All Forum Posts by: Zach Robbins

@Nicholas Colella using a HELOC or any LOC is a good idea (in my opinion). It's a great way to keep every dollar you have busy versus sitting in the bank. Put another way, a LOC gives you the ability to invest every dollar you have available, and then go into the red some. Because a LOC is revolving you then have the ability to throw every extra dollar you have available each month at paying it down rapidly, knowing that if some emergency arises you still have liquidity to pull from the LOC.

This is essentially what I do in combination with long term debt. Establish a safety net of cash to keep on hand at all times. Use long term debt for financing properties, use all cash above and beyond safety net to fund down payments and have a LOC to fund anything above and beyond what you have available for cash. If both cash availability and LOC availability are low, it's probably a sign that you're beginning to over extend and best approach is to just focus on getting the LOC paid back down.

Over time, as you aquire more properties the rate at which the LOC is able to be paid down, and cash built up will accelerate. Velocity of cash will begin to take over and your growth will begin to snowball.

@Arielle Ramirez I personally use Jabco Realty. I use them for full service and I'm not 100% sure they offer what you're looking for. But I can say everything from their operation management to accounting I have been happy with. If you haven't tried reaching out to them yet give them a call. They're based out of Bellefonte but they manage all parts of Centre County (except Philipsburg). 

@Schnavya Bullock Where were you hoping to be with ARV? You're already pretty close to the typical 75% LTV wanted by lenders. Even if you have to come out of pocket with another $5-10k it still works out to be a nice deal (assuming it cash flows).

Thank everyone for your responses. It seems you all have a general answer of "...find a CPA..." which leads me to believe that this is still the most important member of the team to help me plan for taxes. Is that a fair assumption? I raise this question because as I said in my original post all my experiences with 3 different CPA's has basically been, at the end of the year hand them my numbers and let them do taxes. Consulting and planning is something that none of them have shown much interest in even with many questions asked. This has led to the conclusion that maybe all CPA's just want to do tax returns and maybe I should be seeking and working with a different professional on a tax strategy so that when I do hand information over to the CPA it's presented in a fashion that is tax favorable. If not a CPA, who would be my best professional to seek out for tax planning?

@Natalie Kolodij I like the idea of working with a bigger firm that would potentially have many resources to cover a broad range of niches. Ideally still working with a single point of contact but it would be someone who had this team behind them to consult with when we have things come up. Google searches have led to randomly clicking on every link in the results in my search. Anything you recommend to help narrow down what I'm looking for?

This is a post meant to stir general conversation with other business-minded people about finding and working with professionals that focus on our wealth planning, taxes and related areas. 

I'm involved in multiple things. I have income coming in from: 

• An S-Corp with other shareholders that is a service-based business
• An S-Corp with other shareholder that is a manufacturing business
• An S-Corp owned 100% by me that earns income through business consulting
• A single member LLC that I use to hold all my real estate investments, both hard real estate as well as passive investments in syndications and funds
• A partnership where I am currently a LP but likely to transition to a GP over time (family partnership). This partnership owns real estate as it's primary income
• My wife and I also both earn W-2 income from different employers

I grew up in a family business, still am involved in a family business, have my own real estate stuff going, a personal business of my own and plan on expanding into more businesses on my own over time. I also have my own (young) kids I need to plan for along with other personal items that need planning.

Because of the family business, I've always had a CPA do my taxes. That's nothing new to me. But I've never been a fan of the CPA. I tend to ask a lot of questions and I alwasy got the run around. Almost treated as if, "don't worry about that, that's my job".  I don't want to know how to do my own taxes but I at least need to know the basics of the vehicle to know how to drive it in the best way. That CPA is no longer doing my taxes and I've worked with two more CPAs since him. After this year I'm convinced I still haven't found the right fit. 

Besides a CPA I've not worked with any other professionals, other than local attorneys who have set up business entities (very little tax/financial professionals/consultants).

I hear a lot of successful people talk on the BP podcasts and other podcasts, have read hundreds of blogs and some books. I would consider myself pretty knowledgeable in records to basic tax strategies and things like that but I have CPA's looking at my cross-eyed when I try and bring up strategies I've read/heard about elsewhere. The way I have described my current CPA experience to others is "I might as well take my taxes to H&R Block". That's all my past CPA's seem to want to do. "Hand me your end of the year statements and pay me to file your taxes". 

Everyone knows how to interview well. Doesn't matter whether it's an employee or a CPA. In my experience, you don't really know what you're working with until you get them on board. Employees can come and go at any time. CPA's report card really only comes once a year. So each bad hire you lose out on an entire year's worth of time. I'm soon to be through CPA's over about a 6 year period. I don't want to reach 10 years and look back and drown in sorrow over the amount of time I've lost in successful planning. 

