Tax Law and Financial/RE Planning

[Arie Guerra]

Hi! New Bigger Pockets member who is looking for *serious* financial and RE guidance. I currently have a CPA (only handles taxes and offers standard tax deductions advice) and a wealth manager at Abacus (handles retirement investments and stocks- IRA, 401K, etc). I'm paying very high monthly fees and additional management/service charges but am still not getting the help/education I would like. Moreover, neither party seems very interested in my goal to build my RE portfolio.

 Currently, I have a 4-plex in Texas which I purchased in 2020 (FHA loan that is now entirely a rental property) and manage independently. I recently purchased a primary home in LA County Sept 2023 (only put 5% to do renovations and have an interest rate of 7.25%; I rent out back unit when we are out of town and intend to rent out main house eventually). I have quite a bit of cash in my high yields savings and about 300k in my 401k/IRA portfolio (how much is actually mine vs IRS after management fees I have no idea.)

I have two corps: TV/Film corp and RE corp. Up until recently I had been doing my own book keeping for both which was a terrible idea haha; I have gotten extensions on my taxes for the past 5 years because i manually itemized all expenses I did not keep up with throughout the year on EXCEL. I have since submitted my 2023 expense sheet but my CPA has not officially filed, and have hired a bookkeeper for 2024 (finally!) back in April.

The new bookkeeper was supposed to create a quick books for my accounts, which I paid an initial service for and just started paying a "managing" monthly fee this month. However, I have not received my login info and do not think she's really worked much on my accounts. I did speak to my CPA &  bookkeeper this past Thursday and was told late July I should have 2024 expenses up-to-date and taxes filed for 2023. They also mentioned to realistically expect my accounts to not run smoothly and orderly until 2025, which I totally understand because of my disorganized bookkeeping the last few years. However, my TV/Film income has recently changed. I made quite a bit of money the last couple years but my contract ended in April. So, I have no idea how much money I owe for 2023&2024, how much money is actually mine, how to take advantage of tax deductions/credits/RE professional Status/ renovation costs/perform a cost segregation, if I really need a wealth manager at this point and how to take out my retirement investment and move it to a mutual fund I run independently.

My ultimate goal: create systems for my corps to run smoothly and optimize business-related expenses,  keep my books up-to-date for both corps so I know my input/output, pay quarterly taxes throughout the year, give myself a modest monthly income and  continue to preserve/build wealth and grow my RE PORTFOLIO!

This is A LOT of info- a very tall order- so thank you for sticking in if you've read this far! I am the first in my family to build this much wealth and own properties so I do not have any people in my network I can turn to for advice. I would love a mentor or to talk to anyone who has had a similar experience and tangible steps to get more organized. I'm currently looking into dropping my wealth management team and hiring someone (CFA/ tax lawyer who specializes in RE?) to help me with financial planning, building wealth and maximizing tax deductions/credits. Any suggestions, recommendations or comments would be  greatly appreciated!

[Jeff S.]

@Arie Guerra you have a lot of personal information here open to the public at large. I suggest you be very careful with people you meet online. 

What kind of high fees are you talking about with wealth management? This is a good question that people on here should be able to give you ideas about what seems appropriate and what would seem excessive. And you are right most money manager types won't advise you to hold RE because that is out of their control and they cannot collect fees under management. 

The rest of your concerns can be better addressed by others here on BP. Good luck.

[Simon W.]

@Arie Guerra is the CPA and bookkeeper in the same company or you hired them separately?

For the QB, is the bookkeeper handling all your rentals only or both corps?

If the CPA only needs to file 2023, I do not understand why they would say it should run smoothly until 2025.

If you hired the bookkeeper in April, it is mid-June, by end of July, the books should be running smoothly for at least this year. 

[Bill Hampton]

@Arie Guerra

I recommend finding an accountant who is also financial planner and works with real estate investors. Yes we exist. You may want to consider working with your accountant remotely to expand your options.

I would also recommend looking for a accountant willing to work with you throughout the year. You want an accountant who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

Good luck.

[Basit Siddiqi]

Has the wealth manager been able to generate a higher return compared to a complete stock market ETF?

Some suggestions to make the life of your bookkeeper more simple.
Have a separate bank account for each entity and do not run any personal transactions out of each entity(Required, especially if you have an entity).
Be ready to spend 15-30 minutes a month / quarter walking the bookkeeper through certain transactions. There is no way, they will know 100% of what you spent your money on.
The most important thing for the bookkeeper is that their starting point is accurate. 
Therefore, you may want to consider providing them details of what your company owns at that point.
Also, it is harder to start the bookkeeping in the middle of the year, you may want to have them start at 1/1/2024.

Best of luck.