Real Estate Bookkeeping Tips Every Investor Needs to Scale Profitably

Jessica With Real Books (00:00)
Definitely, I would say between lending and again in real estate we get very creative a lot. So you might have private people you’re trying to get money from, right? Actual banks and institutions, you might do a lot of the the BRRRR methods where you’re buying something fixing it and then looking to refinance. So you’re talking to refinance lenders. ⁓ And yes, to have a nice income and expense breakdown where you can say, listen, we’ve been operating, we’re very confident in these numbers and it just puts a whole nother level of like professionalism, especially if you’re gonna try to show.

Cody Crabb (00:27)
Yeah.

Welcome back to the Real Estate Pros podcast. I’m Cody Crabb with Investor Fuel. And today I’m joined by Jessica Villanova, owner of Real Books Bookkeeping out of Central Florida. Jessica works directly with real estate investors and helps them get control of their numbers so they can actually scale with confidence, along with landlords and wholesalers and flippers. But what’s really interesting about Jessica is she’s not just on the bookkeeping side. She’s also an investor herself and has been for a while. So we’re going to get to both sides of it today.

what investors think they’re doing with their money, what the numbers actually say, and why you shouldn’t be scared to look at your books. We were talking a little before this and I was admitting I have absolutely been guilty of that whole like, if I don’t look at my bank account, I can pretend it’s fine kind of thing. ⁓ And she assured me that is not a phenomenon that only happens to me. Is that right, Jessica?

Jessica With Real Books (02:50)
It is not. And thank you, Cody, first of all, for the invite. It’s very exciting to be here. ⁓ But yes, I would say that is not a real estate specific problem at all. I would say most people ⁓ like not looking at the numbers and just kind of floating through things and hoping it’ll all come out on the back end, which sometimes works, sometimes might not.

Cody Crabb (02:53)
Of course, yeah.

Well,

clearly there’s a lot of need for what you do, clearly. So speaking of what you do, I would love to get a little bit of like a ⁓ background, origin story. How did you get into real estate in the first place? How did you get into investing and how did you get into bookkeeping specifically? Because it seems like a little bit of a zigzag going on there and I’d love to know where that started.

Jessica With Real Books (03:31)
Definitely. yes, real estate in general, I got in about 15, 16 years ago now. Kind of cliche. I read the Rich Dad Poor Dad book and kind of got hooked on that whole concept. know. ⁓

Cody Crabb (03:45)
It’s either, it’s either, this is what I always hear, it’s one of

three things. I read Rich Dad Poor Dad and I wanted to do it. I listened to Bigger Pockets and I was like I need to do it. Or the third one is usually I Googled how did rich people get their money. And it’s one of those three, or all of them, yeah. So very, yeah.

Jessica With Real Books (03:54)
Mm-hmm.

Haha.

Fair enough. I’d also

see sometimes you get the accidental people who are like, inherited this property and I had no idea what to do with it. And then I just got addicted. ⁓ Yeah, well, I did get kind of addicted once I read the book. ⁓ Ironically, I actually went to the same college that Robert Kiyosaki did. So was like, OK, this is kind of fun. ⁓ I don’t know, started with long term rentals myself ⁓ and started growing with those. ⁓ Then got in.

Cody Crabb (04:07)
Yeah, might as well. Yeah.

that’s funny.

Anything specific that

drew you to the long term world?

Jessica With Real Books (04:30)
⁓ I just really liked the stability of it. I was kind of a chicken when I started and I was like, okay, if I see something that is making money and I can see it already doing it, nothing too major to fix or, you know, these major remodels where you have like bones of a house and you have to go in there and do everything. So yeah, I definitely started like toe in water, kind of chickeny on the side from my, you know, job at the time. ⁓ but really liked it. You know, I started with a couple of multifamily.

Cody Crabb (04:42)
Fair, yeah, no one’s gonna fault you for that,

Jessica With Real Books (05:00)
Purchased a couple more, kind of rolled a little bit from there. At one point I got into, you know, flips, rehabs, did those for a few years. I really liked that aspect of it as well. And then did a couple short-term rentals and then kind of cycled back into the long-term rentals.

Cody Crabb (05:16)
too scary. Yeah, ⁓ I like when people kind of, you do a few things and you’re like, no, this was the right choice. I should do the thing. Yeah. Okay, so that gets us into kind of the real estate part, right? But now you went from real estate to bookkeeping, with bookkeeping in real estate, and I’m kind of, you know, what…

Jessica With Real Books (05:25)
Hahaha

Right.

