All Forum Posts by: Vincent Pflieger

@Vincent Pflieger my two cents from working with clients in the real estate space for a long time & also personally holding property investments... Pricing from Taxstra to me sounds reasonable for what they are offering for filing your personal return with multiple schedule E's for the investments. (If any of the investments are entities that require a 1065, pricing sounds low.) 

RE: the Prime pricing, this actually sounds very reasonable for bookkeeping + filing your returns (again, as long as the return is a 1040 + schedule E's). If you think about it, total engagement is $4000: if you back out an estimated $1,500 for tax based on Taxstra's quote, that leaves you with $2500/year or $208/mo for bookkeeping, which is a great deal (for reference, our absolute bare bones minimum is usually around $400/mo, and that's if you don't have a lot of transactional activity.) So... with that, two thoughts: 1) do you need/want bookkeeping? 2) what does "bookkeeping" mean to them? I'd definitely get details on what it does/does not include. 

While a bookkeeping service is nice, if it's not up to snuff, it could leave you with a bigger mess in the long run. + If you're already managing your own books & confident in the output, then maybe its not worth an extra $200/mo right now. 

To answer your question are you too small to outsource bookkeeping to a firm right now, i.e. go with the more expensive option, I think that depends on a few things... 1) Can your cashflow support the cost of monthly bookkeeping? 2) What's your time worth? i.e. What could you being doing in place of your monthly bookkeeping? 3) Are your books accurate? 

Hope this helps!! 

@Vincent Pflieger I think 100% leveraged is normally a bad idea.  

1. Will the HELOC also provide funds to force appreciate?
2. This is a tough investing environment with labor costs so high, in particular in NY. I use the BRRRR strategy and do everything in house with my employees and still am leaving a lot of funds in each deal. With the potential for construction delays, increased renovation costs, rising interest rates on the HELOC and final refinance on the DSCR loan, being 100% leveraged in a deal feels risky.

Most of the deals I have been 100% financed in have required me to dump a lot of cash into them consistently because there is no margin between debt, cost, and revenue.  If you get into a big project like a 15 unit with NYC construction rates, you may want to make sure you have ample reserves. 

I usually advise new owners to DYI this with Turbo Tax until they get to about 10 doors, but NYC is a dumpster fire with the restrictions and regulations they impose. A well experienced real estate accountant will be a big help in your trip through the minefield.

If you have 250k as the down and the rest hard including the rehab that is pretty intense. In my market using a HELOC on a rental doesn't even come close to working. I might consider it if you could finance it all yourself and had a plan to sell but could still make it work if you had to hold as a solid plan B. If you have a job where you make way more then you live on this makes think you are probably pretty safe. Have you considered building with the funds?

I did this, or something similar. From 2020 to 2023, I used a HELOC to supplement my available cash to BRRRR as many single family long term rental properties as I could as fast as I could. The times were different then: rates were incredibly low and property values were steadily rising so even if I overpaid for a property (which happened a few times) the market usually bailed me out.

It's a very aggressive strategy and as others have said, if it doesn't go right then there is a lot of risk. In my case I didn't have much liquid but I had other assets that I knew I could leverage if I had to though it would be painful. I never had to go that route but it got close, especially as I began to take on more projects at once than I could really handle and a few of them went south on me simultaneously towards the end. I ended up maxing out the HELOC while I watched my rate climb to 11.5%.

So lessons learned... at least for me personally I kind of got addicted to acquisitions. I used the favorable market conditions to justify being more reckless than I probably should have and prioritized speed over fully stabilizing things as I went. This split my attention to the point where construction projects suffered while I also started underwriting things through rose-colored glasses which led to me drawing my HELOC to its max of 190k from a starting position of about 70 in just a few months.

I also found myself not screening new tenants as well as I should have in order to get properties occupied faster to facilitate refinances that required occupancy, telling myself I had to to lock in those great rates and to pay the HELOC back off. And that mistake came back to cost me tens of thousands in lost rent and damaged houses. Hell I'm still dealing with one of those tenants almost 2 years later.

If I were giving advice to someone else looking to do something similar based on my own experience and mistakes it would be to maintain much more reserves, only take on projects of a size and scope you can handle, and to pay the HELOC back to 0 between each project. Fully stabilize each thing before you move on.

I'd suspect that Prime is also doing bookkeeping services. No reason it should cost that much otherwise. The other one is pretty high, but I see you are in Brooklyn so might be reasonable.

When I started, I interviewed local CPAs who had other similar clients. I asked for and interviewed references. I owned my first property in my name, then quit-claim deeded it over to an LLC. Now, I have multiple LLCs which each do a tax return.

@Vincent Pflieger I see the wheels turning..... This is where sourcing your own deals off market comes in handy. If you are looking for turnkey properties, buying at or below lender LTV will likely not be possible because you are paying for someone else's value add/profit. but if you are adding value(Buying distressed) and adding your own value, then your possibilities open up tremendously.

The mission is to limit the amount of cash in the deal.  Otherwise your scaling will eventually STOP!

Don't be afraid to walk away from a deal if it does not fit. I do it all the time.