Financial Planner a good idea?

Question

Hello BP!

I want to know what your thoughts are on getting a financial planner for someone who is new to real estate and just starting out? Have you guys used one? Has it been helpful/beneficial or do you recommend waiting until you have several properties and a little portfolio built up before investing in a financial advisor?

Joe Splitrock · Answer

Account Closed the trouble is the way most financial planners are compensated, they don't make money if you invest in real estate. Usually they make money based on market transactions or a percentage of your portfolio being managed. Based on what you are saying you do not want a financial planner. There are investor coaches that can help take you to the next level. Some really like them, others forge their own path.

Dave Van Horn · Answer

Account Closed

I think the earlier you see a financial planner, the better. A lot of their advice is based on how much earned income and assets you currently have but it also can involve estate planning, tax strategies, and asset protection which can be pivotal early on. It's also important to note that your financial planning needs can vary dramatically with your age and investing timeline as well.

Real estate itself is really just a strategy, one that tends to be long term with a tax advantage piece which is very important but really just one piece of the pie.

For me personally,  financial planners compensation can determine the quality of advice in my opinion. I've had more constructive experiences with a fee based/hourly based planner as opposed to on compensated based on assets under management.

Planners associated with infinite banking (which is a technique that can be employed early and help speed up your investing) and real estate investing experience are probably a better fit for what you're looking for too. Just something to keep in mind.

Daniel McNulty · Answer

Account Closed

It certainly can be helpful in the grand scheme of things.

Regarding mentors / coaches, don't overpay. Between the podcasts and books by the likes of Brandon Turner /David Greene, you can probably get everything you need, almost for free.

Daniel McNulty · Answer

Account Closed

I think @Joe Splitrock hits it on the head. Financial Planning as a profession is more geared towards budgeting, cash flow management and investing in public markets. There are a number of us on BP that are also rental property investors ourselves and or experienced syndicate investors that do add value at scale or exit when you need someone that understands the world as you do.

If you are new to RE, all you really need is to set a savings goal and stick to a budget to hit it. You do not need to pay for something that simple.

If you want to pay someone to help you understand the real estate market dynamics, how to find properties, close, rehab, etc, you are looking for a coach / mentor, not a financial planner.

Frederic Babeux · Answer

I'm a financial advisor based in Canada and like most have said, it's mostly for investing in the markets, tax and estate planning etc.

Wealth construction and preservation is all about having a plan in place. However, I tend to agree that most advisors will not recommend that you invest in real estate (besides reits) because they are not compensated on those assets.

I feel real estate has so much wealth building power but most financial advisors are not real estate investors, which to me is quite weird since you should be aware of all wealth creation tools out there.

I tend to agree with other posters that what you might be looking for is more of a mentor. Once you have a couple properties you could get advice from a financial advisor or a tax expert on tax and estate planning.

Best of luck!

Steve Vaughan · Answer

I've never used one, but would be interested in one if they helped transition from a career of hands-on RE into a more passive investment strategy with low tax impacts.

They can't help you with RE for the most part.  Maximize your savings and buy some no-load index funds if the money has 3yr plus time horizons.  Savings for RE should stay out of the market IMO.

Jonathan Ramos · Answer

Most financial planners take a cut off your assets/deals. Although a great financial planner or mentor can open certain doors most just come straight out college and haven't done a deal in their lives. Find someone who is experienced can open doors for you and instead of paying them with your money perhaps you help them with your time.

Charles Carillo · Answer

Account Closed

I have never heard of hiring a financial planner for real estate investing. Usually financial planners focus on traditional investing; stocks, bonds, 401ks, roth IRAs etc. Do you mean a mentor or coach?

Account Closed · Answer

@Joe Splitrock Ah Okay. yeah that makes more sense.

@Daniel McNulty Yes, I agree that you can do some of the basic financial planning yourself in terms of setting goals and saving but also feel that at some point it might be beneficial to have someone more experienced and knowledgeable with finances to help your structure your investments. I agree with you in having a coach/mentor and especially for me and where I am at with investing at the moment, that is what would be the most beneficial for me.

Account Closed · Answer

@Charles Carillo

I guess you can call them a mentor or coach. But yes, I am talking about a financial planner or maybe "advisor" specifically for real estate. I have heard of some people using them but not sure as to how exactly and what the benefits are and how they differ from just a coach/mentor. Hence me asking the question.

Financial Planner a good idea?

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