Evolving Paths in Real Estate

In this episode of The Real Estate Game Changers, Mike McKay dives into Nelisa’s inspiring leap from teaching to mastering real estate. Discover her strategies for bookkeeping, property flipping, and rental management, plus practical tips on avoiding financial pitfalls. Whether you're new or experienced, learn how tools like QuickBooks and Stessa, along with virtual assistants and consulting services, can transform your real estate game.

Episode Transcript

Mike (00:00):
All right, everyone, welcome to the Real Estate Game

(00:02):
Changers show.
I'm your host, Mike McKay, basedin Jacksonville, Florida, and
each and every week we do thisshow with people who are
changing the game of real estateall over the country.
If anyone is in the Jacksonvillemarket and you're working in
sales and thinking about gettinginto real estate, uh, we are
looking for more sales reps,acquisitions reps for our team.

(00:22):
So shoot me a DM on Instagram ifthat sounds like you.
And this week on the show wehave Nelisa Lee, Nelisa.
Welcome to the show.

Nelisa (00:30):
Hey, thanks for having me.

Mike (00:33):
Yeah, definitely.
So, obviously we know each otherwell and I know.
A lot about your journey, but Ithink for today, I want to start
out with a little bit of adifferent question.
Since your journey kind of comesfull circle, which is what were
you doing before you got intoreal estate?

Nelisa (00:51):
Yeah, I know.
So, before I got into realestate I actually started as a
preschool teacher.
So, fresh out of college, I hada family and child sciences
degree.
I loved teaching everythingabout it.
So, But what I found was that Ididn't love the aspects of

(01:13):
teaching that had to do withworking with the business owners
and me wanting to implementcertain processes in the
preschool.
And so I, uh, I didn't love thatpart of teaching.
So I actually ended up goingback to school to get a business
degree so that I could learn torun my own preschool.

(01:33):
That was the original goal.
I was like, I want to be abusiness owner.
I want to be the one makingdecisions and I want to be
teaching.
So went back to school forbusiness.
Ended up kind of falling intoaccounting and realized actually
really enjoyed the accountingpiece of business.
So kind of continued on thatpath getting my CPA.

(01:56):
I ended up starting in publicaccounting.
I started learning about howbusinesses operate seeing
businesses more holistically.
And I really did love that aswell.
But what I found with that wasthat there were super long
hours, challenging workschedules.
I was experiencing burnout.

(02:19):
And so during that time, it wasactually my husband who was
really interested in real estateand he had been learning,
listening to podcasts just kindof following the market, seeing
what was going on.
And he recommended that Ilistened to a podcast.
And so this podcast episode wasliterally about a teacher who

(02:41):
ended up getting into realestate investing.
So, of course, that storyresonated with me.
And so, I was like, let's dothis thing.
Like, I'm in.
Like, I don't know what we needto do, but I want to do this.
And so, also during that time, Istarted jumping around to
different accounting jobs.
that the grass would be greener,you know, somewhere else.

(03:03):
At the end of the day, I just, Iknew I wanted to be my own
business owner and I knew that,you know, That wasn't the route
for me.
So, then it kind of led to usgetting into the networking
scene and talking to otherpeople in the industry and
learning that there was like amillion different things you
could do in the real estateindustry.

(03:24):
So we were like, okay, all ofthese people are like making
careers out of this.
Like we're, you know, two CPAs,we can figure this out.
So, We kind of just decided togo all in didn't necessarily
have a plan as most people wouldthink that was the opposite.
We kind of just jumped out of aplane without a parachute and

(03:45):
we're like, we'll figure this onthe way down.
Like we just both had faith andtrusted and kind of gave
ourselves like no option but tofigure it out.
And so, then, you know, startedgoing full fledge ahead, got
lots of experience withwholesaling, flipping, buying
rental properties and so, yeah,that's, uh, that's kind of the

(04:10):
lead up to, you know, enteringthe real estate space, so.

Mike (04:13):
You guys got into it.
Were you, what were youoriginally thinking of, like,
focusing on when you got intothe real estate?

Nelisa (04:21):
so originally we thought we would maybe flip, like, I
don't know, a few houses a year.
It would be a very, you know,small, like, just me and him
kind of going out to theproperty and almost like HGTV
style, uh, you know, what yousee on TV.
And what we realized is that, Imean, I personally don't, Love

(04:43):
certain aspects of flipping likeI'm not the person who's like an
interior designer who wants topick out colors or like You
know, I'm not the one who'sExcited for you know what this
looks like before and what thislooks like after I'm more of the
behind the scenes like I like tosee what the books look like
before and after and you know,structuring different

(05:05):
partnerships and how you recordthose different types of
transactions.
Like those are the things thatexcite me and like, you know, I
find interesting.
So, what I thought we were goingto be doing and where we
started, I mean, I started withwalking every single property
with Daniel.
We would go to Lowe's together.
We realized that we should notbe the ones shopping for light

(05:27):
switches or any of that stuff.
That's just not, you know, wheremy time was best spent or where
I enjoyed it.
So, yeah, so we quicklyrealized, like, we needed to
scale this.
To make it more sustainable.
We didn't just want to do, youknow, three to five houses a
year.
We wanted to have a more volumebased business where there were

(05:49):
more transactions, where therewas a business to operate so
that I could, you know, thrivein the back end, so to speak.
So yeah, so that's kind of.
where we thought we would be.
And obviously, you know, planschange.
And as you start to getdifferent experience, your plans

(06:09):
continue to change.
So, That's actually whathappened with this whole next
phase of my real estate andaccounting journey as well was
that this was never necessarilypart of the plan, but what
happened was, you know, as Istarted getting things on the
back end operating prettysmoothly, I essentially like

(06:31):
bought back my time.
I don't know if you're familiarwith that.
The book, but I literally justkind of delegated a lot of the
work that I was doing to other,you know, team members, virtual
assistants.
And so I had a lot of just timeto think and time to really
focus on.
What is it that I enjoy doingand where do I want to go and

(06:54):
where do I want to continuegrowing?
And so that was when it dawnedon me like the accounting of
real estate is I've always lovedand obviously with teaching
being in my background, I'vealways loved that piece as well.
So, so with the starting ofseeds, which is my, you know,

(07:17):
accounting for real estateinvestors, new business, I've
been able to really just meshall of those things that I love
all into one.
So, yeah, it's been quite thejourney and kind of unexpected,
but that's what life does toyou.
Kind of just happens.

