Real Estate Questions for a Certified Financial Planner (CFP)

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Real Estate Questions for a Certified Financial Planner (CFP)

Peter Vander Ploeg
Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes

Hi All - 

I plan to write a blog series for the bigger pockets community, and I’m looking for topics that are important to you.  Could you answer these 3 questions to help me?  Thanks for taking the time to leave a reply.

  1. What problems are you facing as a real estate investor?
  2. What questions do you want to ask a Certified Financial Planner (CFP)? 
  3. How could a CFP help you with your real estate investing? 

Why write a blog series? - From what I can tell, there is a desire and a need for quality advice, but finding a CFP that "speaks real estate" seems to be very difficult. I have read countless posts that real estate investors are either running into advisors who don't understand real estate investing or only offer a solution like a Real Estate Investment Trust (REIT). Both of these scenarios don't meet the needs of today's real estate investor, and I believe my background puts me in a unique position to help.

A little about me - I am a Certified Financial Planner (CFP) with a Masters Degree in Real Estate Finance who has a heavy background in real estate acquisition, renovation, and investing.  I have experience with fix-n-flips, public trustee auctions, residential sales, multi-family acquisition and management, and commercial analysis.  Also, I am a real estate investor looking to expand my own portfolio.  As a CFP I have solved problems and created financial plans for clients with a net worth of up to thirty million.  A few areas of my expertise pertaining to real estate investors are financial planning, investment management, tax strategy, small business strategy, and cash flow analysis. 

Thanks Again!

Peter

6Reply
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Most Popular Reply

Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
6y
Originally posted by @Peter Vander Ploeg:

  1. What problems are you facing as a real estate investor?
  2. What questions do you want to ask a Certified Financial Planner (CFP)? 
  3. How could a CFP help you with your real estate investing? 

Question 1 is WAAY to broad. Deal-flow, financing, tenant mgt. Easier to be a successful REI that later becomes an advisor than vise versa. I'd stay out of the micro weeds.

A common problem I see for seasoned investors is transitioning to passive 'retirement'. What are some viable actionable and tax-advantaged options when we want to sell larger complexes that have been paid off and depreciated? Lower cost DSTs, installment sales, NNN, 1031 into TIC syndication...? Not much written on that. Maybe be a transition expert.

Since you have expertise in RE finance, maybe assist us in being lenders?   Some of us have large opportunity funds earning squat in mmkt or savings accounts or want to switch niches on some level.

My underlying theme is more hands off.  We've built via hands-on mostly. Help us transition. Look forward to your blog👍

3Reply
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27 Replies

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  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    6y

    1) Problems are deal flow and keeping properties occupied with paying tenants right now.

    2) To be honest, I wouldn't know where to start. None right now. I've talked with a few out of curiosity and I haven't seen any way the typical CFP would add value to a real estate investor. Every CFP conversation I've had has been some form of a pitch for a mutual fund or annuity.

    3) I think that's on the CFP to clarify the value they offer. Most real estate investors need help with topics like asset protection and tax strategy & planning, so there might be something there if that fits your expertise.

    I think there is probably an angle where you can make a name in the real estate field as a CFP, but it'll be your responsibility to clearly indicate the value you can offer to real estate investors. We're more active with our own financial planning than the average bear, so you'll be dealing with a fairly savvy audience.

    1Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y

    Hi Taylor,

    Thank you very much for your time and input!  I’ll let you know as I begin to write the blog series.  I want to help provide a different perspective absent of any sales agendas.  My goals are to provide value to the Bigger Pockets community and learn from like-minded real estate investors.  My best to you as you serve your your tenants during this difficult season in life.  

    Sincerely, 

    Peter
     

    0Reply
  • Account Closed
    Member since 2019 · 1k+ posts · 1k+ votes
    6y

    @Peter Vander Ploeg

    The last CFP I gave 5 min of my time actually told me “you’re problem is going to be when you retire you’ll have too much income and you’ll have to pay taxes. You should start selling the houses and invest in mutual funds.”

    He did not appreciate my response.

    2Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @Peter Vander Ploeg

    Man power and money, always need just a little bit more of both all the time.

    I want to purchase motels in my area and I live in NY, what are some ways I can reduce my tax burden for these properties?

    I think bookkeeping would be a huge advantage as well as having taxes done professionally. I know a CPA can book keep but I don’t know about a CFP. My uncle and younger brother are CFPs and I’ve seen them pull some tax magic on my returns. You guys are like tax magicians.

    0Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    1. Problems facing us as investors...none really we just keep the hustle going !!!

    2. & 3....

    @Account Closed similar to what we heard. 

    We had to deal with dissolving one 20+ yr old S-corp but needed to keep the 401(k)-solo active by transferring it into another active business 401(k)-solo to maintain the REI's inside it.

