How to Track Rehab Costs in QuickBooks Online
“Organizing rehab expenses by phase helps you stay on budget, improve profitability, and prepare for tax season with ease.” - Jake Baker
Introduction:
Managing the financial side of real estate flipping or BRRRR (Buy, Rehab, Rent, Refinance, Repeat) projects can quickly become overwhelming without the right tools. That’s where QuickBooks Online’s Projects Portal shines, offering a structured and efficient way to track rehab costs, monitor progress, and prepare for tax season. Here’s how you can use it to manage your projects like a pro.
Why Use the Projects Portal in QuickBooks Online?
The Projects Portal in QuickBooks Online is specifically designed to track profitability for individual projects, such as a house flip or a BRRRR rehab. It allows you to:
Track Income and Expenses: Allocate every transaction—labor, materials, holding costs—to specific properties.
Monitor Progress: Get real-time insights into costs and profits for each project.
Simplify Tax Prep: Generate reports that your CPA can use for accurate tax filing.
Increase Efficiency: Reduce manual tracking and streamline your bookkeeping process.
How to Set Up and Use the Projects Portal
1. Enable Projects in QuickBooks Online
Before diving in, ensure the Projects feature is enabled:
Navigate to Settings > Account and Settings > Advanced tab.
Under “Projects,” turn the feature on.
2. Create a New Project
Go to the Projects menu and click “New Project.”
Name the project (e.g., “123 Elm Street Rehab”) and assign it to a customer or property.
This links all associated transactions to the specific property.
3. Categorize Income and Expenses
Use Products & Services to set up categories for different rehab phases (e.g., demolition, framing, plumbing).
As you record transactions, assign them to the relevant project.
Link each expense, invoice, or payment to the project for complete tracking.
Tracking Rehab Phases with Products & Services
Using Products & Services, you can track costs by specific rehab phases, such as:
Soft Costs: Permits, architectural fees, and design services.
Site: Site prep, clearing, excavation, and dumpster rentals.
Yard: Landscaping, fencing, and tree removal.
Exterior: Roof, siding, windows, doors, and painting.
Rough: Framing and structural work like lumber and labor.
Systems: Electrical, plumbing, and HVAC installations.
Interior: Drywall, flooring, paint, and cabinetry.
Final Conditions: Cleaning, staging, and final touch-ups.
General: Overhead or uncategorized project costs.
This level of detail helps you identify cost overruns and manage budgets more effectively.
Monitor Performance with Profitability Reports
The Projects Portal automatically generates profitability reports for each project, showing:
Total income (e.g., sale proceeds or refinancing proceeds for BRRRR).
Total costs (e.g., materials, labor, holding costs).
Net profit or loss.
These reports help you:
Compare estimated vs. actual costs.
Identify areas where you can reduce expenses.
Share financials with partners or private lenders.
How We Use It in Our Business
For our flipping and BRRRR projects, we use QuickBooks Online to manage ~10 projects annually. Here's how:
Classes: Separate P&Ls are created for each property, giving a clear view of individual project performance.
Products & Services: Each rehab phase is categorized, so we can track costs with precision.
Projects Portal: All transactions are linked to specific properties, and profitability reports are generated automatically.
This setup ensures that every dollar spent is accounted for and that my CPA has easy access to clean, organized data for tax preparation.
Setting Up Your Clients for Success
At BookkeepingRE, we help clients implement the same system to manage their flips and BRRRRs. By leveraging QuickBooks Online’s Projects Portal, we ensure their financial records are accurate, accessible, and optimized for growth.
Final Thoughts
The QuickBooks Online Projects Portal is a powerful tool for real estate investors managing rehab-heavy projects. By categorizing transactions, monitoring profitability, and simplifying reporting, it provides the financial clarity needed to make smart decisions and scale your business. Whether you’re flipping 2 houses a year or 20, this system keeps your books clean and your projects on track.
