All Forum Posts by: Michelle Eisenberg

@Ryan Weirick Thanks for your book recommendation. I looked it up on Amazon, and it looks like a new version is coming out in around a month, so I'm definitely going to buy the book then. I read Amanda Han's book on taxes already, including the update they wrote up on BP about the changes to the tax code this year. I'm hoping they'll also put out an updated book now that the tax laws have changed because I really liked how they explained taxes in their book.

Did you use H&R's online tax prep software or did you work with someone in person?

@Michael Plaks I really appreciate your response. What you said about H&RB makes a lot of sense. When I've done my taxes in the past, I've done it myself using their software online, so I haven't interacted with a tax preparer in person. I should probably have made it clearer in my original post that I was debating between continuing to do my taxes myself online using tax software like H&RB or Turbo Tax vs. working with a CPA in person. After all of the responses, I'm definitely leaning strongly toward working with a CPA rather than doing it myself online. 

Thank you all for your responses! It sounds like the overall message is that the value I would gain from working with a CPA would outweigh the cost of doing so, even if on paper, it seems very expensive. 

@Damon Pendleton That is a good point about the difference between value and price. I agree that the knowledge I could gain through working with someone knowledgeable could help me make better investing decisions in the future, too. I do worry about the difficulty of finding a CPA who knows real estate well enough to be able to impart this knowledge though. I need to keep asking around to see if anyone knows any good CPAs in the area who know real estate well.

@Carl Fischer I am definitely not an expert on taxes, and I don't consider myself to be simply dabbling in real estate. On the other hand, I am just beginning, and it likely won't be replacing my full time job for a number of years. I do definitely see the value of the advice that a good CPA would be able to give, and I appreciate the recommendations for CPAs on BP to follow. I'll look into all of them. 

@Caleb Heimsoth That makes sense, and I also want to make this a business, even though I won't be able to go full time for a number of years. When you say that you got a CPA as soon as you could, did you start working with a CPA after you bought your first property, or did that come later for you?

@Katie L. Thanks for pointing that out--I know that having to file taxes in multiple states will make tax time more complicated. I'd definitely appreciate referrals, and I'll PM you as well. I have heard about the new pass through deduction, but I'll also look into more.

@George Pauley That's interesting that it was the other way around for you in terms of what drove you to seek out a CPA. It sounds like even though you were able to do your taxes for your rental business on your own, you would still recommend hiring a tax preparer. I also hadn't realized H&R doesn't have a good reputation. That's definitely good to know.

My partner and I live in the California Bay Area and just closed on our first buy and hold SFH in St. Louis, MO. We're still getting it rent-ready, but we'll hopefully have a tenant in soon. That means that for the first time, we will need to figure out how to pay taxes on an investment property.

In the past, I have primarily used H&R block to do my taxes. They do seem to be set up to handle real estate investments. While this is certainly the cheapest option, I don't want to miss out on potential tax deductions or do something really wrong and end up in trouble. On the other hand, with one property that cash flows, but that still doesn't make a ton of money, I'm not sure whether it's worth paying a CPA to do our taxes. I have a feeling that the cost of paying the CPA would wipe out a good chunk of the profit that we stand to make on the property.

Here are my questions:

1. Is it worth paying for a CPA even if it means that there may be very little profit from the one property after paying these fees?

2. If not, at what point is it worth paying for a CPA?

3. If I'm deciding between doing my taxes by myself online using H&R block vs. sitting down in person with a cheaper, non-CPA tax filer, which option would make more sense?

I really appreciate your advice!

@Ting Lai I live in the Bay Area too, and I'd also be very interested in a recommendation for a CPA in the area who knows about real estate investing. I also started in real estate investing this year, and my partner and I just closed on our first SFR in St. Louis, MO.

@Gorden Lopes I live in the bay area and my partner and I just closed on our first property in St. Louis, MO. I have also been thinking that it would be great if there were a meetup specifically centered around investing out of state, so I was excited to see your post. Please put me on your list for potential meeting/networking events. If you want any help planning meetups of this type, I'd be interested in that too. I'll PM you as well.

I've been working with a good insurance broker who was able to find me much better prices than what I was quoted when I called individual companies. If you're interested, feel free to PM me and I can give you his information.

@Ryan Schaefer I am closing on my first rental property in St. Louis (Dogtown) tomorrow. I'm also investing from out of state (I live in the California Bay area), although I lived in St. Louis for 10 years so, like you, I know the area relatively well. 

I've been working with a really great real estate agent who has made investing from out of state so much easier. If you're interested, PM me and I can ask her if she's okay with me sharing her name. 

I don't know your market, but only 7% for property management seems very low. I'm just starting out in St. Louis, and all of the property management companies I spoke to charge 9 or 10% and also charge a full months rent as a leasing fee. When you add that in, the percentage is actually quite a bit higher. I've managed to find cash flow positive properties there even after putting aside all of the expenses, but I've had to analyze a lot of properties--over a hundred so far. I'm hoping to sign multi-year leases to reduce the leasing fee over all.

However, I'm looking at properties at or under $125,000, and I think it's easier to find cash flowing properties at lower prices than higher prices. In St. Louis, for example, I would be hard pressed to find any single family homes at or over $200,000 that would rent for anything near $2,000 a month.

Just something to keep in mind since I was looking into the regulations for AirBnB in San Jose (I'm not an attorney or an expert on this, though). The municipal code in San Jose requires that you live in the property for a decent portion of the year (I think it's 180 days) if you are going to rent out the whole property for short term rentals. If you are going to just rent out rooms in the property, you should be good to rent all year long. 

On the other hand, from what I can tell, the regulations are looser in San Jose than other areas of Bay, so it seems like a good place to try it.