, Augusta Property Management, that’s my management arm. It’s the gross rent. Now you can’t see the detail there. Here it is in the memo line. It’s the gross rent of 29993.16 times 5%. Basically, I get 5% management fees. Advertising this, normally we don’t have advertising. This must be, signage, banners, like, he must’ve ordered some road traffic signs. Okay, is that signage? I could call that signage. This is kind of subjective. Is that signage? Is that a land improvement? It’s not really the same as digital signage, but it’s, frankly it’s not that much of a difference or it didn’t matter that much where I put it on and stuff like that. So, I’m just going to leave it there. Landscaping and mowing. So, this stands out to me. This is a big expense for October, $659. I’m like what’s going on here. So, I look into it, Tyler. So, Tyler is one of our contractors. We allocate some of his time to miscellaneous repairs expense, depending on what he’s working on, which would be down here, it’s $5,109, which we don’t really have much on the land. I mean, the homes, that landscaping is probably attributable to him putting in driveways or mulch or something like that. That’s kind of an internal allocation based on his timecard, which we’re not going to get into today. Life insurance expense. So, this is a recourse note and the bank was a little worried. If I get hit by a bus, who’s going to stir the straw or be the straw that stirs the drink, if you will. So apparently, they thought that was me. So, I got a million-dollar life insurance policy that this partnership is LLC pays for to protect the bank. And that was a long condition. Okay. We got supplies expense minus 200. I don’t know why it’s minus. This guy, Eric, we painted this guy’s house. So, we already paid the supplies expense for paint and which we’re billing back over a couple of months. So good deal, Eric, on the good team. Electric, this is for the streetlights and we have an office. Garbage, just a monthly expense. And we have a garbage temporary expense, those are the roll off dumpsters, total utilities, office expenses. It’s just our internet bill, e-pay processing expenses. This is for Rent Manager, that has a e-pay system called Zago and Pay Lease, and we can charge fees. We will, that’ll actually be billed back to the tenant somewhere else in the, it’s baked into the rent. But it’s a different breakdown. Mortgage interest expense in this case is $3,002. So we have a net income, $215, $170 on page two, we have the gross income of $37 and change, expense at $12 and change NOI, net operating income is 24832, but then we take off the non-operating expense, which is the mortgage interest and that’s our net income. So, our NOI, if we were to sell this property, if this was the same every month, which is not obviously. $24,832, we take it times 12. The NOI for this property is roughly $297,000. If we’re to sell this at a seven cap, that means the property is worth 4.25 million. It’s not for sale, so don’t call me, but by the way, we bought this for $1.25 million 21 months ago, you think we’re doing a good job? Hey, shout out to Austin. Who’s on this call selling homes. All right, Austin you know, I told you, I remember you in my will, that was it right there. You just got a shout out on the MHP Lawyer Podcast. This is fun. Now we’re going to go to … You said I never give you anything. Austin is not for hire. He’s actually a convicted sex offender, drug dealer. He’s been bankrupt 10 times. I’m kidding, but don’t coach him from me. That’s why I’m not showing you his last name anyway. Now we’re going to, Belton Land, I would normally forward it on and say I’m done, but it could change based on Belton Homse. So, I’m not going to say I’m done with Belton Land. Belton Homes, this is where the magic happens guys. Not really, nobody likes park owned homes, but they’re necessarily part of the game. So, Park owned homes revenue, we have some rental homes. We have some homes that are in, you know, either a rent credit or other arrangements. Sometimes the contract for deed. Sometimes a lease, we don’t want to do lease to own actually, contract for deed. And I’ve got a whole podcast on the pros and cons of that. You got to be, if you do contribute, you can’t be super sure to like, not take advantage of tenants and follow all the rules and everything like that. So, we got pet fees, NSF fees for bad checks, late fees, credit for work services to the covered. I’m looking for, normally I am looking for stuff that’s odd. These are all normal. And I kind of have