How much does a CPA "typically" cost with 1, 2, or 3 properties?

[Chris M.]

Hi everyone.

I'm a super beginner, so pardon me if this is a silly question. I'm interested in some ballpark figures on a couple CPA related questions:

1. How much can I expect a CPA to cost to do my taxes, if I have an LLC and one property?

2. Does the CPA typically charge more if I have 2 or 3 properties(under the same LLC)? If so, how much can I expect that to be?

I'm just trying to figure out if it's financially feasible for me to begin real estate investing on a very small scale. Wondering how much of my cash flow the CPA will eat up.

Thanks!

-Chris

[Jana Cain]

@Chris M. I'll take the liberty of being the first person to chime in with "it depends". You're going to get a variety of responses to this one, as tax professionals have different methods of determining their rates. Some charge by the hour, some by the schedule, others by the overall complexity and/or exposure, or some combination of all of these (I fall into the third category). Some may even charge per property. I know a tax preparer (CPA) that would charge you $750 at minimum for a return that files Schedule C and Schedule E. I know another tax preparer (EA) that would likely charge you closer to $450-$500. I'm in an expensive market, and the rates I and my peers charge tend to skew significantly higher than the averages I see in national surveys. My guess would be that in LA, you'd be looking at $500-$1,000. Of course, none of this is factoring in any other schedules you may need to file, any other returns you need to file (e.g. other states) and what your overall income picture looks like. Big dollar (income) returns and returns with many schedules (particularly Schedules C and E) are audit flags, so many pros will charge a premium for these types of returns due to the exposure, even if there's not much to report.

Many will say that you get what you pay for, so be wary of a tax pro who would only charge a couple hundred dollars for something like this. In my experience I have seen CPAs charge the most, followed by Enrolled Agents (EA), followed by CTEC (state of CA licensed tax preparers), so if you're really concerned about price you might get a cheaper quote per the above. I should note, though, that an experienced EA can be leaps and bounds more competent than a CPA who sticks to simpler tax returns, so take that advice with a grain of salt as well.

I recommend doing some research, contacting some referrals and asking for a consult, or some information about how they charge. You should ultimately go with the pro with whom you feel the most comfortable and believe you could trust. Price should be a minor factor in that decision. If the price of qualified tax help inhibits your ability to invest in real estate, you might need to take another look at your business model and whether your really are financially ready to get started.

I hope this helps!