Cody Crabb (05:41)
At what point made you start noticing like investors are not dialed in where they need to be or like people are not aware of the books how they need to be? I’m assuming this is just a strength of yours in real estate.

Jessica With Real Books (05:52)
Well,

ironically, I first got through all of those thoughts because I sat there and I said, I do not have good bookkeeping and I do not have all of my things together. ⁓ yeah, I have made all the mistakes and gone through all of it.

Cody Crabb (06:02)
⁓ wow!

Jessica With Real Books (06:54)
And in my journey when I was, I’ve hired several bookkeepers, you know, while I was running the rentals, while I was running the flips. ⁓

never someone who had also been in real estate or was really like in that niche and just really didn’t find that I was getting what I wanted or really needed from them. You know, a lot of people think bookkeeping and they’re like, yeah, when it’s tax time, I’ll get a bookkeeper and they’ll just put all my receipts out of the shoe box and, you know, put it all on an Excel spreadsheet and we’re done and we’re good to go. ⁓ But there is a lot more to it. And, you know, especially on the real estate investment side, we are all about, obviously, profits, making money.

⁓ But also with multiple assets, you might be comparing different types of properties. Even if you’re just doing multiple long-term rentals or multiple flips, while you’re in the thick of it, it’s really hard to see how each property is doing and what’s going on because you’re running around chasing contractors or looking for your next deal. So you’re really not focusing on those things. Yes.

Cody Crabb (07:31)
That’s the whole point, yeah.

Yeah. Yeah, it’s easy to get lost in the day to day and not kind of follow up on these like,

but is this actually working or not? Yeah, I see what you mean.

Jessica With Real Books (07:59)
Yeah.

So those are the things you want

to see and I felt like I was really not getting that feedback and I didn’t really have the time to do it full time myself because I was doing that same thing, know, chasing deals and talking to sellers and talking to other investors and trying to expand and grow. So, you know, if you’re trying to scale and grow, it’s hard to also focus on those things that are easy to say, you know, in January, February, March, I’ll look at all of that and it’ll be fine. And, you know, it’s just not the best way to do things.

Cody Crabb (08:26)
Hopefully. Yeah,

I’m literally sitting here like, man, I really need to start my taxes. I’m so guilty of that. ⁓ If it’s not your forte, well, that actually leads me nicely into, that’s not your strength, you have two options. Well, you three options. One is to fail. Then the other two options are learn how to do it yourself, which is what you did.

Jessica With Real Books (08:34)
Yeah

Yes.

Cody Crabb (08:52)
or find someone that learned how to do it themselves or that’s their specialty. So ⁓ let’s talk about kind of who you’re typically working with and when do people usually realize like, maybe I can’t do this by myself. I probably need some help with this.

Jessica With Real Books (09:06)
Fair enough, yes. So most eyes specifically stay in the real estate realm.

So working with real estate investors, flippers, landlords, ⁓ smaller property managers, even realtors, really anybody who’s in the real estate space. ⁓ And most of the time, unfortunately, when people realize that they need some assistance is either after they’ve kind of gone a couple of years it usually ends up being where they realize that their books either aren’t together or again, it’s tax time and they’re trying to get everything piled together and they’re like, okay.

This is not happening, not working. You know, I talked to a lot of people in January who are really gung-ho about getting all of their things together and then by this time, March, April, May, you know, it comes to realization again. Yeah. And it’s hard though because you’re focusing on all the things you do and you’re like, you know, that’s such a trivial thing and I don’t like dealing with it, so I just won’t. And that’s what most people feel, you know, at the end of the day.

Cody Crabb (09:43)
You

I feel a little called out here, but yeah, fair enough. Yeah, fair enough. Yeah. Yeah. My, yeah.

Yeah. Well, and that right

there is the perfect time to start a business around something because people are so frustrated by it that they’re like, just please get this off my plate. Like I’ll do anything. Yeah.

