Are CPA’s necessary before starting out? If not, at what point is a CPA necessary?

[AnnMarie Bacchus]

I am a newbie RE investor (currently getting approved for a HELOC to fund my first purchase). I read several post that some people recommend having a CPA before out while other say you can wait until you have a few properties under your belt? Any personal thoughts on this? No idea what to do? I'm struggling to find a RE CPA to work with me since I currently have no investment properties.

[Kelly O'Keefe]

@AnnMarie Bacchus

I think it is based on your current knowledge base and need. It can be extremely beneficial to have a tax pro in your corner. Once you have a tax pro they can help you on more complex matters such as Cost segregation, material participation and effective tax strategies that can be used to reduce W-2 income. You may be struggling to find a tax professional as these options are not available until you own have at least one property in your portfolio. 

It is entirely possible to manage your own taxes and educate yourself but this is time many can't commit to. I always recommend bringing in a tax professional focused on real estate when you think your portfolio is getting too large for you to manage or have questions that are more complex than a basic search. Usually most investors begin to see a need at 3-5 properties. However, this depends as well. Some investors can manage 10 without issue and some need help at one property. I think it would be worth It to schedule a few consultations and ask what you can expect if you hire that company and how it will benefit you.

The bottom line is having a RE focused tax professional is a great option that can be worth its weight in gold. If you feel comfortable self managing your taxes and have the time this gold can be saved and applied to your first property. I would recommend focusing on the education piece right now, doing research, and potentially signing up for a program so you can learn more about how real estate properties are taxed. Then you will know the basics and know what questions you need to ask to know if you are the right fit with a professional. This will also save time if you are paying by the hour as there will be less time spent explaining basics. 

Hope this helps