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Question

I am looking to start investing in real estate but I have not met with a financial advisor. Are financial advisors compensated by directing my money into IRA and other stock Investments? I want to make a plan but I'm curious if a financial advisor will truly help me accomplish my goals in real estate or towards something they are more heavily compensated on. Any financial advisors in here that can straighten that out for me or anyone that has experience with financial advisors in real estate?

Joseph Celes · Answer

Hi Moses,

As a 12 year Financial Advisor in CA, I can tell you the majority will direct you to products they can get compensated on. REITs, IRAs, Stocks, Mortgages etc. The governing bodies that regulate Financial Advisors; FINRA and the SEC do not allow compensation on too many Real Estate specific transactions.

The exception will be an advisor that is working for you on a Fee basis. You pay an upfront fee, and they perform a full analysis on your Financial Statements and give you some recommendations. Again these recommendations will most likely be directed towards products they can be compensated on, but the advice behind the recommendations may be sound based on your current financial profile.

For my clients, I do their Real Estate Investment analysis for free. But that is only because we have an existing relationship and trust.

Paul Allen · Answer

@Moses Castillo if you want professional assistance building a financial plan around real estate investments, then I recommend a fee-only, fiduciary financial planner.

Fee-only (not fee-based)

Fiduciary (make him/her put it in writing. Fiduciaries are like hotties on a dating app - not everyone who claims to be one actually is!)

Financial Planner (Not investment advisor, wealth manager, portfolio czar, or anything like that)

Best of Luck with Your Real Estate Investments!

Joseph Celes · Answer

Hi Moses, It depends on what you want to do with that plan.

Asking for a Financial Plan is like asking for a Diet Plan. You'll get hundreds of recommendations but if it is not towards your goals, then it is useless.

If your goal is to get a second opinion on where you stand today, a Financial Advisor could help.

If your goal is to analyze a Real Estate Transaction, I'd ask a Mentor.

If your goal is to get Tax Advice on a deal, call a CPA.

Just don't go paying Hundreds of dollars when you really only have a specific question in mind.

I.e. Don't hire a personal trainer when you are trying to decide if you should eat that piece of cake.

Alan Grobmeier · Answer

@Moses Castillo. most financial advisors will not want you to invest into real estate properties.  As @Joseph Celes stated, advisors are compensated based on products under their control.  A rental property, obviously, is not under their control.  Generally speaking they won't want you to invest in that.

As a result, I don't trust financial advisors.

I have had the SAME CPA for the last 15 years.  I am closing in on retirement.  What I did do was pay for an hour of HIS time to discuss present situation, retirement, and future retirement considerations.  He is also a friend of mine, which helps.

My advice:  Get a CPA that does LOTS of real estate stuff.  I actually spend more time on my taxes than I do my portfolio/rentals.  ;-)

Best of luck!

William Battistelli · Answer

If you really want a plan, I would recommend finding an advisor that will generate a plan for a set fee (one time or monthly retainer).  However, 10 advisors with the same info will probably generate 10 different plans.  They may all be good plans and move you towards your goals, but will approach them different ways.

What is it you’re looking for in a plan?  How to get started?  Where to go?  What money to use? The ability to track everything?

Dennis M. · Answer

No you don’t need them . They are going to do whatever gets them commission and it’s going to be based on the stock market . They are just salesmen pretending to have your best interests while they gamble with your hard earned money . I read some stats recently that most of them don’t even have a retirement plan themselves ! Don’t trust these charlatans

Alan Grobmeier · Answer

@Moses Castillo, I get that kind of advice from my CPA.  But I am the one that needs to have the plan.  He's not going to make a plan for me.

I'm just trying to make sure stuff looks 'balanced' and i'm not too far 'over my skis' and lose everything.

I have property in my SDIRA, personal property, and Social Security.  My 401k plan money gets rolled into my SDIRA when I retire for the last time.

My plan is to live off the combination of the 3 income streams.  My SDIRA properties are free and clear, but I have to pay tax on the distribution.

As a result, I can move numbers around on the personal property side to lessen our tax liability.

Start out by buying the house you live in.  Then buy the one next door to you if you can.  That will give you a great start.

Best of luck!

Moses Castillo · Answer

@Alan Grobmeier  @Joseph Celes thanks for the response! Who would you recommend I make a financial plan with? Can I really get that type of expert advice from a CPA?

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