Mike (07:35):
Yeah, and like, I mean, I, You know, I know you've kind of
went through that journeyquickly, but you guys were doing
like quite a lot of real estatedeals, right?
I mean, do you want to kind ofshare with the audience, like
the amount that you got up to atthe high?

Nelisa (07:53):
Yeah.
So at the height of our I guessinvesting journey was, you know,
obviously when the market was onfire, everyone got to a high.
I think a lot of people who werealready in the space and kind of
took advantage.
We ended up doing, like, 170plus deals in one year and we
grew our rental portfolio toover 100 properties.

(08:17):
We ended up scaling back alittle bit selling off some of
that stuff just Trying to, youknow, refocus on where we wanted
our investments.
And and so now we're kind of ina little bit of a sweet spot
where we're at.
We're still actively flippingdoing a little bit more
wholesaling.
And and, you know, still haveour rentals just kind of doing

(08:38):
their thing.
But, yeah, so I'm still verymuch involved with ownership of
the business.
So I'm, you know, reviewing ourfinancials and I still manage
our VA who's overall of ouraccounting, but from that
perspective, like I.
Don't spend much time in my realestate investing business just

(08:58):
because everything has kind ofbeen spread out to other team
members.
So, yeah

Mike (09:05):
what were some of the challenges that you faced, like
getting up to that kind of dealvolume, because you are.
You guys are a very small team.
It's only a handful of people.
Yeah.

Nelisa (09:17):
with kind of scaling very quickly with a very small
team was that our books got alittle messy.
So I was doing them all myself.
And I just didn't have any help.
So if I took time off or did myown thing, no one was keeping up

(09:38):
with everything.
And, you know, when you'rebuying a house every couple of
days it's, uh, it's a lot ofwork and a lot of transactions.
So I actually spent a very longtime.
We got to the point where I waslike, I told my husband, I'm
like, you need to stop buyinghouses for a minute so I can
catch up on the back end.
And, uh, so then I ended up.
You know, putting a process inplace.

(10:00):
I started coaching up our VAs tohelp.
We, you know, really just took astep back to say, let's look at
the bigger picture and let'sget, you know, let's get things
in order because the more youdo, the more chaotic it gets if
you don't have.
A process in place.
So, so yeah, after kind of goingthrough the headache of cleaning

(10:22):
up messy books, which is justfunny that, you know, you expect
a CPA who, you know, who shouldknow what they're doing to not
get in that situation.
But there I was.
So then once I got out of that,I, you know, realizing that what
I had kind of taught myself andbuilt for our own business could

(10:46):
be useful for a bunch of otherreal estate investors because I
knew what it took to build thatfor me and myself and our
business.
And I was like, I have theskillset, I have the knowledge,
I have that foundation that Mostinvestors don't.
So I, you know, kind of took myown issue and created a course

(11:09):
out of it.
You know, here's how I shouldhave done it from the start to
have avoided the.
very long headache it was toclean up.
So, uh, I think I took, it tookus months to get through
reconciling everything.
And I was like, I don't everwant for tax season to feel like
a burden again.

(11:29):
I don't want for like this to bea thing.
I, yeah.
So since then, I've, you know,I'm not doing it.
I'm mostly reviewing reports,but we have, you know, all the
processes in place and the workbeing done.
And so it, yeah, it's a lotbetter.

Mike (11:55):
Was like, as you were going through and like catching
up on those transactions, like,did you notice any like
interesting trends or maybethings you wouldn't have done if
you knew you had, I don't know.
I don't know.
Let's see.
I can't speak the language ofbooks.
Cause I don't know how to dothem, but like, what did you
maybe notice that you're like,if I had the books, I wouldn't
have done this.

(12:15):
Or maybe it

Nelisa (12:15):
we probably would have kept a lot more Then we sold,
we, I mean, we sold a lot ofreally great properties that
like, you know what, we probablyshould have kept that one had we
had books that to look at.
Cause we didn't, you know, whenyou don't have something to look
at, you don't know where you'retrending.
I mean, you obviously see yourbank account and you're like,

(12:38):
all right, well it's growing, sothings must be good.
Right.
But you know, your financialstell you a different story than
your bank account might.
Cause there's, especially withinvesting, there's huge ins and
outs all the time.
So I think for us, we would havehad just the.
Just that full picture to beable to say, you know, we should
have kept that one or you know,or maybe did a lot more creative

(13:02):
deals like using our IRAs or,you know, things like that.
Which is what we do now a lotmore of.
We're able to see that fullpicture to really kind of,
navigate that better.
So, yeah, it just kind of givesyou that something to base it
off of besides just.
A feeling.

(13:22):
Yeah.

Mike (13:24):
Like, what are some key things that you look at on,
like, whether it's a weekly or amonthly basis to kind of, like,
what are some key numbers you orreports you look at to know
where you stand?

Nelisa (13:35):
I mean, there's so many different reports we look at.
Obviously we look at everythingon a per property basis, which a
lot of investors I feel like doa pretty decent job of.
A lot of people, you know, knowhow to calculate how much they
made on this particular flip or,you know, whatever it is.
But we also look at the full.

(13:55):
Business picture because that's,you know, most important
because, you know, your grossprofit could be something
completely different from yournet income.
So you want to know thedifference in those numbers and
you know how to operate better.
So we're constantly looking atour expenses to see if there's
any way to cut costs or youknow, we also, you know, are

(14:18):
always looking at our balancesheet to see how many loans we
have out.
You know, what our escrowbalances are, like, you know, to
keep track of, you know,projects when you've got, you
know, your rehab is up to thispoint, okay, let's go request
money so that we can get thatdraw.
So really just, you know,looking at all of the different
reports.

(14:39):
And then of course, because wealso have a rental portfolio,
it's, you know, looking at allof that.
As well on a per property inaddition to as a full business.
So, yeah, it's, and anytime, youknow, there's something that
comes up and we're like, man,how'd we miss that?
There's always a way.

(15:00):
I love QuickBooks.
I'm a big believer ofQuickBooks.
I think it's a great accountingsystem and it's, You're able to
run reports on so many differentthings.
So, you know, anytime you'retrying to find an answer for
something, there's usually areport that you can pull to, you
know, figure out what thatspecific thing is.
So, but yeah.

