Learn how to Track your House Flipping Income when you sell your house flip or if you choose to hold your property long term and collect rental income.
The Project Budgeter is the main Accounting tool which you can use to manage your project budget and track your actual project expenses.
The Project Budgeter provides an overview of your Project Budget so you can see what you initially analyzed for the deal, manage your current budget, see how much you’ve spent to date and forecast budget overages and underages to calculate your profitability.
Let’s start with the first column in the Project Budgeter, the Analysis column.
The Analysis Column shows the values from your initial deal analysis performed using the Flip Analyzer tool. The analysis columns shows the Projected Resale Income for selling your flip and then deducts your expenses for your Purchase, Buying, Holding, Selling Expenses, as well as your Repair Expenses.
The Analysis Column provides a permanent reference point of the values that you initially calculated when analyzing your deal, which allows you to always go back and compare your initial analyzed values to your actual expenses once the project is complete.
The Analysis Column will help you understand which costs you underestimated or overestimated and hopefully help you analyze deals more accurately in the future.
Now, the Budgeted is column is used to setup your Actual Project Budget for the project. The Budgeted Column initially pre-populates with your Analysis Values, but then you can change those values in the Budgeted Column if your budget is going to defer from your initial analysis.
So you may be wondering why in the heck do we need both the Budgeted & Analysis Columns…?
Well, so again the analysis column can be used as reference to the values that you calculated in your initial deal analysis….but once you get a property under contract and actually have time to perform a detailed due diligence of all of the project costs and get bids from contractors, those values may be quite a bit different than your initial analysis...so the budgeted column gives you the opportunity to refine those values and input the actual values you will use as your project budget and repairs budget.
The next column is the To Date column which displays the amount of Expenses you have spent to date and the amount of Income you have received to date on the Project. The Expenses to Date feeds the Expenses from the Expense Tracker tab and are categorized based upon your Category selections in the Category column.
The Income to Date column feeds the Income generated to date from the Income Tracker tab.
The remaining columns, % Complete, Projected, & Variance columns are used to for forecasting for comparing your actual project expenses to date to your initial project budget so you can forecast your budget overages and calculate your profit.
The % complete column is used to forecast the Projected Final Costs for that Category, which is and used to calculate the variance between your budgeted costs and actual costs on the project.
Let's say you had an initial budget of $4,000 for roofing, but there was a change order and the roofing ended up costing $4,500. If you are completely done with the roofing work you will input 100% in the % complete column which will then forecast the projected overage of $500 in the variance column.
If you don’t fully understand the projected and forecasting calculations,don’t worry we will do a deep dive in a separate forecasting tutorial.