Creative Real Estate Transactions
Bookkeeping for Subject-To, Seller Finance, and Lease Option Deals
How We Keep Your Creative Real Estate Transactions Clean, Accurate, and Lender-Ready
As your dedicated bookkeeper, we understand that creative financing opens incredible opportunities—but it also introduces complex recordkeeping challenges. Whether you’re buying properties Subject-To the existing mortgage, structuring seller finance deals, or executing lease options, your books must reflect the reality of each transaction with clarity and accuracy.
At Arch Bookkeeping Services, we specialize in helping real estate investors like you grow portfolios while keeping clean, audit-ready books that make sense to lenders, CPAs, and partners alike.
🔍 What We Do for Creative Financing Clients
Creative transactions like Subject-To, Seller Financing, and Lease Options don’t follow a standard accounting mold. That’s why we build customized chart-of-account structures, track layered payments, and keep detailed documentation tied to each property.
Here’s how we manage each deal structure for you:
📘 Subject-To (Sub2): We Track Control Without Ownership of the Loan
In a Subject-To transaction, you take control of the property, but the mortgage stays in the seller’s name. We help you account for this hybrid structure by:
- Recording the deed transfer as a new real estate asset in your books
- Tracking the remaining mortgage under a dedicated liability account (e.g., “Subject-To Mortgage Payable”)
- Logging each mortgage payment you make—split into principal and interest
- Keeping a parallel schedule of the original mortgage balance
This ensures your books accurately show your equity position and obligations—even though the loan isn’t legally in your name.
💵 Seller Financing: We Track the Note and the Paydown
When you purchase a property directly from a seller using owner financing, we:
- Create a liability in your books for the promissory note (with clear terms documented)
- Track all payments using an amortization schedule, splitting each one into principal and interest
- Record the interest portion as an expense for tax and reporting purposes
- Monitor upcoming balloon payments to keep your cash flow prepared
We make sure your financials reflect the full picture—so your lender or CPA isn’t left guessing.
🏠 Lease Option: We Track Rent, Credits, and Purchase Terms
If you’re using a lease option strategy, we manage the complexities of rent credits and option fees by:
- Recording rent as income—but separating any rent credits as a growing asset on your balance sheet
- Logging the option fee as a prepaid asset, which is reclassified if and when the deal converts to a purchase
- Reconciling the lease agreement terms to your general ledger each month
This way, when the time comes to exercise your option, we’ve already aligned the credits and fees with your future equity.
⚠️ Common Mistakes We Help You Avoid
Many investors try to DIY their books or work with generalist bookkeepers who don’t understand creative deals. That often leads to:
- Inflated equity (from not recording underlying debt)
- Misclassified rent credits or option fees
- Overstated income (especially when wrap loans or rent credits are involved)
- Confusing financials that don’t hold up under partner or lender scrutiny
We prevent these issues by tracking each transaction line by line, and ensuring your books tell the right financial story.
🧾 We Help You Prepare for Lenders, Audits, and Growth
Whether you’re refinancing, bringing on a partner, or prepping for tax season, your financials need to be airtight. Here’s what we provide:
|
Situation |
How We Support You |
|
Lender Application |
Provide accurate debt ratios, net worth, and equity |
|
Partner Reports |
Break down cash flow, rent credits, and profit shares |
|
Tax Prep |
Deliver clean records with all income and expenses split |
|
Audit Defense |
Maintain support documents for every money movement |
📋 Behind the Scenes: Our Chart of Accounts for Creative Deals
We don’t use cookie-cutter categories. We build a chart of accounts that reflects your exact strategy:
Liabilities
- Subject-To Mortgage Payable
- Seller Finance Note Payable
Assets
- Rent Credit Receivable
- Option Fee Prepaid Asset
- Real Estate – Creative Deals
Income/Expense
- Lease Option Income
- Interest Expense (Wrap/Seller Note)
- Tax & Insurance Reimbursements
Maximize Your Profits with Expert Bookkeeping
Tailored Solutions for Your Financial Needs
In the world of real estate investing, every cent counts. At Arch Bookkeeping Services, we ensure that your financial records truly represent your unique transactions while aiming for your highest return on investments. Our dedicated bookkeeping services provide you with deep insights into your cash flow, empowering you to make smart decisions at each step. Partnering with us means investing in your future; accurate records lead to increased profits. Let’s transform your creative financing into a successful real estate portfolio!
We specialize in working with real estate investors using creative financing—and we make sure your books are just as innovative, but never confusing. When your deals are structured creatively, your books must still speak the language of lenders and accountants.
Let us handle the numbers, so you can focus on closing deals.
👉 Ready to Get Your Books Lender-Ready?
If you’re tired of spreadsheets, tax season stress, or bookkeepers who don’t understand creative investing, let’s talk.
📞 Schedule a free consultation: 501-356-4379 (Please leave a message. We rarely answer calls while working the numbers)
📧 Email us: Actually the best way to make contact. Give us your information and we will schedule a call.
🌐 Visit our Website: https://ArchBookkeeping.com