Mike (15:24):
Did.
Did looking through the books, Iknow you said, you know, you
guys kind of got up to about ahundred rentals and I know
you're kind of downsizing someof them now did looking at the
books like influence, which onesyou were going to sell and if
so, how did it influence them?

Nelisa (15:39):
So it's a combination of looking at the books, but also
looking at, like, our just ourstatement in Real Estate Owned
where we have, you know, Whatthe property's value is, what
what the current loan balanceis, you know, basically like how
much equity do we have in thatproperty?
Is it worth, you know, puttingin the money to turn it and rent
it out again?

(15:59):
So, you know, looking at whatThe market rent is has rent gone
up or down since the last timeit's rented out, you know, has
our mortgage payment stayed thesame has property taxes and
insurance increased, you know,so it's not necessarily any one
thing as much as it's lookingat, like, a multitude of
different things.
And then from there, kind ofdeciding, okay, this one, you

(16:21):
know, has a ton of equity, maybeit's better right now to you
know, Sell it on the retailmarket than it is to put more
money in and, you know, rent itout because, you know, maybe the
cashflow is a lot lower becauseof things like property taxes
and insurance, which you know,have gone up.
So, just kind of, you know,going through those different

(16:41):
types of things.
So we typically look at withrentals, whether or not we want
to continue renting them, or ifwe decide that it's the right
time to sell, we'll look atthose anytime they become
vacant.
So it's a great time to justlike reassess because the
property is vacant anyways.
So that's kind of how wedetermine, you know, which
rentals to continue renting orto cash in at.

(17:03):
So, but you know, everything'sdifferent, like some, You know,
some investors might not mindselling a property that is
tenant occupied, but for us andworking with the management
company and all those differentthings, I just, we find it
easier.
That vacancy kind of is thatstopping point of like, okay,

(17:24):
let's assess from here.
So.

Mike (17:26):
Maybe could you share an example of like one or two of
the recent ones you sold andkind of how you came to the
conclusion that like, okay,yeah, we're gonna this one is.
This one's going up for sale.

Nelisa (17:36):
Yeah, so I'll be honest.
There are some properties thatwe've sold recently where we
bought them originally to flip.
And we put them on the market tosell and they, I mean, we just
had some bad luck, you know,multiple buyers backing out.
And then you get to the pointwhere you're just like, do we
really want to keep doing this?

(17:58):
Or, you know, should we justrent it out at this time?
And then, you know, revisit thislater.
And so.
The last couple, actually, Ithink were originally flips that
we ended up holding on to.
And so when they became vacant,we were like, all right, well,
let's go back to that originalplan, which was to resell it
anyways.
So they were, you know, had theywere in good areas where first

(18:21):
time homebuyers.
Are looking and they were at,you know, price points that
were, you know, just great areaslike that because a lot of, you
know, sometimes you might haverental properties that are in
areas that are just Better asrentals than as you know a
homeowner Purchase so those arethings to consider as well like

(18:43):
whenever we're looking at whatto keep or sell We'll look at
the particular asset and if it'slike, you know, what this area
is much more rent heavy The, youknow, the exit strategy is
probably that house selling toanother investor, not
necessarily to a homeowner, thenwe also, you know, consider
those things as well.

(19:03):
So, yeah.

Mike (19:07):
What are some common mistakes that you see a lot of
investors make when doing their,when on their books, besides
just like not keeping them up todate or not doing at all,

Nelisa (19:19):
So the more I've been doing this and the more I've
been talking to.
Investors and other bookkeepers,I'm starting to see things that
I didn't even think were, peoplewere making, but One of the
biggest mistakes I see is thatpeople don't know how to record
Basically the transaction thatcomes through the bank to, let's

(19:40):
say, either buy a property,right?
So you have a wire that goesthrough the bank.
I have seen where people willjust take that amount and put it
all to one account and that iswrong.
It's

Mike (20:00):
what is what does an account, what does an account
mean?

Nelisa (20:03):
Like an account.
So, so there's different typesof accounts.
So you'll probably recognizelike, you know, you got income
accounts, you have expenseaccounts, you have asset
accounts.
And so they will take that 12,000 and they're like, Oh, I
purchased a house.
This should all go into myinventory account.
And that's not how you wouldaccount for that at all.

(20:26):
That doesn't take intoconsideration any of the things
that make up that purchase.
So, you know, if you thinkabout, for example, I know that
when we buy a house, wetypically get a loan on it,
whether it's a hard money lenderor private money lender.
You know, someone's bringingfinancing.
So if you don't record thatloan, then your balance sheet is

(20:48):
wrong.
It doesn't show, you know, thatyou owe someone money and you
do.
So a lot of times people, theydon't know how to take the
transactions that come throughtheir banking feeds and they
don't know how to put them intothe correct accounts.
And so that's a huge mistake Isee all the time, whether it's

(21:11):
purchases, sales There are someother big mistakes.
Another big mistake I see isthat people will record, say for
example, that, you know, you'restarting a business and you're
putting a lot of your ownpersonal money into your
business, especially in thebeginning.
I mean, We all have to do it, Imean, you know, it's real estate

(21:32):
investing, there's huge swings.
So you're putting money intoyour business and people don't
know how to categorize thatmoney that they're putting in.
So I've seen people put that toincome.
That is not income.
You didn't sell anything.
You literally took your ownpersonal money and you put it
into the business.
So that's another, that would beequity.

(21:56):
So you're, it's a contribution,you're contributing money.
So it will affect your balancesheet, but it won't affect your
income statement.
So just stuff like that.
I mean, there's tons of littlethings.
But.
Yeah, I think a lot of times,too, there's, this isn't
necessarily a mistake, but it'sjust something that I like to

(22:19):
challenge when people say, like,you know, why do you need books
anyways, is, you know, everyonethinks about taxes, right?
You're like, oh, we need to havebooks so that during tax time we
have something to provide theaccountant.
And really, like, you need thosebooks in order to.
Make business decisions.
You need to be able to reviewsomething to look at to you know

(22:44):
To give yourself meaningfulinformation so a lot of times I
see mistakes in the sense oflike People might hire a
bookkeeper who doesn't know whatthey're doing or who doesn't
have real estate experience Andso you're getting financial
statements that don't make senseto you and it's like if you're
the business owner You shouldunderstand your books Cause it's

(23:04):
your business, you know, if youlook at your financials, I
should be able to say, Hey,what's included in this account?
And as an owner, you should knowwhat's in that account because
it's your business.
Who knows it better than theowner?
And so I've seen situationswhere, you know, I have a client
who sent me their financialstatements and I was started

(23:25):
asking them questions and theyhad no idea any of the answers.
I'm like, well, how did thischart of accounts come to be?
Like who decided on all of theseaccount?
Because they're customizable.
You can make them whatever youwant.
So I think One of the mistakesis like people not realizing
that your books are for thebusiness owner.

