Finding a CPA for REI

23 Replies

I listened to Amanda Han in BP podcast and also read "Tax Free Wealth" by Tom Wheelwright. I just signed contracts for my first two rental properties in OK and LA. I also have W-2 income. 

I was trying to find a CPA and still struggling to find a good one that fit my needs. There are places famous for REI that charge over $5-10k just for planning and I'm not sure whether I'm there yet. The other CPAs that I talked to, I don't know whether they know enough about REI. Hence, wondering how others find their CPAs.

I also understand that the cost also reflect what you get and at the same time don't wanna pay too much. Any suggestions on how I should find someone? Do you think I can do this myself with Turbotax?

@Eran Withana . I would probably recommend an in between option. Here’s what I mean. Find a CPA for under 1k. If you spend 2-5k or more on filing your taxes (with what you described above) all you’re doing is making your cpa rich. If you develop skills, you can also trade knowledge for cpa or bookkeeping work in exchange for your knowledge or help. I’ve done both things I am suggesting

@Eran Withana - Look for value and not at the price.  If you are going to save $10K, $25K, or $100K by developing a tax plan when you first start out, a $2-5K outlay seems pretty insignificant.  You also have to look at a few different things.  Any CPA/EA/Tax Preparer can DO your taxes.  The value comes from the conversations ahead of time that minimize taxes by providing a framework strategy and an evolving pathway that changes with each conversation with your tax strategist and new deal that your investing career contemplates.

@Caleb Heimsoth - With all due respect and I do mean with all due respect, if an investor goes to the lowest priced or an inexperienced real estate investing tax it is just setting themselves up for headaches.  Many of the tax professionals on this forum are not "cheap" but can make a good fee for fixing situations where investors relied on poor advice from cheap advisors.

My conclusion is to interview a few and go with a professional that you feel comfortable with no only their fee, but also their personality, their experience, their reputation, and their willingness to not only advise you as you start your journey but provide education and planning for what type of investor you want to be.  Best of luck!

Originally posted by @Jake Hottenrott :

@Eran Withana - Look for value and not at the price.  If you are going to save $10K, $25K, or $100K by developing a tax plan when you first start out, a $2-5K outlay seems pretty insignificant.  You also have to look at a few different things.  Any CPA/EA/Tax Preparer can DO your taxes.  The value comes from the conversations ahead of time that minimize taxes by providing a framework strategy and an evolving pathway that changes with each conversation with your tax strategist and new deal that your investing career contemplates.

@Caleb Heimsoth - With all due respect and I do mean with all due respect, if an investor goes to the lowest priced or an inexperienced real estate investing tax it is just setting themselves up for headaches.  Many of the tax professionals on this forum are not "cheap" but can make a good fee for fixing situations where investors relied on poor advice from cheap advisors.

My conclusion is to interview a few and go with a professional that you feel comfortable with no only their fee, but also their personality, their experience, their reputation, and their willingness to not only advise you as you start your journey but provide education and planning for what type of investor you want to be.  Best of luck!

You’re an accountant, so it’s not shocking that you think what I said isnt ideal advice.  You’d naturally want to charge more.  Keep in mind paying less doesn’t mean the advice is bad.  Paying more doesn’t mean the advice is good.  It may be what’s most common but it’s not always the case.  Why would an investor who’s making say 5-10k a year in cash flow want to pay thousands of dollars to file their taxes?  

 I am shocked as to what some people pay to file their taxes.  If it costs too much, that’s fine I’d just do it myself. 

Here is my deal with CPA's, they only know what you tell them.  I can say I had 50 k in rental income expenses of 45 k and only made 5 k easy right.  They add that to your w-2 income and out they spit how much you owe on taxes or how much you get back depending. The problem is that they might have knowledge that would make you owe less in taxes than what you are paying or might be able to get you a bigger refund.  
It is all about communication.  

Lets take another approach.  You go to the doctor you say I am sick. Doctor looks you over can't find anything.  Then you say its my stomach it hurts.  He didn't know to look there for the symptoms since you didn't tell him.   If the doctor doesn't ask the symptoms and you don't tell them nothing will be discovered. It is the same in Accounting.  IF you don't know what to ask/tell and the CPA doesn't ask/ tell then you are not getting good representation for yourself.  

