All Forum Posts by: Jake Hottenrott

@Michael Myers - Congrats on beginning your journey!

I'll speak from a CPA side and not from an attorney's standpoint.

Questions to ask your potential CPA:

- What areas/industry do you focus on?  This is important.  Most CPAs are general tax practitioners.  They will literally do anything that walks through the door.  Real Estate has many specific tax strategies and nuances that makes it worth it to have a professional that works specifically with that niche.

- Do you invest yourself?  Again, not a deal breaker if they don't, but I can tell you about 5 different mistakes I've personally made and can help my clients (especially starting out) avoid those!

- What technology do you use to keep up with clients? - It's important that your CPA be tech savvy enough to be comfortable having conversations from a far as well as providing documents back and forth securely.

- Credentials? - Now, I've seen terrible CPAs and terrible EAs (And great ones of both as well).  Credentials do and don't matter.  One of the best tax pros I know isn't credentialed but is working on it.  Credentials DO at least offer a great starting point to say "hey, this person has at least proven this amount of competency."

- Where should your tax pro be located?  Anywhere.  I wrote a blog post about this awhile back, but I think it still holds true.

https://www.biggerpockets.com/member-blogs/5926/41216-does-my-cpa-have-to-be-local

Let me know if you have any more questions and best of luck!

You may also have cash flow issues when it comes to paying the tax on the profit from the flip.  I'd recommend doing calculations on whether you can end up better off by BRRRing this deal and buying another or flipping it (including closing costs and taxes) and paying off LOCs.  Best of luck!  Any numbers that you could provide would help us provide a better answer!

The only real answer is that if you want a solid real estate purchase and sale agreement you'll need to either be a Realtor and use what their legal team has approved or take this to an attorney that specializes in the real estate and contract laws of your state.  I definitely wouldn't take my chances with an internet contract and opinions.  Best of luck!  

A few weeks ago there was an Arctic blast coming through our area, lows in the teens expected.  I had a tenant move out and at final walk through they said they would leave the keys on the counter when they left.  This house has separate locks for the side door and front door. When I went over to make sure the heat was on before the chill came through, I realized they had locked the glass storm door in the front of the house so my key wouldn't work there and I went to the side door and realized I had a Hillman/Kwikset key on my ring but that the deadbolt lock was a Schlage.  WE HAD CHANGED THE LOCK AND I FORGOT TO UPDATE MY KEY RING.  In a panic I started trying every loose/unmarked Schlage key I could find.  I had no luck and was locked out!  I called my handyman and got on his schedule for the next morning.  He called me and let me know it was the easiest lock he'd ever picked.  He turned the knob and pushed the door open, deadbolt wasn't locked.  Extra set of keys was on the counter.  

Share your stories below!

@Casey Conner - all of that will need to be in the operating agreement and shareholder/loan agreements as well.  Again, with this much money at stake make sure to spend money on competent help to protect your investors and yourself. 

@Zachary Bradigan - The bad news for you is that 95% of CPAs are exactly how you've experienced.  They take docs, they prep a return and give you a result.  The good news is that I know a few of the tax pros here and I know they are very forward thinking.   My personal reference in your general area, meaning your third of the country, is going to be @Natalie Kolodij.  She's probably about as close distance wise as your going to get to a local pro who knows real estate inside and out. See if she has any availability for new clients and schedule a consult with her.  

@Justin Carter - Awesome!  Best of luck and keep us up to date on your real estate career and ask a lot of questions!  There is a lot of knowledge at your disposal here! 

I’d recommend a conversation with an attorney for the operating agreement and entity creation and a conversation with a CPA to talk about the tax strategy to make sure that this is set up correctly before it creates an unexpected tax bill.

@Justin Carter - Congrats on starting your real estate journey!  If your first property is your primary home as well, let us know, @Eamonn McElroy is right that it's not advisable for that to be in an LLC.

BUT! If it's your first true investment property, I'd recommend against starting with an LLC. I wrote a BP blog post a while back and it breaks down why you might not want to start with an LLC.


https://www.biggerpockets.com/member-blogs/5926/53215-questions-as-common-as-the-cold---llc

@Pra Che - A frequent contributor around here is @Natalie Kolodij.  I would look to connect with her and get on her schedule as well.  I know she is very familiar with the Seattle area as well as Washington state laws.