BiggerPockets Real Estate Podcast

BiggerPockets Podcast 196: LLCs, House Hacking, and Saving on Taxes with Brandon Hall

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What has five letters but causes so much fear that millions of wannabe investors never get started? That’s right: TAXES. But taxes don’t need to be scary — and understanding and utilizing the tax system can actually help grow your business and help you build incredible wealth. That’s why we’re excited today to sit down with Brandon Hall, a CPA and real estate investor who works exclusively with real estate investors to help them strategize and organize their business in the most cost-saving way possible. We cover Brandon’s real estate journey, including house hacking, LLCs, S-Corps, bookkeeping, and so much more. You’ll love Brandon’s engaging and entertaining personality, and for once in your life, you might even enjoy learning about taxes!

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This Show Sponsored By

MACK-INV-logo_OverviewA huge thanks as well to our Fire Round sponsor MACK.

MACK Investments is the nation’s longest tenured turnkey operator with over 38 years of combined experience, with its fully vertically integrated operation in the US’s most diverse economy, Chicagoland. With over 2000+ homes under management, we serve over 300+ investors across 11 different countries. Homes are priced below 200 thousand and will generate a guaranteed CAP averaging 9% that can be leveraged to achieve returns in excess of 20%.

Learn more by visiting MACKinvestments.com.

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In This Episode We Cover:

  • How Brandon realized the need for a CPA through the BP community
  • How he grew his firm through the BiggerPockets Forums
  • The importance of giving value to others
  • The details on his three-unit property
  • Tips for hiring a “leverage property manager”
  • How to find investors in your community
  • The details on his second triplex
  • Why he focuses on multifamily
  • How he funds his deals through FHA loans
  • The way he looks at PMI
  • A mistake he is guilty of when it comes to inherited tenants
  • Training your tenants and other management hacks
  • The tax benefits of house hacking
  • Mistakes he’s made in his real estate investing
  • Tips for finding a good CPA
  • Advice for those deciding whether to use an LLC or not
  • What you should know about LLCs
  • Things to know about the “real estate professional” tax designation
  • When to hire a bookkeeper
  • Common mistakes investors make with taxes
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Don’t try to sell yourself. Let your content sell yourself.” (Tweet This!)
  • “You as the business owner should not be in the bookkeeping.” (Tweet This!)
  • “The ongoing tax strategy throughout the year, that’s the time to save money.” (Tweet This!)

Connect with Brandon

Show Preview

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investors and other real estate professionals, who chat about failures, successes, motivations, and lessons learned.