a good feel for what our revenue is and expenses. I know like our electric bill in the last one, I know what our electric bill is. Cause I look at it every month, if it was $800, I’d be like, what the heck? If it was $200, like I would get a deal it’s always around in the fours. Residents prepay, and miscellaneous income. Okay. This is going to be the confusing part of the deal here. Reimbursement income. That’s when people reimburse us for the property taxes or insurance that we would pay on their behalf on a contract for deed. So, it’s not really, it is income. We’re paying the expense down here, baked into liability insurance, building expense. I’m going to put a pin in this MH sale profit loss net of image basis. I’m going to put a pin in that till last, because that’s the confusing part. Insurance policy cancellation. We just got a big refund check. And what does it mean? Does it mean we could have an insurance. Yes, we are Cowboys. No, it means we sold some houses and we paid for the whole insurance. We paid $600 bucks insurance upfront and we sold the house. Two months later, we get a 10-month refund, and we use shelter insurance for this property. And sometimes they do it in batches. We don’t get the money till two months later. So, this is not one months of insurance. That’s when we got to check. Management fees, like I said, this is going for the home team. This number is bigger. So why is it bigger? Because this also includes, we have a full-time manager on this. This also includes the manager salary, which goes to me as the Augusta product manager as the managing company. And then I have W2 employees that work under that company. So, it comes into my company, but then I don’t make money on that, it goes out the door. But I also have 5% of gross revenue, which is profit, which covers, you know, the bookkeeping staff and things like that. Advertising. We almost don’t ever pay for advertising. Okay. The city, Andrea here, she asked me to give them a cheque for the mayor’s Christmas tree. So, this is illegal kickback. I’m just kidding. Mostly it’s actually just, I mean, we want to contribute to our community. So the mayor’s got some fundraisers and charity, Christmas, we paid a hundred bucks and rather than me paying it in my own pocket, this LLC is paying because that’s the LLC that wants to be in community, contribute to the community we are in. Landscaping, mowing. We’ve got minus. That just means we took back something or this payment was allocated. So, somebody paid us to mow their property. That’s what that was. Some people, sometimes we force Mow and that would be a fine, like a late fee. Some people say hey, my mother’s broke or I’m busy, can you mow? We don’t really like to do it, but we do it. Just make the park look nicer. Building expense, liability insurance expense, billing insurance, liable insurance, and miscellaneous repairs. This one is messy. So, I want to just look at it, $3,000 what do we got in there? Okay. We got some laborers here. I pay them out of Augusta property management to do labor miscellaneous labor, like home repairs and so on. So, we can pick on, look at this cheque here. Here’s what we did, reimbursing for certain cheques for these guys. LLC is paying Agusta property management. I do it through Agusta property management, because that’s the entity that has workers comp insurance and general liability insurance. So, all the laborers get paid out of my management company. But if my management company is benefiting, the Belton Investors or Belton Homes in this case, I want to be reimbursed. So, I break even. And then again, I get charged like 2% premium on work comp. So, at the end of the year, we get audited. You get like, you know, you get audited by the IRS like once every, maybe never. You can audit by your workers’ comp insurance company every year, everybody does. And they tell you if you paid enough premium, because you say I’m estimating, I’m going to have $250,000 of payroll. And it’s 50,000, bookkeeping, $200,000 labor and they give you a premium. In a year they want to make sure, if you spent $500,000 in payroll, they’re going to send you a premium adjustment of double. So, I then divvy that up pro rata based on the LLC that you could benefit in this case Belton Homes. And that’s easy to do because we give them 1099 to all these guys, so I know what the share was. So, we’ve got, make ready items. So, this is under miscellaneous. So, these are, this is the home Depot. So, these are supplies, but they’re not supplies like printer ink, like office