    He spent 2 hours promoting his firms capability in REI, none of which was remotely relevant to our issue. Then he spent 2-3 weeks trying to come up with a solution & finally admitted he couldn't. BUT because of our AGE cashing out all the 401(k) REI & investing it through him (Mutuals etc) was THE SOLUTION!!!

    He was not pleased when my wife asked him his net worth after being an esteemed MBA Financial Advisor following his own advice for 20 years !!!

    While waiting the 2-3 weeks for an answer his secretary called us a number of times imploring us to complete & submit a 20 page information gathering paper they had given us so they could review all our investments. She explained that it was to evaluate us as clients before he could arrive at a solution & that was never going to happen.

    We then solved the 401(k) dilemma through a BP guy within a couple of days ...what a complete waste of our time & all this before the Covid-19 equities pull back. 

    0Reply
  • Mike Dymski
    Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
    6y

    1 - Creating mature deal flow pipelines with 100's of opportunities flowing through the funnel is the #1 challenge for most part-time investors (both active and passive).

    1 - Many investors struggle with systematic property management...and finding affordable, reliable contractors. Both are harder without scale.

    2 - Not sure. Real estate CPAs and attorneys handle taxes, bookkeeping, asset protection, and retirement plans. Diversification and asset allocation is pretty easy. Term life insurance is basic. Provision Wealth provides wealth management for real estate investors...may want to check out that business model.

    3 - Owning a rental property is like running a small business. It's less about financial planning and more about strategy, deal flow, and operations.

    1Reply
  • Account Closed
    Member since 2019 · 1k+ posts · 1k+ votes
    6y

    @Pat L.

    I’m mid 30’s and retiring in 5 years.

    Years ago I read an interview with Mark Walburg in men’s health. He was asked if he had a personal trainer blah blah. His response was basically this “when I find someone who can work as hard and has seen better results (looks better) than I do then I’ll hire them”.

    You don’t ask Brad Pitt what it’s like to be ugly, you don’t ask the fat guy for weight loss advice, you don’t ask someone living pay check to pay check for financial advice and you don’t ask someone who’s lunch money is dependent on commissioning your wallet what you should invest in. There’s a big difference between wealth generation or even cash flow generation, and wealth commissioning.

    Why would I take money advice from someone who doesn’t have any but had 8 weeks online study time?

    0Reply
  • Dennis Tierney
    Investor · Omaha, NE · Member since 2011 · 475 posts · 211 votes
    6y

    My problem is going to be handing over the reins of the real estate when I either get too old or the estate when I "shuffle off the mortal coil". My wife and daughter have no interest and my son who has some lives 1,800 miles away. I have yet to meet a CFP who has a clue about how to do that without liquidating it and putting it into investments that they do understand, completely out of the realm of real estate. Then they can charge AUM fees.

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Peter Vander Ploeg:

    1. What problems are you facing as a real estate investor?
    2. What questions do you want to ask a Certified Financial Planner (CFP)? 
    3. How could a CFP help you with your real estate investing? 

    Question 1 is WAAY to broad. Deal-flow, financing, tenant mgt. Easier to be a successful REI that later becomes an advisor than vise versa. I'd stay out of the micro weeds.

    A common problem I see for seasoned investors is transitioning to passive 'retirement'. What are some viable actionable and tax-advantaged options when we want to sell larger complexes that have been paid off and depreciated? Lower cost DSTs, installment sales, NNN, 1031 into TIC syndication...? Not much written on that. Maybe be a transition expert.

    Since you have expertise in RE finance, maybe assist us in being lenders?   Some of us have large opportunity funds earning squat in mmkt or savings accounts or want to switch niches on some level.

    My underlying theme is more hands off.  We've built via hands-on mostly. Help us transition. Look forward to your blog👍

    3Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y

    @Nick Rutkowski

    Thanks for your reply, Nick!  It sounds like taxes are on your mind.  I'll make sure to add some information to the blog series for you.

    - Peter

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y

    @Pat L.

    Thanks for taking the time to reply, Pat.  I'm glad you were able to figure out a solution to your 401(k)-solo issue.  

    - Peter   

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Dennis Tierney:

    My problem is going to be handing over the reins of the real estate when I either get too old or the estate when I "shuffle off the mortal coil". My wife and daughter have no interest and my son who has some lives 1,800 miles away. I have yet to meet a CFP who has a clue about how to do that without liquidating it and putting it into investments that they do understand, completely out of the realm of real estate. Then they can charge AUM fees.

    Hi Dennis, 

    I appreciate the reply!  Thanks for your time.  Succession planning is pretty specific to each individual's situation, but I'll try to include some possible strategies.

    - Peter   

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Mike Dymski:

    1 - Creating mature deal flow pipelines with 100's of opportunities flowing through the funnel is the #1 challenge for most part-time investors (both active and passive).

