CPA, banker, attorney, or RE agent. Who should we talk to first?

Question

Hello,

My wife and I have saved up about $70,000 for the explicit purpose of investing in some local real estate. We want to buy and hold, but that strategy can be adjusted should we find a more efficient means of investment.

Our very first step is to go talk to some professionals (CPA's, bankers, attorneys, real estate agents, other investors, etc). But I was wondering who we should talk to first as we build our team.

Should we get in contact with an agent first to start looking for property?

Should we talk to a CPA with real estate experience first to start figuring out the financial details?

Should we talk to a bank first to figure out financing options?

Should we talk to attorneys first to figure out the legal side of things?

Who is the most important team member? Where should we start?

My gut tells me that a CPA is the best place to start because they can give us more general advice about how to most efficiently leverage our cash. Ultimately, the advice we get from this first professional will guide where we go next.

Thanks for any insight!

Mark Trebor · Answer

First off congratulations on saving 70K. That by far is the biggest hurdle that prevents most people from investing.

Allot of your questions I think have different responses based on your plans after you buy the house(s) are you going to self manage? Or are you going to hire a property manager? For instance are you going to keep track of the finances yourself or give your accountant a shoebox of receipts at the end of the year? You don't need a real estate agent immediately if you have an idea as to how much you are willing to spend. I would say your max spend is 5 x your down payment or $350K. I think if you self manage or don't a good CPA is very valuable. You have enough money so a good relationship with your banker is not terribly important at this point. You should be able to get a conventional loan and not have todo anything to elaborate. If you want to stretch your dollars you could look for low down payment programs in that case a banker could be very valuable. I've never hired an attorney.

BP is a very positive forum you don't see too much tough love on these forums. But I would say that the word "team" gets thrown around a little too much. The podcasts talk about building out your team, I think its nice to have people you can count on and bounce ideas off. But I personally don't think my banker and accountant are cheering for me. You need to know your stuff so you don't get taken advantage of. If you are computer savvy and are comfortable with numbers I would encourage you to acquire Quickbooks and start playing with that. Good luck!

Mark Trebor · Answer

Jake,

You might be surprised by how much you can learn by just calling quicken mortgage and talking to one of their mortgage bankers. I have three rental property loans with Quicken Mortgage (that is the max they will let you hold). Its really no different then getting a mortgage for your primary residence. Give them 20% down they give you a loan assuming credit etc. Now that we have 18 houses allot of my loans are with a smaller regional bank that sets us up on 5 year balloon's. I believe the rule for conventional loans has moved back to a maximum of 1 primary + ten investment properties but quicken has held the line at 1 + 3. You might find other guys that are doing the 1 + 10. If you're buying a fixer upper, you might want to really focus on how much money of your down payment you can pull out once the remodel is complete, this might give you the ability to get into a second house more quickly. When I first started we had around 60K, we bought two houses within 5 months of each other, the bug hit fast and hard, there were more houses then money. So we got a line of credit from the bank for 50K and that allowed us to buy a third house a few months after the first two. Moral of the story lots of options to get money... just focus on getting the right house.

Ahad Ali · Answer

I absolutely agree you should get in touch with a CPA first, specifically one with RE experience. From there, they may even be able to direct you to the right resources for an agent, what kind of talks to have with the bank, and if you might need an attorney depending on the tax structure. CPA is definitely going to be your most important relationship in this process. Good luck to you! Let me know if I can help in any way.

Tara Yoder · Answer

I am very new to all of this as well. One step my spouse and I have taken is to find some meetups in our area for the express purpose of talking with others who have BTDT. Education and others experience counts for a LOT. I would go to the meet up with your list of questions and see what they have to say.

Jake Steven · Answer

Thanks Mark for the response.

The plan is to do most of it ourselves at first. Later on that can be adjusted I suppose.

I guess what I'm most concerned about is finding an expert who can help us navigate the world of loans, taxes, and legality. I know that traditional mortgages aren't always an option depending on how much work the property requires, whether or not it is a primary residence (this will NOT be our primary residence, we'll rent it out), and so on. I just want to make sure that we are leveraging our money in the best way possible. We want to optimize the size of our down payment against interest and taxes, etc.

"You should be able to get a conventional loan and not have to do anything to elaborate."

This is interesting. I thought we would be limited to mortgages or hard money lenders. I wasn't aware there were other options. This is why we need a professional! I can't imagine we would have much trouble getting a loan. We have 750+ credit score and a decent amount of cash.

Thanks for the recommendation of Quickbook. We use a service called Quicken, which is similar.

I'm leaning towards talking to a CPA first. I think, if anything, they would be able to point us in the right direction.

CPA, banker, attorney, or RE agent. Who should we talk to first?

CPA, banker, attorney, or RE agent. Who should we talk to first?

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