For you personally with 2 rentals and w-2 income I would go ask the 100 questions you might have before you engage a CPA.  They do consultations.  IF they ask you zero questions then they suck, and go to another one. But, I would think that a GOOD CPA would tell you, that you do not need them for such a small amount of investments. 

Now if you have a ROTH and a 401 K  and 25 other investments that are not real estate than yes you need a CPA. See, I broke my rule and didn't ask enough questions to tell you the whole truth but, I did answer the general question.  

If you have an other questions please tag me so I can try to help with an appropriate answer.  

Good Luck!

My personal opinion:

Read posts on this forum, jot down the names of CPAs whose posts you get value from.  Ask for referrals from colleagues, etc.

Reach out to everyone on your list.  As tax CPAs and EAs we're less than 3 weeks away from a major statutory deadline, so we're pretty busy to say the least.

If the convo can wait until post 10/15 (i.e. you're looking for help for the 2018 tax year), I'm sure most on your list would be fine with a 15-30 minute phone chat in late October/early November to determine if there's a good fit.

@Eran Withana I ran into this problem just a few months ago. I listened to 2 popular CPAs here on BP. One wanted a 2k consultation fee, which may be worth it but I can't justify paying that. The other person never responded to me so she is dead to me, never give her my business. I found that asking your local network for a real estate minded cpa is the best way to go. I found one that was recommended by my estate planning attorney and he's fantastic, local, and didn't charge me to ask him questions for an hour plus. He listened to me, my game plan and I am even opening his eyes about how self directed IRA's work. Some people can and will pay a consultation fee, I'm not willing to and found a diamond by networking. Best of luck to you. If you want my cpa's info, message me and I'll gladly share. - Greg
Originally posted by @Greg Junge :
@Eran Withana

I ran into this problem just a few months ago. I listened to 2 popular CPAs here on BP. One wanted a 2k consultation fee, which may be worth it but I can't justify paying that. The other person never responded to me so she is dead to me, never give her my business.

I found that asking your local network for a real estate minded cpa is the best way to go. I found one that was recommended by my estate planning attorney and he's fantastic, local, and didn't charge me to ask him questions for an hour plus.

He listened to me, my game plan and I am even opening his eyes about how self directed IRA's work.

Some people can and will pay a consultation fee, I'm not willing to and found a diamond by networking.

Best of luck to you. If you want my cpa's info, message me and I'll gladly share. - Greg

Most of the Popular cpas on BP are super expensive in my experience.  Probably not worth it unless you have 1M or more in assets 

I am in the same boat and looking out for a CPA. I have a couple no cash flow rentals (in Seattle) and bought a couple others this year that would cashflow.

I want to start talking to a CPA soon so that I am prepared ahead for taxes next year and on.. What do you guys say are the right questions to be asking a CPA when initially interviewing them?

Originally posted by @Jake Hottenrott :

@Eran Withana - Look for value and not at the price.  If you are going to save $10K, $25K, or $100K by developing a tax plan when you first start out, a $2-5K outlay seems pretty insignificant.  You also have to look at a few different things.  Any CPA/EA/Tax Preparer can DO your taxes.  The value comes from the conversations ahead of time that minimize taxes by providing a framework strategy and an evolving pathway that changes with each conversation with your tax strategist and new deal that your investing career contemplates.

@Caleb Heimsoth - With all due respect and I do mean with all due respect, if an investor goes to the lowest priced or an inexperienced real estate investing tax it is just setting themselves up for headaches.  Many of the tax professionals on this forum are not "cheap" but can make a good fee for fixing situations where investors relied on poor advice from cheap advisors.

My conclusion is to interview a few and go with a professional that you feel comfortable with no only their fee, but also their personality, their experience, their reputation, and their willingness to not only advise you as you start your journey but provide education and planning for what type of investor you want to be.  Best of luck!

@jake hottenrott

Good info.  Where should one start their search?

I'm a CPA and I have a few investment properties. I agree with most of the responses that for your portfolio you probably don't need to pay any crazy amount for a consultation, but you should talk to someone. There are many things that they could tell you that could help you save money and just help you make better decisions in terms of your rentals. 

I'm actually on here for my own investing not to be a CPA but I'd be willing to talk to you to explore possibilities of a consultation. 