supplies. And they’re not supplies inventory like this one storage shift, that’s categorized as equipment machinery. That’s probably about, that’s not going to show up in our profit loss. So essentially on a balance sheet. So, you’re not going to see that $2,100 in here, miscellaneous repairs, make ready that’s things like smoke detectors, blinds, light bulbs, all of that stuff. You got deck wood. And we allocate it to the unit, this unit that had leaked out, he had this much deck supplies and wood, and then all these other homes and so on. So, these, Kristen usually pre-allocate this for me, I’d like to see everything attached to a unit. So that goes into our balance sheet. I’m going to attach this to 179. Some of this is, it all works out in the end, so to speak. So, it’s not, I don’t know exactly which he uses this for, but I don’t have it naked or it’s going to make our dispositions of  individual homes inaccurate from an accounting standpoint. And I know 176, 181 are new homes. So, I know they had these supplies, already just allocated one 176, 179, so now I gotta do 181. I’m not going to allocate 144, because that was a home we sold, but that home was already in the park and it was already occupied. So, we didn’t really spend that much, obviously on make ready. So, I usually, I always drill down on 5109. At some point you start to memorize all these. 5,200, this is supplies. I typically review this one because sometimes stuff is miscoded, and it should be office supplies. So, these are all, these are payments, will be reimbursed from these guys. It is negative. I don’t remember what that was, to be honest. Let’s think about it. We made 150 for materials, Austin what did we pay for these units? Austin: Say it again. Ferd Niemann: Excuse me. Austin: What did we pay for… Ferd Niemann: For 124, 125, we’re being reimbursed 50 bucks a pop and it’s in this category. I feel like that’s… Kristen: It is going to be driveways. Ferd Niemann: Oh, okay. Got it. And we charged. Yeah. We charged for driveways a hundred dollars install for gravel. We put nice landscape tempers around them. We just try to break even. We don’t make any money. We probably lose a little money on that, but that’s what that was. Thanks Kristen. And then if we do concrete driveways, it’s like a thousand bucks to install and we just hired an outsource that to a pro, just cause it’s a mess to do it yourself. We had a couple of guys in the team that know how to do it, but it just ain’t worth it, frankly. Water, sewer expense. So, here’s how the homes work. So, we have a rental home and the rent’s $900 bucks, of the $900 bucks we have lot rent. So that’s down here, lot rent. So, we transfer in this case, there are drilled down here, transfer lot rent from it. Belton MHP homes development if we land 33 POH. So, we have 33 POH in this park and that’s a combination of contract for deed and MPOH. We actually have, Kristen, you just sent me that site map, didn’t you? Pull that site map here. I don’t think I saved it yet. Peaceful homes. You sent me this site map, right? Kristen: Yes. I sent you everyones. I can resend if you need. Ferd Niemann: Oh, it’s because you put them on the same email, I think. Send me the whitelisted site map. Here it is. I put them in APM because you sent them on the same email where normally if you send all a card, I’ll put it in the Peaceful Home SIM folder. Okay. So, here’s this part. Okay. Well it might be even removed the legend. You whitelisted the legend, even. So, I remember those, the purple or light purple are contract for deed, the pink is tenant owned homes. The green are rentals. So, I looked at it the other day. It’s like, cause we’re under 25%, which is huge for, we are going to do a big refinance with Fannie Freddie. The bright purple, these are homes that are in route or ordered. This is an adventure neveda. This is a true satisfaction. It’s a true satisfaction, adventure neveda. We’d like to mention adventure neveda, because they have a really nice planter box and hitch and elevation. So, you’ll notice those are strategically on the corners. And we got one over here too. And then I got one coming here at 112, it is under contract right now. So, this park is 93 spaces. It looks like we’re at 91 full we’re not, because the park coming soon, we’ve got five coming soon. So, we’re at about 86 and 93. I got to order this one from 114. We should be full first quarter, 2021 and then we are going to initiate our refinance. April one, our lot rent is 375, we are going to push it to 400. And then we’re going