Need help setting up new property in Dashboard, from start to finish. For example, you buy a property, renovate it, refinance it, then rent it.
Need help categorizing the following:
Initial purchase includes private lender fees, points, local state and county transfer taxes, etc. Do we categorize these expenses? If so, where?
Initial renovations to make property rent ready. Are they capital expenses? Would you break them down into specific projects (flooring, paint, windows, roof, etc) or categorize somewhere as a lump sum?
On the refinance. Where to categorize the cost of the loan (Similar fees as the initial purchase)? And also if you cash out, where should those proceeds be categorized?
Any incite or help would be great. Just want to be sure I’m getting initial set up correct so the numbers onward are accurate.
Happy to weigh in here and see what we can do to help. The primary reason there’s no specific instruction from Stessa on how to do this is because we do not provide tax advice. Our tools are flexible enough to handle many different scenarios, but questions as to what’s a capital expense, what’s a loan cost that must be amortized, and what’s a regular expense are mostly tax questions for your CPA.
The purchase price (as noted in the contract, not including closing costs or other adjustments) can be set up under the “Acquisition Price” column on your Properties page along with the date you acquired the asset.
Properly categorizing closing costs is quite complicated and there is no single answer that will work for all transactions. That said, we will soon release more categories around Purchase & Sale, which will provide you with additional options. In the meantime, we suggest making use of certain existing categories for purchase, sale, and refinance activity, including:
There’s now a dedicated help article that clears up many outstanding questions about logging purchases, sales, and refinances in Stessa. Check it out: Track Purchases, Sales, and Refinances
Still lost on this same startup… None of the article clearly explain how to setup a purchase of an investment property and all the expenses that go with it. I have tried everything and none of the report show accurate numbers on the initial investment cost.
We highly recommend working with a qualified CPA to understand how to track and categorize all aspects of a new rental property acquisition. It’s one of the more complicated areas of rental property accounting and can trip up even more experienced investors. Some items like property taxes and dwelling insurance are typically expensed in the year incurred while others like title insurance, escrow fees, etc are usually capitalized over the useful life of the improvements. And then certain loan expenses are amortized over the expected duration of the loan. It’s not simple and there is no one-size-fits-all approach.
Bottom line: Every acquisition is different and while Stessa is flexible enough to handle many scenarios, we are not able to offer tax advice.
Question about acquisition date recording for the properties, for one property the form allows me to enter only month and year, where as for the other it allows to enter date, month and year, is this a bug or a feature that comes depending on other fields?
No update or fix a year later. pls let us know if there are specific steps to follow, it works when we do certain steps but not sure, so it is a bug for sure.
We entering transactions for a refinance, I know I have to enter transactions for the new Loan amount and the payoff of the original loan - but don’t I also need to enter a new Aquisition transaction using the new appraised value? Example:
Original Purchase Price: $500,000
Original Loan Amount: $400,000
Refinance Appraised Value: $600,000
Refinance Loan Amount: $450,000
Would I enter a transaction for $600,000 as Aquisition for the refinance?