    1 - Many investors struggle with systematic property management...and finding affordable, reliable contractors. Both are harder without scale.

    2 - Not sure. Real estate CPAs and attorneys handle taxes, bookkeeping, asset protection, and retirement plans. Diversification and asset allocation is pretty easy. Term life insurance is basic. Provision Wealth provides wealth management for real estate investors...may want to check out that business model.

    3 - Owning a rental property is like running a small business. It's less about financial planning and more about strategy, deal flow, and operations.

    Hi Mike, 

    Thank you very much for your reply.  I agree that owning rental property is like running a small business.  There is a lot of opportunities to miss-step and cost yourself money.  Also, thanks for the tip to check out Provision Wealth's business model. 

    - Peter 

    0Reply
  • Chris B.
    Chandler, AZ · Member since 2020 · 295 posts · 272 votes
    6y

    I've had rentals for about 15 years now; mainly banking on appreciation and not rental income. Recently, I've started looking into ways to maximize my assets and better plan additional acquisitions. Maximize equity gain and maximize rental income and its starting to pay off. Thanks BP for the great advise!

    What questions do you want to ask a Certified Financial Planner (CFP)?

    I'm intrigued by the $57,000 yearly maximum that can be contributed to a 401k (ROTH). Total from self investments and company contributions combined. How can I leverage my real-estate assets, present, and future, to help me contribute to a 401k and especially a ROTH 401k. Should I move my properties into an LLC to do this? Are there better alternatives? Will an LLC allow me to contribute "company" contributions to get me up to 57k? It sounds like the contributions can't be more than 50% of income. If my income isn't that high, how can I maximize what I do get from it?

    Thanks!

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Steve Vaughan:
    Originally posted by @Peter Vander Ploeg:

    1. What problems are you facing as a real estate investor?
    2. What questions do you want to ask a Certified Financial Planner (CFP)? 
    3. How could a CFP help you with your real estate investing? 

    Question 1 is WAAY to broad. Deal-flow, financing, tenant mgt. Easier to be a successful REI that later becomes an advisor than vise versa. I'd stay out of the micro weeds.

    A common problem I see for seasoned investors is transitioning to passive 'retirement'. What are some viable actionable and tax-advantaged options when we want to sell larger complexes that have been paid off and depreciated? Lower cost DSTs, installment sales, NNN, 1031 into TIC syndication...? Not much written on that. Maybe be a transition expert.

    Since you have expertise in RE finance, maybe assist us in being lenders?   Some of us have large opportunity funds earning squat in mmkt or savings accounts or want to switch niches on some level.

    My underlying theme is more hands off.  We've built via hands-on mostly. Help us transition. Look forward to your blog👍

    Hey Steve, 

    Thanks for your input!  You provided some excellent ideas to write about.  I'll let you know when I post the first blog. I appreciate your time. 

    Sincerely, 

    Peter
     

    1Reply
  • Brady Gallagher
    Financial Advisor · Baltimore, MD · Member since 2020 · 12 posts · 6 votes
    6y

    @Peter Vander Ploeg

    As a fellow FA, great job.

    Cheers,

    Brady

    0Reply
  • Scott JensenPro Member
    Financial Advisor · Blaine, MN · Member since 2014 · 477 posts · 387 votes
    6y

    @Peter Vander Ploeg I agree. There's not a lot of financial advisors that want to deal with real estate investors and there are plenty of real estate investors that want an ongoing relationship with an advisor. I specialize in working with real estate investors and it has been a blast.  When it comes to working with real estate investors I help them track their properties and calculate rates of return each year, provide technical expertise in 1031s, DSTs, depreciation and recapture, long term tax planning, etc.  I would suggest going completely independent and fee-only to minimize conflicts of interest.  Let me know if you'd like to connect some time.

    2Reply
  • Darin L.
    Investor · Pocatello, ID · Member since 2011 · 25 posts · 11 votes
    6y

    @Peter Vander Ploeg

    This is what three CFPs had no idea how to help me on...

    Address or Create some software that correctly analyzes a paydown phase of rental properties. I would be happy to partner with you on the software creation!

    Consider someone who has purchased several rental properties at 20% down and is planning to match a payoff of all loans to a retirement date with pensions starting (military, state, etc).

    Assuming there will be no more purchases and a set amount of monthly money (cashflow plus additional owner input) is used to paydown loans via debt snowball/avalanche process, what is the actual timing of the payoffs? Be sure to include continuation of taxes and insurance remaining as an expense and increasing by a certain amount each year. Then, make it update-able without losing a copy of the original plan, so that I can compare on a regular basis if I am still on track or how far off-track (time and dollars) I am and how to get back on track.

    It took me many hours to get a spreadsheet that i think gets me within a year or so of a correct payoff date but doesnt correctly account for taxes and insurance.