to refinance, market lot rent is over 500, by the way. So, we got a lot of room to grow and doing great work here for our residence. Okay. Where was I? Back to my little Zimmer here. Okay. Rent Manager. Here we go. So, we’ve transferred the money internally. So that’s 33. So sometimes I’ll just do the calculation to verify that Kristen and Chris did it correctly and it is 12,000 and they almost always do, $12,375. So that money is lot rent we’re paying from the left-hand of the right hand for factory bookkeeping. And then we do the same thing with the water. So, these tenants could individualize water invoice every month. And we capture that in the Belton Homes, and we transfer it over to land. And then we got to get some payroll processing, security patrol that you need to meet. We don’t really have security. That’s just the cameras. We bought security cameras for the office. So, I got to figure out security controls the best account. Over here under accounting, they have chartered accounts. This is your standard gap chart of accounts, well I added in all those checking accounts actually, because those are per each property. And I got some stuff with investors and all that. So, I’m going to go down to the expenses which are in the 4,000, expenses are 5,000 level. So, I’m going to look at some of these expenses here and see what’s better than security patrol. Cause it’s really not, it’s really more equipment, but it’s security related. So, it’s probably what Kristin or Chris classified it as such. It doesn’t really make a big Hill of beans. It’s the same money going out the door, I just try to be accurate as possible. You could argue those are telephone services. Software. We’ll probably keep them under security because that’s what they are for. Some of these we created, I had to add these. So, for example, all these like, bad debt was in there. Bad debt, defaulted loan bad debt, adjustment expenses, title transfer fee, government inspection fee, petty cash, HVAC repairs. We wouldn’t do each HVAC separate than the rest of the supplies. Cause I wanted to monitor it. Staging furniture, security patrol, mobile home tax, miscellaneous permit, mobile home transports. These are things that Rent Manager somehow doesn’t have. I don’t know how, there’s got to be other guys like me. We are frustrated with the generic line items. The big one is 5004, which we’ll get into here in a minute. And this is tracking the profitability or lack thereof on home sales. So, I don’t see it. I’m pretty sure it’s 5004. It must’ve been moved around. It was not in sequential order. Kristen: It is under income Ferd Niemann: Isn’t it 5004 though? We put it in there. That was the number, because at the time it was an expense, but it’s a classification. That makes sense. So, I’ll leave that as good, but that’s what I do every month. I drill down. So, the rest of you guys, listen, that’s how I drill down to watch these. I’m going to go to page two And NOI 12,000 interest. We have minimal interest. We have a line of credit with Hawthorn bank in Belton, Missouri. And they let us buy the homes. We sell the homes typically through 21st mortgage, but Hawthorn doesn’t want to finance the end buyer. They’ll finance me and they are the landlord on this too. So, they financed the park and they’ve seen that the, their LTV went from 20 to 30 in the last year or so. They’re pretty Mormon fuzzy. So, I asked them for a lot of credit because they’re cheaper than 21 mortgages on the acquisition side. So now we’re going to drill down to miscellaneous income 4999. There it is, 5004, I knew I was not crazy. I titled this MH, for mobile homes sale profits/loss in the mobile home basis. So, it says this month we made $8,760 on mobile homes. That’s probably not accurate because it includes, we’ll see that typically there’s things like down payments or things that are from, you know, if we get a down payment this month for a house coming in two months, it’s going to be, make it look like we’re artificially profitable today, but that’ll ultimately be worked out when we sell the home. So, this is where, I’ve gotten a lot of gray hair and it’s because of this. Net profit loss regarding 171. So that was the address, 171, John Johnson. It is not the real owner. We change this, because we knew we’re going to record this. And I’m not just saying that. Whose named John Johnson? Actually, it’s probably the most common name in America now that I think about it. Should have put Ferd Johnson, nobody would even believe it. Anyway, back to running programming, net