    Matthew Hipp from Columbia, South Carolina
    Replied almost 3 years ago
    This was a great podcast. Thanks for all the great info. This is very helpful for a newbie like myself. Good luck!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thanks Matthew. Happy to hear you enjoyed it!
    Patrick Roob Rental Property Investor from Mundelein, Illinois (IL)
    Replied almost 3 years ago
    Hey there B Hall! I must say, this podcast has been added to my top 5 of favorites through BP, and I have listened to MANY others! With it being the end of year, in addition purchasing my first four-unit (house hack) this past March, and currently on the lookout for my second house hack to close on, this information was EXACTLY what I was looking for on my hour drive into work this morning……. For that I thank you! I was just looking at your website today, as I am currently on the hunt for a new CPA, and I see that you offer “uninterrupted access” for CPA advice and knowledge for a monthly rate, HOW COOL! Just out of curiosity on this… Would these services be provided by you directly, or do you have a team to help with that? I could imagine that once you have a large clientele basis it would be tough to juggle time for this in addition to everything else. For me personally, I am not sure a monthly partnership would be best at this point, however I would love to connect over BP and discuss prices on other options! Thanks again, and great job on this podcast! Patrick Roob
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Patrick – happy to hear you enjoyed the podcast so much! Services are currently provided by me directly, however I am growing quickly and onboarding team members all the time. I’ll be onboarding another CPA likely in the middle of next year. I’m not 100% sure how I will structure everything but I assure you customer experience and adding value are my priorities. I’ve hired business coaches to help guide me through the the process. Please do connect if you haven’t already – I’m pretty swamped but will get to you if you’ve already connected 🙂 Brandon
    Mike Dymski Investor from Greenville, SC
    Replied almost 3 years ago
    Brandon, where you separate yourself from some of the other pros on BP is that you provide complete answers on the forums rather than partial trolling answers that require members to contact your business. Most members are looking for answers, not a soft hand-off to a service provider. The hard hand-off comes with the expertise and client relations that are exhibited in the answers and articles. Well done.
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thanks Mike!
    Adam Treece USAF from Phoenix, AZ
    Replied almost 3 years ago
    Really enjoyed this podcast…tons of great info, and especially interesting perspective about the virtual relationships with clients. As someone looking to invest from overseas (military), having someone who is savvy with virtual relations is of great importance to me. Establishing a network or team from a distance is a great challenge, but using technology is a great way to overcome that. Great podcast and keep up the great work!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Military pay (especially that of overseas) is a great financial position to be in. The tough part is finding “boots on the ground” in terms of property management and contractors. It can be done!
    Philip Humphrey Note Investor from Land O Lakes, FL
    Replied almost 3 years ago
    Thank you, Brandon – excellent podcast for a beginner like me! You answered my main questions about LLC’s and real estate professional designation. One thing I would like to do is have the tenant responsible for basic maintenance on the rental property (I have seen $300 as a threshold on some posts). By doing this, are there any negative tax implications like reduced depreciation deductions or anything else? Is there a set threshold for these situations? Thank you in advance!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Philip – no tax disadvantages in this strategy. Just be careful as tenant repairs are usually no where close to the quality you are probably expecting.
    Philip Humphrey Note Investor from Land O Lakes, FL
    Replied almost 3 years ago
    Thank you very much, Brandon!
    Joe Mercer Investor from Vancouver, Washington
    Replied almost 3 years ago
    Great podcast! Where can one find a copy of your small time landlord book keeping spreadsheet? Thank you for your concern.
    Brad Simmons from Andover, Kansas
    Replied almost 3 years ago
    He describes the process on his website, but I didn’t see the spreadsheet. I don’t know of posting a direct link to the article is kosher or not… so just check out his website. It’s linked to in the show notes.
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    We had some website issues the past couple of days but it’s working now!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Hey Joe – I have spreadsheets available on my website > http://www.therealestatecpa.com
    Chris Luksha from Jaffrey, New Hampshire
    Replied almost 3 years ago
    What a great Show! Thank you Brandon for the amazing amount of nuggets in this episode. I had to pull over to write notes and questions to ask on the forums because I was listening mostly in the car and kept smacking myself in the head with ‘Ah-Ha’ moments. Really great stuff and I can’t wait to post some of my questions that came from this. Away I go to do so… Blessings, Chris
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thanks Chris glad you enjoyed it! Feel free to connect.
    Pancham G. Investor from Jericho, New York
    Replied almost 3 years ago
    Great show Brandon!! Loved every part of it.
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thanks Pancham!
    James Masotti Rental Property Investor from Washington Township, NJ
    Replied almost 3 years ago
    Awesome show Brandon! I agree with many of the other posts that this was extremely well done and that your input on the forums has been beyond valuable. I wish you the best of luck and continued success. Perhaps as I grow my business a bit more and find myself in need of some tax strategizing our paths will cross.
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thanks James. Looking forward to working with you in the future!
    Lior Mal
    Replied almost 3 years ago
    Thank you for high-level podcast
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Quite welcome!
    Dmitriy Fomichenko Solo 401k Expert from Anaheim Hills, CA
    Replied almost 3 years ago
    Inherited tenants, always something to watch out for. Nice information, thanks for sharing!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Thank you sir! Glad you liked it
    Kevin Wood Contractor from Houston, TX
    Replied almost 3 years ago
    Hey Brandon hello from another podcast guess. My questions is how did you get your site up and running. I’m in the process of getting a site and really like your look. It looks like a wordpress.org site. Did you design it yourself or what are some resources I can use to make an up to date website?