    1Reply
  • Randy Bloch
    Rental Property Investor · Minneapolis · Member since 2019 · 257 posts · 244 votes
    6y

    @Darin L.

    I’m Pretty sure I built an excel that does this. DM me if u are Interested in me sharing.

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Chris B.:

    I've had rentals for about 15 years now; mainly banking on appreciation and not rental income. Recently, I've started looking into ways to maximize my assets and better plan additional acquisitions. Maximize equity gain and maximize rental income and its starting to pay off. Thanks BP for the great advise!

    What questions do you want to ask a Certified Financial Planner (CFP)?

    I'm intrigued by the $57,000 yearly maximum that can be contributed to a 401k (ROTH). Total from self investments and company contributions combined. How can I leverage my real-estate assets, present, and future, to help me contribute to a 401k and especially a ROTH 401k. Should I move my properties into an LLC to do this? Are there better alternatives? Will an LLC allow me to contribute "company" contributions to get me up to 57k? It sounds like the contributions can't be more than 50% of income. If my income isn't that high, how can I maximize what I do get from it?

    Thanks!

    Hi Chris, 

    I like where you're going with this post.  Structuring your business is important and can help you on many fronts.  I'll make sure to include some information on this for you.

    Thanks, 

    Peter  

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y

    @Darin L.  - Hopefully, you saw @Randy Bloch 's comment on your post.  If you want me to take a look at your spreadsheet too, I am happy to provide some thoughts.  Thanks for posting!

    1Reply
  • Ryan Allen
    Saratoga Springs, NY · Member since 2017 · 30 posts · 14 votes
    6y

    @Peter Vander Ploeg

    Hey Peter,

    Thanks for gauging and gathering opinions. A few things off the top of my head where I could see it adding value.

    1. Tax planning - how will the real estate investments I have impact my personal tax situation. If I spend more on CapEx or repairs, will that save me meet in taxes? What about combining it with IRA & 401k contributions. Strategies to play the least amount of taxes and how to combine real estate.

    2. Not sure if this falls under CFP, but book keeping and performance metric calculation advice. Just general methods.

    3. Tax strategies and Advantages for forming an LLC vs not.

    Thanks for providing the content! Looking forward to reading it.

    Thanks,

    Ryan

    1Reply
  • Sean YorkPro Member
    Developer · Houston, TX · Member since 2019 · 52 posts · 12 votes
    6y

    @Peter Vander Ploeg I am very interested in your future blogs on the subject. I am starting my own small business focused mainly on development of small niche projects, including small multifamily and neighborhood office (duplex, fourplex). Additionally I will be re-investing development fee profits and cash flow to expand into the multifamily investment arena. My wife and I are in the middle of getting our current financial house in order and working with a CFP in our neighborhood, but I would like to get some additional expert input on the real estate aspects including creating a ROTH IRA that can be used for future investment. I would welcome input on strategies for building my fledgling development business into something sustainable. Will be looking for partnerships and to enter into consulting contracts for income initially.

    1Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Ryan Allen:

    @Peter Vander Ploeg

    Hey Peter,

    Thanks for gauging and gathering opinions. A few things off the top of my head where I could see it adding value.

    1. Tax planning - how will the real estate investments I have impact my personal tax situation. If I spend more on CapEx or repairs, will that save me meet in taxes? What about combining it with IRA & 401k contributions. Strategies to play the least amount of taxes and how to combine real estate.

    2. Not sure if this falls under CFP, but book keeping and performance metric calculation advice. Just general methods.

    3. Tax strategies and Advantages for forming an LLC vs not.

    Thanks for providing the content! Looking forward to reading it.

    Thanks,

    Ryan

    Thanks Ryan!

    I appreciate your input.  Great ideas!  I'll include some information for you on these topics.  

    Peter

    0Reply
  • Peter Vander Ploeg
    OP
    Financial Advisor · Denver · Member since 2019 · 12 posts · 8 votes
    6y
    Originally posted by @Sean York:

    @Peter Vander Ploeg I am very interested in your future blogs on the subject. I am starting my own small business focused mainly on development of small niche projects, including small multifamily and neighborhood office (duplex, fourplex). Additionally I will be re-investing development fee profits and cash flow to expand into the multifamily investment arena. My wife and I are in the middle of getting our current financial house in order and working with a CFP in our neighborhood, but I would like to get some additional expert input on the real estate aspects including creating a ROTH IRA that can be used for future investment. I would welcome input on strategies for building my fledgling development business into something sustainable. Will be looking for partnerships and to enter into consulting contracts for income initially.

    Hi Sean, 

    You have exciting times ahead. Roth IRAs are a great tool to use for saving. Real estate investing within an IRA can be tricky. I'll include some thoughts on both the savings and the business front.

    Thanks, 

    Peter  

    0Reply
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