(23:46):
Like that should be the maingoal.
It should be for the businessowner to be able to understand
what's going on in their ownbusiness.
And so, you know, your book,your chart of accounts should
look different from my chart ofaccounts.
And my chart of accounts shouldlook different from everyone
else's because What you careabout in your business might be
a little bit different from whatI care about.

(24:09):
So yeah, I would say just kindof like people not realizing
what they can actually provideto a business owner.
So,

Mike (24:22):
If someone's running a flipping business, like what are
some key numbers you think theyshould paint?
I mean, I know you can divesuper deep writing QuickBooks or
other accounting software, butif they were to kind of look at
something on a, well, I guess,what should they look at and
like as big picture and howoften should they look at it?

Nelisa (24:44):
so I would say a flipper should be looking at their
breakdown of every single flipthey do.
So anytime you finish a projectand even not just finishing a
project, I mean, you should bereviewing those.
Throughout the project, youknow, where are you standing?
Cause that's how you end updetermining, you know, how much
do you have left for the rest ofthis renovation?

(25:05):
Are you over budget already?
Do you need to cut costssomewhere else?
Or, you know, do you need tokind of just rethink your exit
strategy?
Like, you know, you have to kindof really think about all of the
different pieces.
So I would say, you know,throughout the project.
Especially at the end of theproject, reviewing what you
expected versus what actuallyhappened and why there's

(25:28):
variances.
You know, because that's goingto help you better determine
estimating costs for your nextproject.
You know, where were you off?
You know, what was it that thatmade that difference?
So reviewing those in fulldetail, going through you know,
where can you, what can you doto help?
Make those numbers better.
Or if they were great, then, youknow, making sure.

(25:51):
Okay, how do we continue doingthat?
What did we do right?
You know, if we came in underbudget, how, you know, what did
you overestimate?
Which I don't know that anyonereally does that, but so really
going through, you know, eachproperty, you know, when it's,
you know, While it's in processand then also when it's done and

(26:13):
then I mean, I think personallyI recommend looking at your
entire business financials atleast on a monthly basis, so And
the way we look at ours we lookat them in different ways.
So, you know, we might look atthem as So let's say, you know,
for looking at September orthrough the end of September

(26:36):
now, you know, we might look atJanuary through September, but
then we also might look atSeptember compared to you know,
August compared to July comparedto June, like on a month by
month basis.
So we kind of go throughdifferent ways of looking at.
Your information, so you mightstart to see trends like, oh, we

(26:59):
do a lot better in the springmonths than we do in the winter
months, or, you know, summer'sour best months, you know, on a
year by year basis, like we arestarting to see a trend, so you
can kind of look at yourfinancials in different ways to
see, okay, we might have a lowmonth Right now, but
historically, we also had a lowmonth, you know, a year ago,

(27:21):
this same time, or vice versa.
We're like, man, this was thebest month ever, and we go back
and we're like, oh, okay, well,last year at the same time was
also the best month ever.
So, you can start to seedifferent, like, you know,
trends with your own data andthe way you kind of, look at
things.
So, I mean, but at the veryminimum, definitely looking at.

(27:42):
You know, each project, but thenalso holistically as an entire
business.
Like, cause you know, if you'rerunning a flipping business, I
mean, depending on the type ofbusinesses it is, you might
have, you know, advertising andmarketing costs to have gotten
that deal.
If you're doing any sort ofdirect to seller marketing, or
you might have, you know,software that you pay for, like

(28:04):
all these other things thataren't reflected in any one
project.
Those are just.
The cost of the business.
So yeah, making sure that andmaking sure it's actually done
because you know what we tellourselves and what actually
happens until I started settingup automated reports.
I'd be like, all right, I'mgoing to get to these.

(28:24):
I'm going to get to these.
Well now they come to my email.
So I know it tells me to stopand look at them.
So yeah, just, you know, makingsure that.
You're just aware of what'sgoing on.
Cause that's also going to tellyou, you know, how to make
changes.
If you start to see yourrenovation costs increasing or
holding costs, you're like,what's going on here.

(28:47):
And maybe we need to starttrying to raise more private
money so that we can get, youknow, lower interest costs or
whatever the thing is yourbusiness books will give you
information to look into thosethings to kind of, you know, get
a grasp on it.

Mike (29:02):
yeah, what are you you know, so when you're kind of
looking at the books in theflipping business, it can kind
of be, and I'm just going tospeak for myself as an amateur
at accounting, I may or may nothave been the person who also
just handed it off to someoneand said, just figure it out and
send me the reports once in awhile, uh, and I wouldn't have

(29:22):
known what's in the chart ofaccounts, but Anyway, not
anymore, but

Nelisa (29:26):
Hey, we all started somewhere.
I had messy books too, so.

Mike (29:29):
yeah, but I guess like, like, you know, with the
flipping business, it's like,you know, you could buy
something four or five monthsago and you're only finally
realizing the income for that,like today, cause you know,
whatever you renovated it, maybe60 days and you put it on the
market.
And, you know, you had somebuyers and finally now you've
got the money back.
So like, I guess, how do youlook at that?

(29:51):
Like, how do you, what's thebest way to look at that?
Okay.

Nelisa (29:57):
if you have a flipping business, the way you can record
those transactions within yourbooks, there's actually
different ways to record that.
So, some people, which, Somepeople will record it straight
to your inventory accounts,which is technically what, if
you think about a flippingbusiness and the product you

(30:19):
sell, the product you sell isyour house, right?
A house.
That house is your inventory.
So, If you're looking at yourbusiness, if that's how you
record them, then you would goto your inventory account in
QuickBooks.
You'd be able to see, okay,here's how much inventory I'm
carrying.
Here's, you know, what the loansare for it.