proceeds at sale. So, we sold this house. We got a check from 21st mortgage for 12,503. And that may make you think it’s profit, but it’s not all profit. Here’s how we’re going to determine, so I’ll look at this. What do we have? Well, on the credit side, somewhere on the line. So, at sale disposition, what do we do? We get cash. Meaning we get the net proceeds and we also get rid of the Hawthorne line of credit. So, we pay off the OCL, underline of credit. That’s why it’s negative over here. So, we owed 39,000 on this home. And then when we give away, we give away the home, what do we have on the home? And we had the big number. This is our basis at purchase 39006, which is why it’s the same as … We borrowed money on the line of credit to buy the home. We paid for the rest of the stuff out of our checking account, which is why, except for this one, this one was on, that’s the profit. The rest we paid, sometimes we put the other stuff in the improvements on the line of credit, but we had a bunch of cash in the checking accounts that we didn’t do that, we just use our own cash because it’s really just, it’s easier. And when it’s all going to work itself out on the disposition date, you don’t hold these things very long, right? Selling houses several month. Okay, so we’re giving up our install. We paid 4950 to install our concrete. We paid 5,050 for the hudset concrete that’s two feet wide by two feet wide by three feet deep, which is the appropriate Frostline in Missouri. We transferred the skirting. We had 550 labor for the skirting on this double wide. This is a double wide, this is a 28 by 56, true thrill, which is a three-bedroom, two bath, pretty nice home. I actually like true. A lot of people bash tru and I say, have you bought them? I bought 30 of them this year. And they work out pretty well. They’re not the nicest home, but they’re a value play. You know, some people were supposed to drive a Ford Taurus. Some people were supposed to drive the Ford GT. Some people will drive the Ford Fiesta. So not everybody gets to have the GT, you know, or the Mercedes, if you will. And transfer to HVAC, this is not enough. This is 1,006 HVAC. That can’t be right. Because HVAC costs us like 2200 bucks. So that’s a red flag. We got our HVAC over here at $2,583. So, Kristen, what is this $1,006 for a transfer of HVAC? That’s not, that can’t be HVAC. Kristen: I will drill down on that right now, and I will look at that. Ferd Niemann: We will look at that in a second here. Well, here’s how we figure it out. We’ll jump over to, we go reports, financial statement. We do our balance sheet here in a minute, but our unit balance sheet, we’ll just do P and L today, so it doesn’t get too messy. I’m going to drop down to Belton Homes, unit 171. I’m going to run it as of today. And if it’s done correctly, we’re going to have zero. Boom! It’s done correctly. There’s no home, because we don’t have the home as a day. Cause we sold it back on 10/5. So now I’ve got to run my unit balance sheet. I’m going to run it on 10/4, and we should show, it should show us exactly what we have for that unit. And what do you know? We’ve got a mobile home zone. That’s a classification we made up 1,505. What did we own? That’s how much we had, that’s our cost. Okay. So, we had 39,000 at the line of credit. That was the acquisition. Our cost was 50,000 and change. And those are net cost actually, because we already had, we received the down payment in advance from John Johnson and we got our deck wood, our wiring for a mobile home install. Casey makes me go to concrete guys, home Depot. That would be some of the electric wire installed miscellaneous stuff. We don’t have a unit attached to this one. So, Kristen put a note in that. This is not a cheque debit on August six.  We paid labor 3550.67, That’s for, we do the electrical installments ourselves. So that gets pretty pricey, but it’s cheaper than hiring somebody from the union. We do the electric, it is 200-amp house. We run 60 feet underneath in conduit, digging in the ground, all that kind of stuff. Newcastle installed his home 4950, skirting. Kristen: That’s going to be our number. Ferd Niemann: That’s our number of skirting, 1066. And we found it. This is how we cross check guys, every deal every month. So that’s not the transfer of HVAC. That’s transfer of skirting materials. We also have skirting labor above that. And that’s, I know that’s the number cause if Brian charges this 550. So, I want to save this at the bottom, but I’m not going to close it because I’m still tooling around here. So, you can see this is where the errors can be found and I’m super paranoid about ever putting an error out the door. I used to have a boss and said, speed is important. Accuracy is imperative. If it’s a penny off, it’s not close. It’s wrong. So that’s how we run this shop. Skirting AC that’s right. 