Jessica With Real Books (10:10)
you

Yeah, well like I said, I’ve been there too. So I mean

at the end of the day it’s really…

It’s not right for everyone to outsource bookkeeping. I’ll definitely say that, know, especially if you’re really only doing a couple of small properties and or you’re just doing it on the side of your main job and you’re not really ready to grow a lot. But you know, if you’re an investor that’s looking to scale and really looking to expand, then I’d say that’s the time to really look at outsourcing the bookkeeping because even as you are looking at maybe taking partners on, you know, it’s really nice to be able to show them, hey, these are our profitability is on these other.

properties, this is how I operate, you know, even when you’re applying for loans, you know, you can use reports and things from bookkeeping that kind of give you a little bit of an extra edge looking a little more professional getting into things. ⁓ And then just for yourself, you know, if you’re looking at properties, you’re trying to expand and maybe you haven’t been looking at the properties you’re actually operating because you’re so busy in the day to day that you don’t even realize, you know what, I shouldn’t even have this one, like we should sell this one or I should be using the funds from this one for something else or hey, this

one’s doing really great if that model is working really well like let’s focus on that and let’s ditch the whatever else it is long-term rental short-term rentals or you know it’s hard to look at your business as an overall when you can’t see it from an overall.

Cody Crabb (12:10)
I totally get what you mean there. So this is actually, again, good transition. If someone is getting to the point where they’re like, I should probably start outsourcing this, what are some signs that you might start to see that are like, just they’re creeping in, like early warning signals?

Jessica With Real Books (12:30)
⁓ well, guess from being the owner yourself, ⁓ you would see things like…

and I know because again I’ve been there, where even when you try to, I’ll start here. Most people when they’re doing bookkeeping, they’re tracking something in Excel, right? Or even if they’re using a software, you know, they’re just doing the basic, the information goes in there, but then you have to actually go in there and put things in all the right buckets and kind of space things out. So it’s a lot of interaction of yourself, right, to do the bookkeeping. So ⁓ you kind of start to see those things back up where when you’re going in there, you know, maybe you’re not putting in

a week’s worth of data anymore, you start to feel yourself drifting to where it’s hey, a month at a time or maybe two months at a time and then you’re looking at receipts and you’re kind of saying, I don’t even remember what this one was for, we’ll just kind of skip that one for now and you know, where you…

feel it slipping, I mean, honestly, is what you would kind of see from the owner operator side. Or again, if you’re looking at, if you’re just looking at your checking accounts each month, even if you have business banking accounts, whoever you’re set up, and you’re seeing the deposits come in, either from the tenants or your property managers, or wherever you’re set up, but you really can’t look at them and explain them to yourself, where you’re like, okay, see 5,000 came in this month, 10,000 came in last month, I see 1,000,

Cody Crabb (13:27)
Yeah.

Jessica With Real Books (13:53)
slated for next month. I’m not exactly sure what’s going on, but I have other things to focus on. So as long as money’s going in there, it’s fine. And then, you know, you’re really not happy when you’re seeing that you don’t have an understanding of how the money flow’s actually going. I would say it’s a good one also.

Cody Crabb (14:09)
Yeah.

Yeah, think

is it like what is time like the first the first thing like I even if you’re even if you’re good at it I imagine that like time is a big factor like if you might not just not have time to do it It’s a time-consuming thing to go through someone’s books. So

Jessica With Real Books (14:25)
It is, and again.

As most real estate investors know, there’s lots of things we end up outsourcing, right? Maybe when you’re starting, you’re doing your own marketing, you’re doing your own tax return, you’re doing your own bookkeeping, you’re the one driving around looking for properties. But if you’re really focused on expanding, you realize you can’t do all of those things. And it just makes sense to outsource. And something like bookkeeping, unfortunately, as an owner-operator, it’s really not a huge value add unless you

Cody Crabb (14:45)
There’s only one of you. Yeah.

Jessica With Real Books (14:57)
really know how to get to that last point of putting all the data together to analyze it, right? So you have to do this task and it’s not like you make more money from doing it yourself. But when you start to outsource, then you can do a whole other deal that month because you’re not spending the time on doing the bookkeeping. And then the next month you can do another extra deal or two. And that’s where you really start to see that those activities are really what you should be focusing on as the

Cody Crabb (15:00)
Hmm.

Jessica With Real Books (15:27)
business owner, not the things that are, I would say, easier to outsource and still get, you know, a lot of good information out of from not doing it yourself.

Cody Crabb (15:39)
Yeah, cool, yeah, I think hearing this is all really helpful for someone that probably has been thought about. If you are the kind of person that is about ready to do it, to outsource it, or to think about outsourcing it, this is something that’s been on your mind probably. Like you’ve thought, man, I don’t know if I can handle this type stuff. So hearing these things is probably very validating to be like, okay, yeah, I was right, I should. ⁓

Jessica With Real Books (16:04)
Yeah, and again,

I’ve been there, you even

gosh, the first flip I did, I sat at the house every day. was babysitting contractors. I literally was writing out every cent that came in and out. And it was the quickest flip I did and it was profitable. But at the end of the day, I could look back and say, OK, it’s literally impossible for me to do this on every property that I do. And instead of me sitting there, I could have been doing marketing for my next deal or I could have found the next property while I was waiting for this one to get worked on and finished.

