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A lesson learned from my 1st house conversion to a rental property is to get organized now as I buy new house. I have realized I need to keep everything that affects the cost basis of the property in case I decide to sell it or convert it to a rental property.
I have put together a 3-ring binder for this property that will track all the expenses that could potentially affect the cost basis.
So far I have included:
-house contract (I don't think I need this, but seemed like a good place to put it)
-invoice from the home inspection
-Invoice from the pest inspection
-HVAC inspection invoice
-HUD statement
-survey (I found out this can be useful to measure size of landscaping such as driveways, fences, etc)
Anything that I do to the house that may adjust the cost basis will also be added:
These include capital improvements such as:
-bathroom/kitchen remodels
-new appliances,
-new roof
-additions
-landscaping
-shed
-new windows
-blinds
-new HVAC
Basically anything that MAY affect the basis (if I don't know I will add it just in case) will go into this notebook. Then when it comes time to convert or sell the property I have everything together in one spot to make it a less painful process.
Related in Rental Property:
Rental Property Investment Breakdown (Sep 27, 2011) Here is some overdue financial record keeping from our latest rental investment in August 2011. This breaks down all our out of pocket costs to purchase the property and get the 1st tenant in place. Out of Pocket Investment in...
Thoughts On Buying Another Property In This Environment (Aug 15, 2011) We recently put a contract on a property to serve as an expansion to our rental properties. We weren't looking to expand, but an opportunity popped up that was compelling enough for us to make an offer. As we have...
Put a Contract on Property #4 (Jul 29, 2011) I had no plans to expand our rentals, but market conditions have drove us to action. A property went up for sale in the same neighborhood (with nearly identical characteristics) as our 1st property that we currently have been renting...
Comments (6)
DATE: 8:01 AM
Very cool.. It is good to keep organzied... For I don't own any property but I do organize my tax information and receipts from book purchases and stuff like that...
Posted by pyroracing85 | September 10, 2006 3:17 PM
DATE: 9:06 AM
I actually have 2 books for each property. My attorney always prepares one for me about 60 days after closing, I receive it. Her book contains all the closing documents and receipts and it is beautifully sectioned. I being of the anal sort, also create books for the day to day major improvements that I make, leases, and all other pertinent info. So in the end, I have two books on each property. Mine, of course has to be upsized after i have a property for a decent amount of time. I think you will love this decision. I can't tell you how many times I refer back to these books.
Posted by D | September 10, 2006 3:17 PM
DATE: 1:14 PM
Great idea! I need a new way to organize things, as my folder is overflowing from receipts and invoices from my rental...-GrantTheCornerOfficeBlog.com
Posted by Grant | September 10, 2006 3:17 PM
DATE: 4:28 PM
2million, seems like you have done a lot of research on teh real estate market in Raleigh and the surrounding areas....I am moving fown to NC and would love to hear more about your thoughts on teh housing merket in Raleigh, Cary....
Posted by goindownsouth | September 10, 2006 3:17 PM
DATE: 10:13 AM
goingdownsouth,Not sure what your looking for - if you are completely unfamaliar with the Raleigh market I can tell you this, until recently (over last year), the overall market hadn't really been seeing a significant increase in prices over the last several years - maybe maybe 10%-15% in the last 3-4 yrs (depending on area) in my opinion. Things seemed to be starting to catch up, but I don't know if thats still true.Personally, if I were buying more real estate at the moment in the Raleigh/Cary area, I wouldn't be too worried of a steep decline in housing prices, the market seems very healthy.
Posted by 2million | September 10, 2006 3:17 PM
How do you value your personal time into the cost basis when doing projects yourself? I am an independant consultant and would love to make the case that my value of an hour is my billable. Is that valid?
Posted by YuppieMBA | August 13, 2008 1:43 PM