(30:42):
Here's, you know, what I'm intoit for, basically.
There are sometimes people willchoose to record everything to
their cost of goods sold.
So, that is.
Technically, like, until yousell the property, that cost of

(31:02):
goods sold shouldn't berecognized.
But the way you can account forit, you basically just, you
would say, you know what, I'mgonna, on a monthly basis, or
quarterly basis, or annualbasis, I'm gonna go through and
take all of this cost of goodssold that hasn't sold yet, and
I'm gonna, you know, I'm gonnabasically put it back into your
inventory account.
So depending on the type ofbusiness, like, you know, I've

(31:26):
worked with some investorswho've, they're flipping, you
know, 30 plus houses at a time.
Like they're not recordingeverything into inventory and
then taking it out.
They're recording everything tocost goods sold because it just,
it's a lot less time intensive.
And then on, you know, Aquarterly basis or annual basis.

(31:46):
They'll go through and kind ofreallocate it.
So, depending on how you recordit, it's going to depend on
where you look for.
So, and so there are ways likethat.
We kind of take Almost like aprojected approach of like
looking at basically as soon asa property goes under contract,
our VAs will go through and theybasically take what the sales

(32:09):
price is, come up, we have likea calculation where you take
out, you know, your closingcosts, your filter commissions,
like all of that, thatdifferent, those different
costs.
And you're basically going totake that number and then
subtract out.
What do you, what the loanbalance is, right?
What do you owe on it?
And you're going to get to anumber where we kind of, we

(32:32):
project how much cash back we'regoing to get into the business.
So, you know, we can look at iton a, okay, in November, we have
these closings that we'reanticipating.
And so here's how much cash Andthen, of course, when you look

(32:53):
at your profit and lossstatements, you can see how much
you actually earned what yourincome was.
But we kind of do a little bitof both where you can see, okay,
how much cash are we gettingback and then also how how much
do we actually make from it?
But,

Mike (33:08):
Is that done in QuickBooks too?
Or is that done like outside ofit?
Or that cash back estimation?
Is that what I mean?

Nelisa (33:16):
Yeah, it's in QuickBooks.
So you, there's basically like ascreen where you can kind of see
what your expected cash in andcash out is each month based on
any bills that are entered.
QuickBooks also uses its best,you know, information to guess
at what's coming.
Coming up based on, you know,what they're seeing in your

(33:37):
data.
So if they see that you have thesame recurring expenses every
single month, it's going to belike, okay, we expect to see
that same 200 charge or whateverit is coming out.
So you can go in and say, Hey,we expect to see, you know, 45,
000 back in our account on thisday from this closing.
And of course, if closings getdelayed or things go into

(33:58):
different months, then that cankind of.
You have to manage that, butyeah, that's kind of how we're
able to see, like, into thefuture of, like, all right,
where are we trending forNovember or December or January?
So, yeah,

Mike (34:11):
Gotcha.
And this sound, this is going tosound like a really basic
question, but I'm going to askit because I didn't know what
this was until a couple of yearsinto my business.
And probably other people Don'teither, who are listening, not
everyone, but some, what is whatis the difference between a
balance sheet and a P and

Nelisa (34:28):
No, oh my gosh.
Honestly, I wouldn't have knownuntil you know, I went to
college and learned all aboutall that stuff So a balance
sheet is basically your assetsyour liabilities and so assets
And say, for example, flippingbusiness is going to be all of
the projects that you have thathave not been sold yet.

(34:49):
So all of that, you know, costassociated with them.
So any of your assets, your cashaccounts yeah, any of that
stuff.
And then your liabilities,basically anything that you owe.
So your credit cards, your loanbalances, any lines of credit,
that kind of stuff.
And then basically thedifference between the two.

(35:11):
And then your and then your P& Lor profit and loss statement,
income statement, all the samewords they, that is going to be
your income minus your expenses.
So that's going to tell you, youknow.
what you're actually earning.

Mike (35:28):
And then on your balance sheet in like the assets, is
that what you bought thoseassets for, or that's what you
think those assets are worth?
Cause you might have, it's goingto be worth more, right?
If you're

Nelisa (35:40):
yes.
And so that's what people referto as like the book balance.
So what you have recorded onyour books is not necessarily
the same value as what you wouldsay that you could get it for on
the retail market.
Which is why, like for us, wehave, you know, for our rentals,
Are statement of real estateowned where you can put in those

(36:01):
actual values of what they'recurrently worth, you know?
So if we were to go to resell ittoday, what is that actually
worth?
'cause your book balance is notgonna be that.
So yes, it's a great questionand a lot of times people yeah,
don't realize there's adifference.

Mike (36:19):
So it's what you, it's what you paid for that asset.
Just so I,

Nelisa (36:22):
So it's going to be four flips.
Yes.
It's going to be what you paidfor.
Yeah.
And then any of the, your costincurred throughout the project.
So if you're paying for a roof,that's also going to be included
in your assets until you sellit.
And then you would recognize theexpense.

Mike (36:40):
Okay.
Gotcha.
And then you know, this isalways like a, well, it's less
of a debate that I've had now,but I've had this debate with
myself in the past is like,what's your guys theory on, you
know, borrowing money versusputting a lot of your own money.
And like, for a while I wasusing a lot of my own cash.
For rehabs now, as I've scaledmy business, it's, but not

(37:03):
really possible anymore.
Maybe just not the smart idea,but I've, you know, kind of gone
back on fourth, if it makessense to kind of pay that
interest cost or not.
If you, if I have the money atthe time, what's your theory on
that?

Nelisa (37:18):
I mean, my theory is that's a personal decision.
So there are some investors whoare very risk averse to loans.
They want to pay for everythingin cash.
They don't want to owe anybodyany money.
Like, that's just, you know, apersonal decision.
I don't know if it's Cause I'myounger and kind of just don't

(37:39):
see that as risky just becauseyou do have an asset that, you
know, at the end of the day youcan sell I, we leverage as much
as we can most of the time.
Just because you just alwaysneed cash.
It's a cash intensive businessand you're constantly have huge
swings, ins and outs for newpurchases, for, you know, roofs,

(38:03):
for re pipes, for full gutrehabs.
Like those are all, you know,it's a lot of money all the
time.
So for us, it just makes moresense to pay the interest costs.
Yeah.
To, you know, try to leverage asmuch as you can.
But every business is different.
Your, you know, your cashbalance might say otherwise.

