Book Value Vs Market Value

As a real estate investor, you want your investment properties to be reflected on your balance sheet at their book value not market value. When I say book value, I mean the purchase price of the property plus any expenses and improvements put into the house before it was put into service. If you are a landlord, this means all the money put into the house before you rent the house out. If you are a rehabber, it's a little simpler because you put all of your improvements into the property on the balance sheet.

Some real estate investors make the mistake of going into their accounting software and "correcting" the book value of the property shown on the financial reports. They say they thought they should update the property since it is now worth more than what the books show as the value.

You don't want to update this number on your balance sheet, because this will alter the calculation of profit/loss that occurs when you sell the property.