CPA or experienced REI better for building business plan?

9 Replies

I'm gearing up to take the next steps in my REI journey. Currently have 5 properties (2 LTR and 3 STR) with waaaaay too much equity in them. All are paid off but one, and that has a LTV of about 20/80. I'm looking at a 10 year horizon and want to be "cautiously aggressive" with REI toward that horizon.

My immediate goal: I want to run a bunch of scenarios and look at possible outcomes. Examples:

  • What if I did maximum cash-out re-fi and bought 20 BRRRR properties. vs
  • Buying 5 BRRRR properties with more equity in each and conservative LTV? vs.
  • Buying b-class turnkey multi-family in a stable market with good appreciation but low equity? vs.
  • Keep four; sell highest $$$$$ one for cash, go conventional on maximum number of SFH with 80/20 LTV vs.
  • Where am I if I simply BRR 7 SFH units (not refinance/repeat) in 10 years?


Some of this I can do. But some of it involves issues with taxes that are out of my depth. Same with simultaneous rehabs. I've done five rehabs (sold 3) but did all the GC work myself; it was slow. How do the numbers and issues change when I hire a GC and take on multiples? 


What kind of consultant / sage should I seek for this? [To be clear, this is not a "mentor me" thing; I'm looking for a consultant who can help with this one specific step] CPA with REI experience? Or just a really seasoned REI consultant? Other? What's your wisdom?

Hi Erik,

If it involves taxes your CPA is probably your best bet.

Maybe do what you can on your own, and have your CPA on Speed dial vs email (however he or she prefers to work).

They say a picture is worth a thousand words.

Good Luck!

@Erik Stenbakken Why not both? If taxes are involved, you definitely want to consult a CPA. I believe more than a few tax pros on this forum practice what they preach and invest in RE themselves (myself included).

Judging by your description of your current situation and the hypotheticals on your horizon, I would advise you to look for continuous guidance as opposed to a single consultation to clear this one hurdle.

This is a growth and preservation of wealth plan. It requires maintenance, especially on that tax front since taxes are one of the biggest, if not the biggest, expenses.

@Nicholas Aiola , Yes. I think continual contact is a good idea. Just thinking through what approach is best to start off with. As @Scott Mac mentioned, for sure keep the CPA's number handy! 

Given that a CPA will be involved at some point, what are some of the conventions CPAs typically work within? Example: I interviewed a one who recently went from running a local municipality's finances to independent CPA. She has a consulting package that starts at the price of a decent used car… for a one-day consult (and she doesn't know anything about REI!). We agreed that wasn't a good solution. Interviewed another CPA today via phone briefly and he has reasonable hourly rate… but has never advised on REI things as above. Should I expect hourly quotes? Package minimums? Expect that they won't consult unless they're doing my taxes? I don't know what (if anything) is trade standard for this field. Any tips on what range of approaches I may find?

@Erik Stenbakken As you've come to find out, there is no standard when it comes to CPAs and their service offerings and billing methods.

I think it goes without saying that you want someone who specializes in real estate. In that case, I'd look no further than BP - there are about 20 of us here that specialize in RE.
Both hourly rates and advisory packages are common. You shouldn't have a problem finding a CPA who will consult without a tax prep commitment. 

@Erik Stenbakken

There are a couple of accounting firms that provide advisory related services regarding your investment. 

In my opinion - I think it is best to keep the two functions separate.

Regarding the strategy you want to go with.

How much net income do those 5 properties bring you on a monthly basis?

Did you also create a budget for yourself on what expenses you need to live the lifestyle you want?
Are you working right now - is your goal to eventually quit the W-2 job?

I am a firm believer in that more is not always better. If you can achieve your lifestyle with 5 BRRRR properties instead of 20 properties - I would go with the 5 BRRRR properties.

Good luck in your search!

@Basit Siddiqi Absolutely 100% yes! If I can hit my goals with say 5 properties making as much as 20… I'll take the 5! Totally agree. I heard on one of the BP podcasts someone who has 20 doors saying they wanted to hit $xxxxx annual income some day. I was shocked/surprised/educated when I realized that my 5 out-performed that person's 20! As Brandon Turner says, it's not all about how many doors one has. 

Yep. I have a 10x goal for REI income. Funny how I thought "All I need is $xxx" But then comes the need for a new HVAC system, or roof, and then comes taxes, and the realization that I have college tuition for kids… and all of a sudden I realize: I think I need $xxx 10x to be *net* where I want to be!

Regarding my W2 job: Yes/no. I'm self-employed now as a freelance photographer/ videographer (think B2B stuff). My wife is W2 as well. Yes. Some day, we want to get out of the "Rat Race*" for sure. [We played "Cash Flow" by Rich Dad Poor Dad and that game ROCKED my world with insight. That kicked off the whole REI we did 9 years ago].

I need to "gamify" this and get busy. Thanks for your insight.