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All Forum Posts by: Jana Cain

Jana Cain has started 7 posts and replied 219 times.

Post: New investor intro & Meet up events in Bay Area, CA

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Shawn W., welcome to the forums! 

Re: local meetups, if you haven't already, I recommend going on the Meetup website to find events - there are quite a few all over the bay area. Several that I know meet regularly are those hosted by Bobby Sharma (usually meets on the peninsula if not virtually), Neal Bawa (mostly virtual these days), Lori Greymont (SJREI in San Jose) and Bay Area Wealth Builders (they meet in the north bay). There are plenty more that I'm less familiar with. Meetup is great for finding others!

Post: Do I need a CPA? ANSWER INSIDE

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Kevin S. I agree with @Kory Reynolds - you want to work with a professional who fundamentally understands your business, whatever that is. Yes, there is nuance to real estate, just like there is nuance to any business. You want your accountant (tax preparer and/or bookkeeper) to understand how to classify your business items - fundamentally, there are just 5 categories of entries (asset, liability, equity, income, expense) and the transaction is booked as a debit or credit to the appropriate category. So, for exampe, if you're in the business of selling a product, be it houses, horses, or Halloween costumes, your chosen pro needs to where to stick your inventory, and how to track it. They don't need to be in that business themselves to understand how to do the accounting. 

As for whether or not you can use the same accountant for all of your needs, that is harder to answer. A multi-accountant firm might be more likely to have practitioners that specialize in your various areas of business, whereas a solo shop may be much more limited. For example, I specialize in just a few industries (RE being the bulk of my clients), but I don't enjoy cost accounting, or dealing with high turnover inventory, so I don't have any retail/ecommerce or manufacturing clients. I know of accountants that do specialize in these areas, but they don't touch real estate at all. So do some investors have multiple accountants? Yes, some do. It wouldn't be all that strange for someone to have a bookkeeper for their real estate business, a bookkeeper for their non-real estate business, and a tax preparer who takes the reports from the bookkeepers and files the return(s). All three could be part of the same firm, or they could each work solo in their own business focused on those areas. 

The benefit of having one person (or one firm) handling everything is consistency in the work product. Plus you know your tax preparer will find the bookkeeping acceptable (it's not uncommon for the tax pro to have preferences as to how they like to see information presented). The cons are it could be pricier to have one person/firm do it all - a qualified tax preparer likely charges more for bookkeeping than a standalone bookkeeper. I have a REI bookkeeping client that I don't prepare the returns for, but I work closely with their chosen firm to make sure the financial statements look they way they want them to (and I also explain to them my preferences for reporting, so they understand why I categorize certain items in certain ways). Their CPA firm's rates are much higher than my bookkeeping rates (they're a firm with staff, I'm a solo practitioner), so for this particular client it makes financial sense for them to have an accounting "team" vs running everything through just the CPA firm.

My recommendation is to evaluate your existing needs and how you expect them to change over time, and then do your research accordingly. 

Post: Equestrian Community Properties

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Sheena Konas If you're targeting folks who will be bringing horses with them and riding them at the property, you definitely want to make sure your footing and your fencing are top notch. The dressage/hunter/jumper set tend to be a bit more primadonna-ish when it comes to their horses being turned out, the stock horse folks (including the pleasure folks) slightly less so. No one wants their animal to risk injury when out of a stall, but I feel like the dressage/hunter/jumper crowd likes turnout footing more similar to their arena footing whereas the stock horse folks are bit more comfortable with more natural footing in the turnouts. In all cases, barbed wire is never acceptable as horse fencing, the pastures/turnouts/arenas need to be as rock free as humanly possible, and ideally the whole place is cross-fenced so that if/when Houdini makes his escape, he doesn't make it to the road (or highway!).

For arena/work surface footing, you want footing that is as versatile as possible, unless the show grounds cater predominantly to one particular discipline - for example, reiners and jumpers have different footing preferences so you'll want to plan accordingly. Granted, the hard schools will likely happen at the show grounds, but you don't want your clients to feel like they can't work their horses at home because the footing is subpar.

Hot water in the barn area is so, so lovely (my gray (i.e. white) horse wouldn't stand still for a cold water bath which made bathing at shows super annoying for all involved). Ideally feed storage is separate from tack storage.

You want it to be easy for a rig to get in and out. Ideally they can pull in, load/unload, and keep on going without need to back up. It's one thing to turn arond a 2-horse straight load bumper pull. It's another to maneuver a 6+-horse slant, or even a 3-horse LQ (living quarters trailer).

As far as a general show rental, your renters are going to want to be as close to the showgrounds as possible (it's not uncommon to need to be at the barn at 4am to start getting ready if your first class of the day is really early). They'll want to be close to decent restaurants and a large/nice grocery store. They'll eat out quite a bit with their barnmates for dinner, but will likely do breakfast at home and pack coolers to keep at the showgrounds for lunch. Nearby attractions are helpful for non-show days. Competition days are usually Thursday-Sunday each week, but if they're staying for the whole circuit and not competing every weekend, they'll want to sightsee or do fun day trips during their downtime. If your rental is dog-friendly, that's a huge bonus - horse people love to bring their dogs with them! 