25A, that’s looks like a number I should see for AC. AC is pretty similar to like 2250 to 2,600. There’s a little bit of difference per home, based on the size of the tonnage. This is a big double. So, we probably got a three ton in here instead of a two and a half, manufacturer special tell us that. That’s the building the deck, that’s deck labor, rail supply. I don’t know what that is. It’s different skirting, we would have allocated that’s, I don’t know what that is oh, that’s for the steps probably, steps in the back of the house. And then we paid 8:00 PM, 150 for miscellaneous repair and installation. That should have been a reimbursement for cheque 1255 to Tyler. Okay, So very granular level accounting here. Which is why I’m hiring Logan. So, I don’t have to do this anymore among other reasons. Okay. And we can reflect the down payment of 64235. So, let’s drill out of the unit general ledger. Get back to our unit balance sheet, mobile homes zone. We had a line of credit. Okay, so we already fixed this problem on the 1066. Cause I knew that wasn’t the right HVAC, it was too cheap. Home Depot supplies, we allocated 455 on Home Depot supplies. It’s mostly conduit and electrical wiring. HD miscellaneous, that’s all the gravel, 2×4, wood, that’s generally deck wood, is what that big, 900 generally the deck. So, this would be a, this is a double, we totally put 10 x 10 wood decks on the doubles. 8 x 8 on the singles, bigger decks on premiere lost or corner lots or based on if the buyer wants it, in this case, we didn’t know who the buyer was. We just put in our, we budget our standard deck. Most homes we buy a spec, we then sell them once we’re up and running, the deck’s going to cost about a thousand. And wood nowadays a lot more with all the COVID fiasco, but for probably 1500. But then also we got to pay. We pay old Ben deck labor, which is built in here. We’ve got it under miscellaneous labor. Cause she did this for ease. But I know from the unit balance sheet that it was not 657 for the deck. Where’s my boy Ben. There he is, 450. I pay him 450 to do a 10 x 10. Cause I knew that wasn’t the right number. Okay. So back to journal 1005. Here’s the tough part. We recognized; we got a fixed asset when we received the down payment. So, we basically said hey look, we received cash. I don’t think it’s just supposed to be 1505 Kristin. I think it’s supposed to be checking because we received checking in there. You concur. We just tool around with this in place. So that’s that, that’s of checking there. And then… Kristen: Ferd the reason that is like that is we, it’s not going to be checking because we have already done a journal entry that reflected the deposit. Ferd Niemann: Okay. Well let’s see then, when Chris and I had this discussion every month on these, these are the concepts. She’s already done on this one. I’m going to show you guys at home where we did that. That makes sense. Here we go. There’s John’s wife, Kim. She brought the check in apparently and here we got the checking positive. What did we get that day? Yeah, we debit. We receive cash. We give up part of the home. We lost part of the home, you know, because we essentially gave away rights to the home in exchange to this, we had a loss of 1505 in the mobile home. We still actually own the home, but then it upon sale, we clean that up. We do this. We then, that’s why Kristen is right. This is 1505 on the debit. We then get the home back because we then recognize the down payment here as a credit in 5004 so that it evens out so that we properly can allocate our net profit, which is the Delta. So, in this case we also transfer it. We gave up, we’ve transferred the HVAC at sales. So, we paid for the HVAC earlier, if we get rid of it at sale. So, at the end of the movie, what do we have? We have zero house, but with zero house we’re going to get rid of the all the ancillary things like the deck, the skirting, all that. And we give it to old John and Kim. And then in return, we look at our net proceeds, which in this case was we had 12,000 and change. But that wasn’t profit because we’d already paid a lot of this in cash. So, we then allocate wherever the Delta is, and you have to get it right in Rent Manager here at the bottom, see