(38:24):
If you're like, okay, well,we're good.
Even if there's, you know, hugeswings, we'll be fine.
Then you might decide that, youknow what, for this project,
we'll just borrow the purchaseprice and we'll pay for the
rehab ourselves.
You know, but it's really justif you have your books to be
able to look at, to say, okay,here's where we stand as a

(38:44):
whole.
And here is, you know, wherewe're trending, then you can
say, okay, we should probably,you know, leverage as much as we
can here, or, you know, and wedo that too.
If like, we might look atsomething and be like, you know
what, there were a few projectsthat haven't sold yet that we
thought we'd be gone by now.
So we already have our holdingcosts at a place where we're

(39:05):
comfortable and we don't want toexceed that.
We'll bring in partners, youknow, Hey, can you fund this
entire deal?
Like, all of it, so that we'renot adding to our holding costs.
We're just making sure thatwe're staying where we're at
comfortably.
But now we have to split profiton the back end, so.
But your books will tell you allof those things.

(39:26):
You'll be able to look at themand make what decision feels
right for you.
And where you're comfortablewith, you know?
So.

Mike (39:35):
Is there a certain holding cost that you guys like to stay
below?

Nelisa (39:38):
Not necessarily.
And it really just kind ofdepends on other things.
So there's not like a magicnumber.
It's not like, you know, oh,here's where we want to be.
It's just what else do we havegoing on?
What else are we purchasing?
You know, how's the rentalportfolio doing?
Like where is everything as awhole?
And where do we want to be?

(39:59):
So, so yeah.
It's really just like, it's apersonal opinion you know,
everyone has a different numberthat helps them sleep at night.
Like where do you have to be,you know?
And today's number might bedifferent from tomorrow's
depending on what you'reanticipating.
If you know that something'sclosing, you know, in two days
and you already got the clear toclose, you feel a lot

(40:20):
differently than before.
Day one of a contract where, youknow, you're like, all right,
well, we got to get throughinspections.
We got to get through, you know,a whole lengthy process.
They've got to get their loanapproved.
Like, you know, day one of atransaction is different from
closing day of a contract.
So, just kind of, you know,looking at those things to yeah,

Mike (40:40):
Do you guys ever project any further out into the future
than once you have a salescontract signed?

Nelisa (40:49):
Us not necessarily right now.
Just because I mean, it's sohard to guess that it's a
project based business whenyou're flipping.
You know, it's different fromrentals, which might be a little
bit easier to kind of guess thatwhere you're headed.
But I mean, no, we're just kindof looking at.

(41:12):
You know, as a whole where arewe trending and are we, where we
want to be, you know, do we needto do more or do less or, you
know, do more creative things?
Just kind of, yeah whateveryou're able to see within that,
those financial pictures thatyou're looking at, like where
should we be at?

(41:32):
But yeah, we're, I mean, we'renot projecting like, you know,
years out in the future because

Mike (41:37):
Yeah.

Nelisa (41:38):
who knows what's going to happen, you know?
Markets constantly changing,shifting.
So you have to shift yourbusiness along with, you know,
what changes you're seeing.
So,

Mike (41:49):
Yeah.
What about the rental side ofthe business?
Like what are you like lookingfor particularly in the books on
the rental side?

Nelisa (41:57):
Rental, we're looking at like, basically depreciation and
amortization, like, you know,how, what do our books show
we're making versus what, youknow, are actually making.
So just

Mike (42:14):
Meaning with like your like meaning with like your loan
payoffs and all that like whatare you considering that like
what you're actually making or?

Nelisa (42:21):
Yeah, like all of that.
So taking into considerationlike your principal pay down you
know, what the value of theproperty is at that point just,
and seeing what expense youhave, so Depreciation is
basically an expense that youcan take, you know, across a

(42:43):
period of time, depending onwhat it's for.
And so we will look at basicallyit's an expense where you don't
actually see money leaving yourbank account.
Let's put it that way.
So, so you get credit forexpense, but that expense is not
actually cash leaving your bankaccount.
So you want as much depreciationas you can for tax benefit.

(43:05):
So we look at that a lot withour rental portfolios, like
where do you want Do the bookssay that we're at?
And then of course, you know,what's it cash flowing?
What, you know, where are thingsat?
Cause, and that is constantlychanging.
I mean, you know, insuranceprices.

(43:26):
property taxes rental amounts,you know, what you could rent
something for, you know, threeyears ago is completely
different in certain areas thanwhat you can get for today.
You have to anticipate longer,you know, hold time to get a new
tenant in just all of thosedifferent things.
So, But again, if you don't havesomewhere with that information,

(43:48):
then there's no great way tomake that decision.
But if you have a process forit, or you have, you know, you
have your book set up, you havesomewhere where you're keeping
track of all of the, you know,How much rent you have, what is
their security deposit, youknow, all those different
things.
If you have a place for that,then you can see what you have

(44:08):
and then be able to, you know,make a better decision on that
going forward.
So,

Mike (44:17):
Is that all done in QuickBooks too?
Or that's some, somewheredifferent software that you have
to use.

Nelisa (44:22):
So we use QuickBooks for all of the accounting piece of
that, but for some of the morelike administrative stuff, we're
using Stessa.

Mike (44:31):
Okay.

Nelisa (44:32):
It's, I mean, it's a great tool that we found.
We don't use it for accountingpurposes, but we use it to be
able to run, you know, reportingon that's where we keep our
capital assets schedule.
So at any given point in time, Ican, you know, see what we have
there.
It's where we have statement ofreal estate owned.

(44:53):
I can pull, you know, rentrolls, all of that's kept up to
date so I can see who, whohasn't paid, who has paid all of
that kind of stuff.
So we keep all of that inStessa, but the actual
accounting for it, we do all ofthat through QuickBooks.

Mike (45:11):
What do you mean by capital schedule?

Nelisa (45:13):
So, so basically When you buy a rental property
they're, you know, the way youreport that is like, part of
that purchase gets allocated toyour buildings account.
So it's going to be a fixedasset on your balance sheet.
And then there's a part of thatpurchase that gets allocated to

(45:35):
land.
So, and then Anytime you makecapital improvements.
So basically you're, you know,you've got a big ticket expense
that you pay for to improve thelife of that asset.
So if say, for example, you puta new roof on it, that's going
to improve the value of thathouse, right?

