CPA for Starters ?

Question

As a starter, at what timing is good to hire a CPA ? on the first property? second or after several ?

Kory Reynolds · Answer

I always take "offense" (not really, figure of speech) on this last line - that somehow a CPA could serve them better if they are an investor themselves.  I say it as a real estate focused CPA that doesn't do any direct real estate investing.  I do hear it a few times a year, and a few times I have been told they don't want to work with me as a result of that.

The reason being - most don't care if your professionals have had the same land lording headaches that you have, you just want a team that is knowledgeable in the problems you are trying to solve, not in the problems that you didn't hire them to solve.  To put it another way, I don't care if an oncologist has had cancer, I care that he knows how to solve the problem of cancer.

It is a matter of perspective too.  I think if someone is just getting started and is buying some smaller multi family deals, they have a greater level of comfort if it is someone that has been there / done that.  My clients on the other end managing portfolios valued at hundreds of millions, they don't care if I own some multi family, they care if the firm has the ability to solve their tax problems and provide solutions to their problems...which have absolutely no relation to me operating a small real estate portfolio.

To be clear @Julio Gonzalez - I don't actually take offense at your comment, and I certainly understand why some investors might look for that!  Just providing a different perspective on why that might not actually be a valuable indication depending on the problems you are looking to solve.

Sean O'Keefe · Answer

@Taya Shavers if you can get answers to the above questions on your own, plan, and file your own taxes then you can avoid this expense. Some investors are better at doing their research, financials, and taxes than others - it depends on the investor.

Congrats on kicking off the hunt for your first property.

Michael Plaks · Answer

Some more food for thought:  https://www.biggerpockets.com/forums/51/topics/1088325-expla...

Taya Shavers · Answer

@Sean O'Keefe thank you sir, i will do my best to make the right moves as possible !

Sean O'Keefe · Answer

@Taya Shavers you'll want to get a CPA when you are first starting to look for your first investment property.

They can help you with the following:

• Understanding tax impact of short-term vs. long-term vs. flip before you buy
• Which entity structure is best for goals and investment property type
• Tax and compliance on LLC or S-Corp
• How to transfer property out of personal name into LLC (hard to buy 1st through entity)
• Ways to optimize taxes through out the year
• How best to set up accounting to track income and expenses (doing this late is a mess)
• Feedback on property management systems, accounting systems. systems, etc
• Estimated payments to avoid penalties
• Knowing when to file and getting things in on time

Maybe a few things I missed, but this is the high-level …..

Account Closed · Answer

I would say after the first property, its a good time to start looking. You want to find a tax professional that is going to grow with you, and be familiar with your situation. usually, firms that don't work with smaller people charge higher fees. At the same time, you want access to these higher level strategies as you grow, so its a balancing act. We have clients ranging from 1-30 properties of all sizes and try to grow with our clients.

Taya Shavers · Answer

Thanks everyone ! Im learning alot

Peter Stewart · Answer

The sooner you get a good CPA the better. No need to wait until you have multiple properties. There are tax benefits to owning RE, so once you own 1, you can start taking advantage of them and that is where a good CPA comes in. Plus, they can help you plan and strategize for your next one.

Be sure to find a RE focused CPA. I've been through multiple CPA's in the past, even ones that many RE agents suggested. This last year I hired a new firm that only works with RE investors and it made a MASSIVE difference.

CPA for Starters ?

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