Now to this point I've only been mentioning CPAs. I know I should probably be dealing with more professionals than just a CPA and this is where I want to raise a discussion with some questions (primarily towards high income, multi-entity/multi-income stream, individuals):

• How did you go about vetting and finding a CPA that you feel fits you best?
• Should I consider working with multiple CPAs? To date, a single CPA has done the taxes for my individual returns as well as ALL business entities. Should I consider different CPA's for different entities based on the nature of the business?
• What are your thoughts on using a dual CPA-Tax Attorney? The big benefit claim is you have the advantage of one person who is capable of handling legal and tax sides. That's not as appealing to me, I don't mind working with multiple people. I'm more asking for Client Privilege reasons. Do you think the benefit of having Client Privilege because of working with a dual CPA-Tax Attorney is advantageous enough to seek out someone with that qualification? 
• I've not worked with any financial advisors or wealth planners. Do you feel this is a role that should be filled by a well rounded CPA/Tax Attorney? Or are you better off finding someone else who isn't the CPA/Tax Advisor? My concern here is, again I've done a lot of research on my own and when I present ideas to current CPA's they look at my cross-eyed. I don't feel that's going to change just because I bring in another party that's helping to create the plan.

My post is getting lengthy so I'm going to stop here. I know everyone has different plans and structures going so I'm hoping this turns into a round table like discussion where people can help share their experiences to create ideas and maybe some direction. 

@Nitin John Abraham I currently two different property managers managing my properties. Each month I get their statements and a virtual assistant records the transactions from their statements into Quickbooks Online. Quickbooks offers a feature called "Classes". Classes allow you to record all income and expenses to a specific class. So if you create a class for each investment you end up with some good reports for each property including a profit and loss report. 

I also use a cloud file storage service to manage my paperwork, including the property management statements I get each month.  You can also attach files to each record in QB's which is perfect for linking copies of invoices to invoice records. Note I do this because it makes it easy for myself or CPA to recall the invoice if needed as you're working in QB's. But I've still always kept a copy of each invoice in my cloud filing system in case I ever moved away from Quickbooks so that I wouldn't have to worry about getting those copies back out (not sure how easy or difficult that is). As for the cloud service I use I don't think that matters much and you should just use one you prefer. I used to use Dropbox but then switched to OneDrive only because I was already paying for Office 365 for email and other services, and OneDrive is included with that subscription so no point in paying for the same service twice. You always may be able to get away with a free version. If you're using Gmail look into using Google Drive. 

The above will handle everything on your list. It may not be flashy but between the Quickbooks accounting software and the file storage where you can save PDF copies of mortgage docs and everything else, plus word and excel docs you create yourself to manage bits of information can all be done.

That said, coming up with a good filing system, whether it's hard copy or digital, is important so that you can recall this information when you need it.

@Zachary Piatt are you speaking of Centre County? If so you can use their website. Note it's a pay per click setup but I've learned if you search for the property through maps first you'll save a lot of clicks versus searching through the other ways. Clicking around the maps doesn't count towards the click count.

https://webia.centrecountypa.gov/

@Nate Graville - First, welcome to the Bigger Pockets community and congrats on your early success as an entrepreneur. 

First Question: "...would it be a bad idea to exercise leverage where I maybe purchase three or four cashflowing properties...". 

You're going to get the best returns on your cash investments by using leverage. Choosing to use or not to use leverage does not make you right or wrong. Using leverage does create more risk. As a result, different investors prefer different paths. Some are willing to take less of a return and reduce their risk while others are more risk-tolerant and want to leverage as much as they can. This is ultimately something you will need to determine for yourself. Play with the numbers both ways and see what you think works best for you.

Second Question: "I guess my question is are rental properties somewhat recession proof, or at least in a sense?"

There's obviously no guarantees but generally a recession helps the rental market. During a strong economy people have more money to spend so more people move into more expensive living such as single family homes (buying or renting). During downturns when people are making less money housing tends to retract to more affordable living. So affordable housing in the form of multi-family rentals offers a great risk/reward ratio to investors. 

This obviously doesn't mean you can just go buy any place you want and assume it's bullet proof. You will still need to research the local markets and understand how different economic cycles will affect the areas you're looking to invest in. 

If you are busy with "day jobs" it will be important for you to find a good property manager. I wouldn't let some of the posts above discourage you from trying your hand at owning rentals. It is true that owning rentals, even with a good property manager, doesn't mean that it will be 100% passive. But your mindset shouldn't be to become "financially free" and hope to never work again. The difference is simply whether you're "working with money or working for money". In either case, you're still going to have work. One way is just more convenient than the other.

I agree with @Jay Hinrichs and @Nicole Heasley Beitenman. Whether it's friends and family or a colleague that you have known for some time and trust, raising money from them as debt or even bringing them in as an equity partner are your best options. 

The other scenario you may want to explore is to see if the owner would be willing to owner finance. This doesn't necessarily mean they need to owner finance the whole thing. Maybe they would be willing to owner finance all or at least part of the required down payment for the bank which would mean less out of your pocket. 

@Kyler Cook

So he's dealing with Centre Region Code? Hate to say it but, good luck.

I'm by no means an expert but I have enough experience with them to know that they are not easy to work with.

I do know some guys who are more experienced in things like this locally who may be able to help. If you PM your brothers contact info I can reach out to him sometime next week to get more info (I'm in NY through the weekend).

Zach