Cody Crabb (16:30)
Yeah.

Yeah, okay. So like what once you’ve cleaned up your books like what what does that change like what does that unlock for you being able to have Clean books because it’s not like you said it wasn’t a huge it’s not a huge value add that you can do yourself But like i’m curious. What are the what are the value adds once you do that?

Jessica With Real Books (17:34)
Sure. Well, number one, just having the data clean ⁓ kind of helps not miss things, right? Because like I said, you might be trying to clean up a year of your own data. And do you remember which Home Depot receipts or business lunches you went out to a year ago? Probably not. So yes. So when you’re always moving into it. you know, preventing missing data or, you know, any ⁓

Cody Crabb (17:51)
Yeah, much less real estate where it’s like constant. So yeah, I know what you mean.

Jessica With Real Books (18:03)
anything from not being included in there. ⁓

From an overview, it’s a lot easier to see things that you might literally just be missing. So if you’re looking at your bookkeeping monthly, it’s all cleaned up, you’re getting a nice report, and you can start to look at it and say, listen, somehow we’re spending this extra five, $10,000 on, I don’t know, utility services, or this one specific type of marketing, and we haven’t gotten a deal from this marketing in two years, so why are we still paying for this marketing?

And because you don’t realize those things, right? It’s like when they advertise for the hey, we’ll clean up all of your unwanted subscriptions and then you start to do it and you’re like, holy cow, I’ve been paying for like this movie subscription that I haven’t touched in 15 years.

Cody Crabb (18:42)
Yeah.

Yeah,

I didn’t even know that was still around. exactly. Blockbuster membership fees. What is that? Yeah.

Jessica With Real Books (18:52)
Yeah, so the same

thing happens in business and if you’re not looking at it, you don’t really see it, right? Because that just doesn’t work that way. ⁓ So that’s a big one too. And on the same side, potential is for profit on a certain side, right? So you might again not really be breaking down the incomes that you’re getting from a property, but then if you really see it all on paper for a few months over time or like a comparative year, you can say, listen, these two rental properties, we added laundry units.

Cody Crabb (18:59)
Yeah, for sure.

Jessica With Real Books (19:22)
and it ended up increasing our profit by 15, 20%. So let’s do that for the rest of our properties. that’s something that you can look at and see and it really, we love numbers, right? We’re investors. That’s what everything comes from at the end of the day. That’s how we justify everything to all the people who told us we were crazy to get into real estate.

Cody Crabb (19:41)
Totally, ⁓ Well, yeah, exactly. You can just

show them the receipts, literally show them the receipts. So what is it that, ⁓ this is just me kind of saying, I imagine this. ⁓ Does this also help on the back end when you’ve got some, you can clearly show really nice books to banks and stuff? I would imagine that when you’re kind of trying to get more funding and people are much more receptive to like,

Jessica With Real Books (19:47)
Yes.

Cody Crabb (20:10)
Here’s everything, I can lay out everything for you, here you go. And they’re more willing to, is that the case? Again, this is just me thinking probably, but.

Jessica With Real Books (20:17)
⁓ yeah.

Definitely, I would say between lending and again in real estate we get very creative a lot. So you might have private people you’re trying to get money from, right? Actual banks and institutions, you might do a lot of the the BRRRR methods where you’re buying something fixing it and then looking to refinance. So you’re talking to refinance lenders. ⁓ And yes, to have a nice income and expense breakdown where you can say, listen, we’ve been operating, we’re very confident in these numbers and it just puts a whole nother level of like professionalism, especially if you’re gonna try to show.

Cody Crabb (20:46)
Yeah.

Jessica With Real Books (20:48)
private investor that you’re gonna give them a percentage back and they’re like well how do I know you’re even gonna make money and you can say well here I can show you that we’ve been making this we’ll be splitting these profits with you you know that’s a really positive light on things for sure and it just helps you evaluate when you’re looking to buy another property

so you can look at the numbers as well. It definitely makes a whole nother level of many deals are completed on the napkin math and handshakes at a bar, but these days a lot of people like to the numbers.

