Avatar's Blog
» Keep Clean Books - It Pays Off
Here's an example of excellent bookkeeping practices that will pay off handsomely for a hard money client:
The client owns a building. He also owns a business. The business and the building each have their own corporate entity. The business corporation has occupied the building and paid rent every month to the building corporation for a quarter of a century. The business coporation deducts the expense of the rent in its books. The building corporation takes it as income.
With a clean record on the books of the actual transfer of the rental monies over the years, the building corporation will now be able to collateralize the building to generate a commercial bridge loan at an advantageous rate, since the building is rented out and income producing. It doesn't matter that the corporations are owned by the same person, since the books have been kept neatly all these many years.
Keep clear books - it pays off handsomely when you need it most.