these numbers, I’m going to save this. I’m going to try to change this and say my profit loss on this transaction, I’m going to try to say, it says 5568.05. So, 5568.05 is my number. If I changed that to 5,000 and I go to S and I go to save, well, it won’t let me. Look, it is all jacked up. It’s not balanced, we’re off. So, I have to, I have to get it right, but you can get it right, you know, by cheating, so to speak and put it in a wrong category. That’s not a good idea. And that’s pretty much how this one works. So, I’m going to get out a journal, that journal. I’m going to get out of 171. And I’m going to, I’m going to go back to my ledger and here’s some other down payments received. Last one we just referenced, so she was a step ahead of me. And then let’s look at journal 1032. This is Doug and Judy Johnson. They’re a family. And we’re going to go through the same machinations to figure out if this is accurate or not. Okay, what did we get? We got that proceeds of sale. We got cash. Why don’t we have two of these Kristin, we have two net proceeds of sale. We should have got that one cheque from 21st. That was not rhetorical. Kristen: We had two, it was two separate deposits into our account. It wasn’t just one. It was made in two separate. Ferd Niemann: I’m not sure why. Austin do you know why? Did they give us part of the money down payment? No, this is in closing. Austin: This is for, what are the numbers on it? Ferd Niemann: This is actually money we received from 21st. It’s 2,587 is one of them. And another is 4,994. It doesn’t make sense. Austin: I don’t know. I don’t remember getting, I would have to look at what the actual down payment was. Ferd Niemann: Yeah. And that’s 46,000. So, it’s roughly 46,000. The 4994, that would have been it. Because plus sales tax would be like 3,200. So, you’re at 49,000. So, this is the down payment. So that’s what this is. This is a down payment, I think, Kristen. So, let’s go run the unit balance sheet for 128. Let me see a day of this journal. We sold this home. Oh, we got ourselves an error. No, wait, It’s the eighth, you are okay.  That was dated 10/4 from the last one. I’m going to change it to 10/8.  Let’s just look and see if it’s right. Let’s do you know, 1031. It should be zero house because we no longer own the house on 1031. Cause we sold it on 10/8. The report, no house looking good. Okay. Now let’s go back to 10/7 to reflect the day before we sold the house to see if we got ourselves a house. We do, 29,000. So, we got checking and let’s see what’s in the checking, received a down payment, 4000 bucks, received a down payment. Did they pay a big down payment? 10,000 instead of 10%? Austin? I don’t remember them paying that. Austin: Which house is it? Ferd Niemann: 128. Austin: They did. Because they sold their house. Ferd Niemann: Okay. Well that’s rare. So normally the 10,000. Okay, so that makes sense. So, let’s look into our mobile home zone. This is stuff that we paid, okay received a thousand. Oh yeah, they put a thousand down to hold the house. That’s right. And then later they sold their cycle house, and they gave us 10,000 down to make their loan smaller with 21st Mortgage. Okay. That’s great. Now we happen to pick the complicated one here for our viewing audience. Austin: That one was stretched out over time. Yeah. Ferd Niemann: So, this is just coincidentally, like right about what 10% of their down payment is. That is what threw me off. There’s the down payment. So, on this one, we are doing the same thing. We recognize the down payment, debit, mobile home zone. We’re giving away. This is all profit at this point, at that point recognized 10,000. But then we get to the Delta here, 3105. And we back into that number. This is the true profit on that home. Starting with that, we back into that by adding up all the rest of this stuff, so if I make the zero it’s off, but what have I done? At closed, I got the net proceeds in the bank. I paid off my line of credit. Those are all debits. I got the down payment, I got down payment. I gave away the house and all the ornaments on the tree. So, what happened? I gave away, I credited, gave away more than I had. So, the Delta here is, let me just cancel that. So, it shows back up is 3,105. So that’s our net profit or loss, as you can see, I gave away more than I had, which means I lost. On this house, I lost $3,105. Well that ain’t no fun. How do I do that? Some of it could be, this is part of it. The concrete was high on this one because there must’ve been other concrete in the way. Which