Cody Crabb (21:15)
Yeah.

Well, yeah, I mean, kind of sounds like would ⁓ hiring a bookkeeper can absolutely pay for itself because you’re you’re literally kind of creating visibility into stuff that like you’re probably going to end up not paying for stuff that you currently pay for and you’re going to be taking better deals and making better, you know, doing things to adjust. it’s it sounds like it’s totally going to pay for itself. ⁓ So ⁓ this is this is awesome. So one last question for you as we wrap up here, if someone wants to if someone is wanting to

find a bookkeeper or ⁓ someone to help them or whatever. ⁓ Question one, can they work with you? Do they have to live in a certain place or something like that? And question two is, if they can’t work with you, what makes a good bookkeeper? What should they look for when they’re trying to find one?

Jessica With Real Books (22:13)
Fair enough. real books work completely remotely. So, they do not have to be in Florida. I would say within the United States is what we focus with. But yes, does not have to be local to Florida, if you are all the merrier. And at the end of the day, I would say number one when you’re looking for a bookkeeper, referrals are always the best kind of option because if you have someone who’s happy with their bookkeeper, I think that holds a lot more

Cody Crabb (22:19)
awesome.

Mmm.

Jessica With Real Books (22:43)
than just Googling and trying to find something. ⁓ We always offer free consultations, so I like to speak to all of potential clients and really get a good understanding, make sure we’re on the same page, because it is, at the end of the day, a relationship. It shouldn’t be a complete set and forget. You should be talking to your bookkeeper at least once a month, if not a little bit more, ⁓ so there is still some involvement. So you kind of want that personal level of things.

Cody Crabb (23:06)
For sure, yeah.

Jessica With Real Books (23:13)
⁓ And one thing I would say is not that it’s a horrible thing, but a lot of people use their accountant also as their bookkeeper and again, not the worst thing definitely, you know, they have a lot of financial knowledge, but ⁓ Some days I’d say maybe that’s trying to use like your Mortgage lender as your insurance guy. It’s like, you know what? Maybe just keep some separation because your mortgage guys are really good at mortgages and your insurance guys really good insurance and if they’re doing both, you know now that

Cody Crabb (23:35)
You could.

Jessica With Real Books (23:43)
dropping the ball, but it’s good to keep separation, right? Because your tax professional has, I don’t do taxes, but your tax professional has really good knowledge of tax codes, tax advice, all those key areas. So let them do that and you should have a separate bookkeeper that’s focusing on all of your day-to-day and the in the weeds.

Cody Crabb (23:46)
Yeah.

Yeah, for

sure. Okay, so if you feel as called out as I did by today’s episode, we’re talking to you, you should probably look into this. ⁓ And also, if you’re not gonna hire somebody, just try to get on top of it. Like you said, there’s a big return if you really know how these things are working. So if someone wants to find you online, how can they do that?

Jessica With Real Books (24:11)
Thank

We do have a website. It’s at realbooksbookkeeping.com. ⁓ And I should be putting up there shortly kind of a basic ⁓ template for people who are doing their own bookkeeping and aren’t at that point to hire out. So I’ll be putting that down that’s downloadable and maybe I’ll shoot you a message when that’s actually available because we’re working on that now.

Cody Crabb (24:48)
Cool, yeah, we can add that to the notes and

things, yeah.

Jessica With Real Books (24:51)
Yeah, just because again, some people aren’t at that point and at least you should be making sure it’s getting done even if you are doing yourself at this point, right? But yes, available there. We are on Facebook at Real Books Bookkeeping, on Instagram at Real Books Bookkeeping. ⁓ And again, always free consultations, you know, available just at least to talk through what your business setup is, how your entities are structured, you know, and what you’re looking for, especially if you’re looking to grow and expand.

Cody Crabb (24:59)
Totally, yeah.

Awesome. Thank you so much for joining us today. I love episodes like this because it really gets people thinking. It’s not just like another investor saying what they’ve done. This is like great advice. think. Thanks so much for sharing this with us. And thank you all of you for listening today. If you learned something or like I said, you feel a little called out, go ahead and subscribe to the channel, like the video, comment, do all the things and make sure that you are subscribed to see the next.

episode where we talk to more awesome people like Jessica. Jessica, thanks so much again for joining us today.

Jessica With Real Books (25:52)
Thank you, Cody and all of Investor Fuel. I appreciate it.

Cody Crabb (25:55)
We’ll see you next time.