If the property has hookups, that may be attractive to folks that haul with a camper or LQ. The hunter/jumper folks tend to do either a house or a hotel and don't really do the camping thing as much as the western folks.

Some resources to check out that help provide more context - I highly recommend the Chronicle of the Horse forums (english focused, has forums like BP) and Go HorseShow (western focused, no forums, just articles). The Bay Area Equestrian Network is a west-coast based equine version of Craigslist (super popular resource out here) and has a real estate section with active listings (or you can navigate to the listing agents' sites to see more of their properties).

As @Bruce Woodruff mentioned, the money can border on obscene (basically it's the clients and/or investors that are really the ones paying for all of the fancy stuff the trainers have). Lol. If you're intentional about your offering(s), you can easily charge top dollar!

I hope this info helps. I have a close friend that shows at the big hunter/jumper shows out here (her barn is about to head down to the winter desert circuit) and I work closely with a facility that houses several top trainers that are always coming and going from the big shows. Happy to address any additional questions! 

Post: 2 Properties in Bay Area and W2 Income - Need to LLC or Any Other Suggestions?

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Jane Mipsey Do you *need* to put any of your properties in an LLC? No. *Should* you? That very much depends on your end game and various other factors of your personal situation. A single-member (i.e. you as the only member) LLC is a disregarded entity in CA, meaning you and your LLC are considered one and the same. If there's even a hint that you're not adequately keeping your personal and rental activities separate, having an LLC isn't going to offer much, if any, protection should you find yourself subject to a lawsuit. Also, there is no inherent tax advantage to having an LLC.

As others have mentioned, you'll want to discuss the pros and cons with a lawyer and a tax professional to determine if an LLC makes sense for you.

Post: Very New investor with very little tax knowledge

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Donald Bowman There are quite a few things to consider when you are married but filed separately. You may find that collectively (as a household) you may end up with a bigger tax bill/smaller refund when you file separately vs when you filing jointly. If you're working with a tax pro, they should be able to run a comparison for you to show the differences. Simply filing separately isn't going to automatically raise red flags to the IRS. You'll just want to thoroughly evaulate if that change in filing status actually makes sense for you.

Post: Very New investor with very little tax knowledge

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Donald Bowman Sort of. If your modified adjusted gross income (MAGI) is below $100k, the passive activity loss rules may allow you to deduct up to $25,000 in passive losses. That amount reduces from $100k-$150k MAGI, with $0 in allowable loss once you exceed $150k (MAGI). The loss is still captured and carried forward and can be applied if/when your MAGI falls below $150k. 

Post: How Much Should I Pay for a CPA / Do I Even Need One?

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

@Mason Myers Pricing will vary quite a bit, based on several factors. A firm with employees will likely charge more than a single preparer office (due to overhead, etc). Some pros only work with REI clients with a minium portfolio size. Based on what you've described, in my area a return like yours would probably start at maybe $400 (with a solo preparer) and go up from there with a preparer that has staff (the bigger the office, the higher the cost). A firm whose pricing structure I follow for reference starts their individual return fees at $800.

Being that we're already into February, you may have trouble finding someone to work with for TY2023 as many pros don't take on new clients once the season has officially gotten underway. Unless you're okay with filing an extension.

I will also note that some (many?) preparers don't offer a "review" or "second set of eyes" for a client prepared return. If a new client brings me a return they've prepared (but haven't filed) and wants me to check it for errors, I'm charging them the same as if they brought me nothing. This is because the only way I can check for errors is to start with the same information they started with and enter it myself. Aside from any glaring errors (like data fields that are blank that shouldn't be, or more commonly, depreciation that seems wildly high because the client didn't know that you don't depreciate land), I won't be able to spot missteps without seeing all of the data that went into the return.

I hope this helps!

Post: Bookkeeping Account Payable or Bookkeeping software

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

Agreeing with much of what has been said. However, your post title mentions payables. There are plenty of apps out there that can make paying bills easier, and peer-to-peer payment tools (Venmo, Zelle, etc) make it pretty easy to add a description so that you know what they payments or for. If you're not finding the bookkeeping process to be a drag, and you're really just looking for efficiency (and possibly some additional level of detail/transparency than what your PM provides?), I recommend evaluating your app stack to make sure you're leveraging the best tools that will get you the outcome/results you're looking for. 

Post: I thought this was interesting...horsebnb?

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148

Super clever! 

Post: Am I being silly to limit my properties to states w/o income tax?

Jana Cain
Pro Member
Posted
  • Enrolled Agent
  • Richmond, CA
  • Posts 225
  • Votes 148
Originally posted by @Lynnette E.:
Originally posted by @John L.:

Maybe the investor in this case is a resident of CA? I have a hard time believing if you reside in a different state (Texas) but have properties in CA and other states that the state of CA is going to tax you on all those properties out of CA.

I think CA will tax all the properties if the properties are joined in any way like in an LLC.

A nonresident would not get taxed on all of the properties. On a non-resident return, you carve out what amount of your total income is attributed to that state. Yes, all of the properties could be taxed if they're held together in an LLC, and then it becomes a question of what/which returns the LLC needs to file - typically it will need to register as a foreign entity if it does business in a different state than where it is initially registered.