we can dig it up and throw away. Normally concrete is like 3,600 per single, there’s 4,075. That’s part of it. Deck wood, transfer of deck and miscellaneous make ready there. And it really, I think we just probably, we lost a little bit, sold for a little too cheap, to be honest. Part of that’s because we were advertising them at 46 and then once COVID happened, the manufacturers all start jacking up the prices because OSB plywood went from four bucks, a sheet to 17 bucks a foot. So, it has to be more expensive. And he said that they’re telling me as I watch my home sale profits go down. So anyway, that’s the unit balance sheet. That is the most complicated part in Rent Manager, on a unit balance. And then we do the balance sheet, those three. So, I’m going to consider those audited and done. We’ve already gone through the rest of them. So, Kristen, you can save these, and we’ll go from there. I’m just going to send them to me in the email and you can label them. And that was, excuse me, Homes, E-Homes help send that. And then we go to the land. I already sent to investors, nothing from our transactions that are impacted this. Actually, I’m going to scratch that. I’m going to refresh these, because some of those changes would not have been reflected on the main sheet that I just sent. I think they’ll email the right one, but just to make sure I always refresh it. This is going to be B homes. So, I don’t confuse the other email and then B land, email that. You can save them and export all these. You can export them. Probably getting too much into the weeds for today’s lesson. I’ll show you a couple more functionality. I’m not going to do the, I’m going to exit out of that. I want to do a balance sheet. You just saw the unit balance sheet. I’m going to do the balance sheet. I’m not going to do investors, because this got people’s names on it. Who are my investors, some of them may want to be nameless. So, we’ll just do Belton land-owned homes for the viewing, unless you guys all close your eyes. So, Belton Homes, here’s our checking, note receivable. Undeposited funds, pastored loan origination, investment into the land. I just look and see what’s missing or what’s inaccurate. Other receivables, equipment machinery, mobile homes zoned, improvements to land. That’ll be like our playground, line of credit. We got 10-year loans with the Hawthorn bank. There is a bunch of little transactions in here. Each one is a journal entry. This is a pain keeping them. We’ve got these homes on a fixed tenure, fully amortizing mortgages with local bank, again because it is cheaper than 21st mortgage. Lots cheaper. And then this is mobile home loans, with the line of credit that I mentioned that this date, we had 184,000 line of credit. That’s probably four homes outstanding. And then we got security deposits. That’s a big security deposit. What the heck is that? Oh, it’s for all the homes to, we’re looking at the homes, those investors, looking at oh, we’ve got a bunch of tenants. So, we’ve got a bunch of tenants, so we got a security deposit. We require a double; in Missouri you can do a double deposit. So, if you’re a renter from us, it is 900 bucks to rent. It’s going to cost you 2,700 to get in the door. So, we got a lot of deposits on hand. I’ve got due to Belton Land that was for initial journal entry upon purchase because we purchased the land and the homes. We allocated $244,000 and purchased two homes. And that’s basically owe-able, a note payable to the sister entity rather than transfer them at closing or co-mingled the funds, which you don’t ever do. Investor capital count. That’s pretty much it. I look for here, there’s nothing. Sometimes I’ll see an error where under the checking, it’ll say like APM or got some property management, which it shouldn’t be showing on this property. It is because when I entered the check, I did it incorrectly. Belton Land look through here, same jam, nothing out of the ordinary. Equipment machinery, real estate land, real estate improvements, real estate Goodwill, got a loan of 985. How do you like them apple? Let’s say this was worth like, 4.2 million, you know, 985. Pretty good work for the last, okay I’m right there. One minute. So, guys today’s episode is coming to an end because my wife has to leave, and she’s got a doctor’s appointment. I’m on kid duty. So, I think we covered most of what we needed to do. I’ll do another episode. We get into more detail, some other topics. I’m going to stop recording and unfortunately, no questions for you. For anybody else, bye now.