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Hey Kevin – it’s a WordPress.org site. I hired a developer who installed a few plugins and then coded CSS to make it visually appealing. Happy to put you in touch. Email me at [email protected]
    Chuck Buck Investor from Colorado Springs, Colorado
    Replied almost 3 years ago
    Hello Brandon, That podcast was fantastic and quite information dense. I imagine I’ll watch it a few more times to get everything. I did have a question about Quick Books. I have been using Fresh Books the last year. Its not bad for invoices and tracking of funds. Is there a reason you recommend Quick Books over Fresh Books? Is it personal preference? Or does one offer more than the other?
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Chuck – glad you liked the podcast so much! QB is the most robust accounting program out there. Granted, I have limited experience with Freshbooks, but mainly because QB is so reliable. But from an “accounting power” perspective, I think QB is hard to beat.
    Jake M. Investor from San Antonio, Texas
    Replied almost 3 years ago
    Great show. Wanted to mention something so people don’t get the wrong idea. When discussing whether to use limited liability entities, an example was given about a guy who did not hold his real estate assets in entities and was sued due to his son injuring someone while driving drunk and the father was somehow found liable, putting his real estate assets at risk. Because the father was found personally liable of a tort in that case, having his real estate assets in a wholly-owned entity would not have provided any protection against his personal creditors. This is a commonly misunderstood topic. Putting your assets into wholly-owned limited liability entities (when done correctly) generally protects your other assets from liabilities arising within the entities. It does NOT protect those assets from your personal creditors, which would view your ownership of the entity as an asset just like the cash in your bank account or a rental home owned in your personal name.
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Jake – thanks for explaining. I’m no attorney, but I do know there are ways to structure entities to avoid, or minimize, the damage personal creditors can inflict upon the assets held by the entity.
    Ewan McInnes Investor from Salt Lake City, Utah
    Replied over 2 years ago
    Good catch JAKE M. I was going to post the same thing. I have obtained judgments and executed on LLC membership interests. In Utah, judgment creditors executing on membership interests take an “assignee’s interest” which in the simplest terms entitles the judgment creditor to distributions from the LLC including proceeds from the disposition of the asset. In multi-member LLC the operating agreement or buy-sell can contain buy/liquidation provisions that are triggered up death, bankruptcy, judgment etc.
    Julie Marquez Investor from Seattle, Washington
    Replied almost 3 years ago
    I really liked this podcast because Brandon is so real, but also so smart. The conversations around getting your tenant to pay on time was invaluable, and nice to know that we are all human and all have struggles. Thanks for all the help on tax questions!
    Brandon Hall CPA from Raleigh, NC
    Replied almost 3 years ago
    Absolutely! Glad you liked it.
    Jeff S. Specialist from Portland, OR
    Replied almost 3 years ago
    Thanks Brandon for this great info. You answered a question of mine which is at what point would you elect to file as an s-corp. $40k sounds like a great thresh hold.
    Shannon Shue Real Estate Agent from Los Angeles, California
    Replied almost 3 years ago
    HI Brandon, Thank you Brandon. I appreciate all that insight and incredible insight. I use Xero for my flips and my buy and holds. One of my biggest disappointments with Xero is they have no customer service phone number, so they only allow for chat session (which are not very helpful, I have been on many) and emails back and forth to address issues. Quickbooks has a 1-877 number. I went to Xero because it is user friendly and I have a CPA (who I introduced Xero to 2 years ago…and now more people are using it of her clients). Something you mentioned about Quickbook Online VS Xero, I want to ask a follow up question(s): 1. To confirm what you mentioned in the podcast, Quickbooks online has an ability to manage flips as separate projects (where as Xero does not). How is it managed inside Quickbooks? Is there a work around for Xero (so far we just list different projects under the same asset category by project street name)? 2. Do you feel transitioning my books from Xero to Quickbooks is fairly easy to do? 3. If I have a few LLCs (maybe an S-Corp soon), can I manage them inside quickbooks together or needs to be done separately? Thanks, Shannon
    David Pascual from Pacific, Washington
    Replied almost 3 years ago
    great podcast very helpful, one thing though, I was slightly confused when you said you dont have an entity on your properties because you are leveraged pretty extensively. could you clarify on that ?
    Dimitar Yankov from Great Falls, Virginia
    Replied almost 3 years ago
    Brandon, I have somewhat extensive experience with QB (not RE specific). You mentioned that QB allows you to set up everything as inventory. Could you elaborate more on this? Thanks!
    Billy Evans from Saint Petersburg, Florida
    Replied over 2 years ago
    Great Podcast! I have a quick (hopefully) question. When you make more than $150,000 and are treating your spouse as a full time real estate professional so you can capture depreciation, is it necessary to file as a married filing separately, or can you file jointly? Thanks so much for the information you’ve already provided!
    Cece Liu from Newton, Massachusetts
    Replied over 2 years ago
    Hi Brandon, This podcast is great, addresses a lot of my questions. And I have two more: 1. I have a 2BR condo, and currently rent out one room, is the monthly condo fee deductible just like insurance costs? 2. The condo was for personal use for 3.5 years, then househacked for 6 months and fully rented out for 6 months — in this case would I still fully qualify for the Section 121?
    Cece Liu from Newton, Massachusetts
    Replied over 2 years ago
    Hi Brandon, This podcast is great, addresses a lot of my questions. And I have two more: 1. I have a 2BR condo, and currently rent out one room, is the monthly condo fee deductible just like insurance costs? 2. The condo was for personal use for 3.5 years, then househacked for 6 months and fully rented out for 6 months — would it still fully qualify for the Section 121?
    Elliott Schiller from Hope Mills, NC
    Replied over 2 years ago
    Should I transfer title to LLC on a property I own in my name before sale? Or just wait till the next one to setup llc.
    Don Spafford Investor from Idaho Falls, ID
    Replied almost 2 years ago
    Very useful information. I like the S-corp paying the husband & wife thing.
    Nikki Kofkin Real Estate Agent from Chicago, IL
    Replied almost 2 years ago
    Love this podcast, it is so helpful! Brandon, I’m wondering if you have a link to the blog post where you talk about your first multi unit? I’d really like to use it for comparison!