(45:55):
Cause now you have a house witha brand new roof, so it's worth
more.
So that roof, you know, if youhave a rental, then that roof is
actually included in your assetsas well.
It's not necessarily immediatelyhitting your expense account.
And that's where thatdepreciation comes into play,
where that roof, you know, itemwill get expensed over time.

(46:18):
So, But yeah, so, so the thecapital assets schedule is going
to include all of those things.
It's going to have yourbuildings and land when they
were placed in service.
So basically when was thatrental property available as a
rental?
Like when did it hit the marketwhen it was listed to become

(46:39):
available for rent?
And so.
You know, you're at the end ofthe year when the, your
accountant is like, Hey, whenwas this placed in service?
We have a report or you can runinstead of being like, I don't
know.
When do we buy that thing?
When was it ready?
Like,

Mike (46:55):
You don't tell your accountant just to go on Zillow
and check.

Nelisa (47:00):
Yeah, I guess they could do that, but I bet you'd save
money if they didn't have to.
If you had them a prettyschedule, they're like, all
right, well, you can only chargeit so much because you've
already done the work for them.
Yeah.

Mike (47:18):
So you store all that kind of stuff in Stessa.
And then like the book, thebooks themselves stay in
QuickBooks.

Nelisa (47:27):
any of the, you know, anytime we get, so we actually
use a property manager for allof our rentals.
So anytime, you know, we getthat statement on a monthly
basis, we'll go in and basicallytake that transaction.
So, you know, normally it'slike, here's your cash in, but
that cash in is made up of abunch of income.
A bunch of expenses, and so wehave to allocate that

(47:49):
appropriately on a property byproperty basis.
So, you know, here was theincome we received for this
property.
Here was the management fee wepaid for this property, you
know.
And so we do that.
And then, of course, you know,your property manager, Most of
the time isn't keeping track ofyour mortgage, you know, so if

(48:10):
you have a loan on a property,then we're also going through
and making sure, you know, youallocate the mortgage payments
to, you know, our interest toprincipal pay down to escrow.

Mike (48:24):
Does that like automatically get calculated in
Stessa?
Like, can you put that in onceand it kind of does it?
Or do you have to do that everymonth for each place?

Nelisa (48:33):
We manually do it.
I'm not sure you might be ableto set up some sort of automated
things, but our, we have a VAthat on a monthly basis, they go
in and update all of that stuff.
So,

Mike (48:47):
Gotcha.
So there is hope we don't haveto do it all on our own.

Nelisa (48:51):
oh yeah, nothing should be done alone.

Mike (48:56):
Yeah.
Okay.
Well, I think it'd beinteresting if you talked a
little bit about like kind ofwhat you're doing now that with
the accounting side of thebusiness and you know, cause
like when even just asking allthe questions, it seems very
overwhelming for most investorswho are go, right.
Worry about the ad stuff later.

(49:17):
So maybe if you talk a littlebit about what you're doing, it
might give some people a littlebit more peace of mind.

Nelisa (49:22):
Yeah.
So it's funny.
I actually had a call thismorning with someone who went
through my course.
She was literally, she'sactually a, an assistant of a
real estate investor.
So the real estate investor waslike, Hey, can you, Take this
course for me and figure thisout.
And she, Oh, I know.
I was like, man that's myselling point.

(49:45):
I'm more assistance to take thecourses.
But the she literally had noreal estate experience and no
accounting experience.
And she was like, I feel like.
So confident like she's like, Iknow like I get it now She's
like obviously things are takinga little bit longer to click but

(50:07):
also she literally is brand newto everything so the way, What I
have, basically, is courses setup for specific to wholesaling,
specific to flipping, and thenspecific to rental property
owners.
So, you know, if you're justwholesaling, then you don't need
to learn about fixed assets.
Like, you just need to know howto record your wholesaling

(50:30):
income in double closes, youknow?
So it's very streamlined in thatsense of, like, it's not meant
to be overwhelming.
It's meant to be very simple andvery, like So I used to teach
preschool.
I took it and I made accountingas simple as it can be because I
know it can be challenging, butit literally breaks it down for

(50:54):
just what you need to know.
Just whatever your specificfocus is.
And then of course, The courseshave like plug and play
templates where you can, youknow, take a settlement
statement and plug in thenumbers and it'll tell you
exactly what you need to putinto QuickBooks.
It goes through all of thedifferent account types that
actually is like a done with youkind of course.

(51:15):
So if you don't have QuickBooksat all yet, and you're like, I
don't even know where to begin.
It will walk you through.
Here's how you set up a chart ofaccounts.
Here's how you should thinkthrough setting up those chart
of accounts.
It's really just meant to giveyou exactly what you need to
build that confidence to be ableto, you know, create your own
financial statements and notfind it overwhelming.

(51:37):
What I have found is that thereare some people who just don't
want to do it and that's finetoo.
I mean, every business owner isdifferent, you know?
So.
I have actually started nowdoing some more consulting and
bookkeeping as well for clientswho aren't interested in, you
know, kind of the done with you,they want the done for you path.

(51:58):
So kind of do a little bit ofeverything, whatever really the
goal is just to help peopleavoid the mess I was in.
So, yeah.

Mike (52:11):
And it's like, like, do people just go online and sign
up for the course if they wantto find more about it?
Or how does it all work?

Nelisa (52:18):
Yeah, so for the course, it's literally, you just go
online seedstockcourses andclick on the course that you're
interested in, and you can haveimmediate access as soon as it's
paid for, and if someone wasmore interested in a one on one
kind of, you know, moreconsulting or more of a
bookkeeping path, then just setup a free call where we go over,

(52:39):
you know, what the goal is andkind of put together a plan from
there, so.

Mike (52:43):
What do you find?
And I asked this questionbecause I have whenever I bought
courses in the past, it's alwayswhat I've asked the person who
sold the course, which is whatdo you find is the difference
between people who do yourcourse and do it really
successfully?
And the people who like, what dothey do differently?
Okay.

Nelisa (53:02):
I would say the people who don't kind of get through it
as they should, or the way I seeit, is that they might already
be in a position where theyneeded it.
Like six months ago before theystarted.
And so now they're trying toclean up something based on, you

(53:23):
know, something that was alreadydone which I also help with that
as well.
So I'm actually, I'm doing oneright now, a big old cleanup for
someone, you know, their entire2023 was just really messed up.
And so I'm going through andhelping them clean it up.
And they actually started withtaking my courses and realize
that, you know, They knew thatsomething was wrong, and it was

(53:46):
just a little bit overwhelming.
They didn't know how to fix itthemselves.
And in that case, I would say,you know, he didn't end up
finishing the course yet but nowwe're on track to get his stuff
cleaned up so that movingforward, you know, he should be
able to stay on track.
So, I would say my courses aredesigned more for if you haven't

(54:06):
quite gotten something set upyet.
But if you learn the concepts init, it might reveal a bigger
problem.
Like you need to hire a newbookkeeper or you need to go
back and start cleaning stuffup.
So either way you'll learnsomething from it.

Mike (54:25):
like it's easier if people had started with it than

Nelisa (54:28):
I like to compare it to to like preventative measures.
So like I, I talk about this allthe time.
So I'm in like preventativeperformance therapy where like
before you actually needphysical therapy I actually do
that.
So like, you know, so if I dohurt myself, I'm already had a
schedule where most people don'tthink they need physical therapy
until they're injured.

(54:50):
Right.
So sometimes people don'trealize that they need the
accounting help until it's toolate.
And then they need more help tofix what the problem was.
So my courses are designed tohelp prevent the pain.
But sometimes it's hard forpeople to know that they need
that until it's too late.

(55:10):
So if they're in pain, I canhelp with that as well.
But yeah, it's always.
Yeah.

Mike (55:18):
Yeah.
Easier to start ahead of time.
Yep.

Nelisa (55:20):
Yeah, exactly.

Mike (55:24):
Cool.
Well, there's always twoquestions I like to ask towards
the end of the show.
And, uh, the first one's kind ofa fun one, which is, uh, what is
the craziest or mostuncomfortable situation that
you've ever experienced in areal estate deal?

Nelisa (55:39):
So, I could answer this with a million different things,
but I'll say the first one thatcomes to mind is a situation
where we basically had gotten aproperty under contract and the,
it was all done virtually.
So, You know, we'd spoken to theseller over the phone, we had

(56:00):
sent the contract through email,everything was signed, you know,
we sent it a title, we were ontrack.
We also actually, you know, wentto the property, I didn't, my
husband did, but he went to theproperty, the tenants let him
in, he took photos.
Nothing weird, you know, justyour normal transaction.
Well What happened was?

(56:22):
apparently this seller was notthe actual seller and We got a
phone call from a friend whoKnew the homeowner and he's
like, Hey you know, thehomeowner of this property is
saying that they're gettingcalls from, you know, a lawyer

(56:42):
and they're not sure what'sgoing on and she's afraid she's
gonna lose her house.
And like she was just veryconfused at what was going on.
We were like, immediately we'relike, oh my gosh.
Like, I don't know who we'vebeen talking to or who signed
the contract, but it obviouslywasn't the true homeowner,
someone.
Trying to pull a scam, right?
So, so that was going on and wewere just like, okay, we like

(57:08):
let title know what's going on,you know, whatever.
Well, the homeowner had a friendwho was very protective and who
thought that we were trying toscam this woman out of her
house.
And he was livid, like showed upat our office.
Literally busted the door open,yelling, Where is, where are the

(57:33):
lees?
Like, you know, is thisevergreen homebuyers?
And we're like, what is goingon?
Like, we're in a tiny littleoffice, just me and my husband.
Like, it's normally quiet inthere.
And we're like, who is that?
And like, what do we do?
So this is not evergreen.
I know this sign on the doorsays otherwise, but so that was

(57:56):
one of the scariest, likecraziest things.
And basically, I mean, Daniel'slike, you need to leave, you
know, this is private property,whatever.
But after that, I mean, we hadto call the cops and, you know,
let them know what was going on.
Cause I was like, I was legitscared.
I'm like, when people are crazy,you don't know what they're
gonna do.
So fortunately, I mean, we wereable to speak to the actual

(58:18):
homeowner and like, squaredeverything away.
And we're like, can you pleaselet your friend know, like,
like, everything's fine.
Like, This was just a big ol mixup for all of us, like, you
know, and, we wouldn't have gotto closing, like, the, there was
no actual seller.
So, you know, everything kind ofworked itself out in that
regard, but it was, like,definitely A little scary.

Mike (58:41):
Sure.
Put a burglar alarm in.

Nelisa (58:51):
Yeah.
We already had one.
It started getting turned on.
I

Mike (59:02):
Well, the second question I always like to ask is if you
could go back in time and giveyourself one piece of advice
when you were looking for yourfirst real estate deal, knowing
what you know now, what wouldyou tell yourself?

Nelisa (59:18):
would say to just not be afraid to put your pride aside
and use the help of otherpeople.
I think a lot of times we'vePeople just try to do too much
on their own, and I'm guilty ofthat, too.
You're, you know, kind of thinkthat you can just figure it out.
And, you know, sometimes you do.
Sometimes, you know, you figureit out the hard way.

(59:39):
But I would say just, like,leveraging your network and
leveraging the right people.
Like, making sure that whoyou're taking advice to are
people that are providing soundadvice, you know.
And just, you know, Just, youknow, really not being afraid to
put pride aside and start as abeginner, you know, like it's

(01:00:00):
hard to do sometimes, but it'llhelp save you a lot of
headaches.

Mike (01:00:06):
Yeah, I think that's a great piece of advice.
If people want to reach out toyou after the show, if they have
questions, or maybe they'reinterested in your course, like,
what's the best way for them togo about doing that?

Nelisa (01:00:18):
So best way is going to be through either social media
or email.
My email is nelisa at seeds.
courses, pretty simple.
My social media accounts are allSeeds Courses, so I'm active on
there and will reply, you know,pretty quickly if you get on
there.
So, yeah, those will be theeasiest ways to get in touch.

Mike (01:00:40):
Awesome.
Well, thanks for being on theshow.

Nelisa (01:00:43):
Yeah, no, thanks for having me.
This was a lot of fun.

Mike (01:00:46):
Okay.