@Chris M. - my advice is to find a few threads on here that are tax related and look to see the tone and educational nature of a tax professional on here.  You can figure out if it sounds like the ideal professional for you to work with.  Then, reach out to a few of them to see about a consult on your situation.  Interview them as much as you can.  Good luck!   

@Eran Withana I found my CPA on Yelp. Interviewed 2 of them, and chose the one I liked the most. For your situation, if it’s just once a year filing taxes, most CPAs charge $400 and goes up depending on how complicated they get. I started paying $400/year for my personal returns when I owned 1 property and a few stocks. Now with multiple properties, he charges me $750/year for personal and $1,000/year for my LLC business which is complicated. Search Yelp. I bet you can find one for around $400-500. If you’re looking for someone to ask questions weekly or monthly, expect to pay the consulting rates you’ve been quoted.

This is awesome - thanks everyone for providing your inputs and helping a fellow colleague. 

The CPA I mentioned in the original post requested me to pay half the price even before the initial consultation - so I don't even have a chance to evaluate them. 

As @Jake Hottenrott mentioned I want to look for value and not necessarily price - but at the same time I don't want to blindly pay $$ upfront. 

I think what I will do is, as some of you already mentioned

1. reach out to some here who offered to help

2. read the tax forum and find CPAs that I think has provided good guidelines and see whether I can get an initial consultation with them

I know they can add value to my situation but unless I believe they can add long term value that will justify my payment, I'm not willing to commit to them. 

I will report here once I decide what to do. Thanks again for providing feedback. 

If you know a good CPA that knows enough about REI, please send me the details directly. Thanks in advance

Love it - we found the problem! "...all you’re doing is making your cpa rich"

But is it a bad thing? Before you answer, think about this: not once a year, but on every single deal, you are paying thousands, sometime tens of thousands, dollars to your wholesaler, your lender, and your Realtor, to name a few people involved in your business. Several times more than what you're paying your CPA!

So why is it that you do not mind "making" your wholesaler, Realtor and lender rich, but you do mind making your CPA rich?

Answer: because you do not believe that your CPA is helping you make money. 

And if this is the case, you either have a wrong CPA or a wrong relationship with him. The right CPA will help you get rich, and he will be rightfully entitled to a piece of the pie.

I searched online for a CPA in my area, and every single one of them offered free consultations (not necessarily in person).  I found someone I'm comfortable with that way, and it's going to cost me $200-300 dollars to get my taxes done next year.  

Up until now, I've done my own taxes.  My dad, a dedicated DIY-er, taught me when I was in college, and I just kept learning.  Adding a rental property wasn't terribly complicated, once I wrapped my head around depreciation.  This year we sold a rental property, and I've decided it's time to bring in a professional.  Keep excellent records, and you won't be up a creek if you change your mind later.

@Eran Withana I was in the same situation as you last year. Employed full time and had just picked up a couple rental homes. I used Turbotax when I only had a W-2 income but didn't feel confident using it for RE. So, I went on a similar hunt as you are on now to find a CPA. As you found, the cost at most places is so much that it eliminates your cashflow for the year. I was eventually able to find a CPA (@Daniel Hyman) who specializes in real estate and charged reasonable prices. I'd recommend reaching out to him. He's recommended by several folks on BP.

I've been doing my own taxes for years and can tell you that a couple single-family rentals on your Schedule E is not rocket science.   The state part may be a pain.  See which state appears the most difficult and get a pro from that state would be my advice.

If the 'professional' justifies their fees with platitudes or is on here only telling people to consult a professional?  Hard pass.

If the 'professional' wrote a vague book and is never on BP offering help?  Hard pass.

There are only like 5 numbers the IRS cares about your rental EOY.   Straight line building (improvement) depreciation is easy, too.  Don't put someone on a $5k pedestal just because you're scared.  Knowledge has a way of removing False Evidence Appearing Real (FEAR).   Do a little digging.

@Eran Withana I only have a small portfolio myself. I find that a CPA is helpful. I went with a larger firm that has juniors at a more reasonable rate. This allows me to grow into the firm. The reason I chose the place I’m at is because they were large but also willing to take on small accounts and gave me honest advice. I was also able to get a free consultation so we could see if my needs and situation would work for their firm. Some places wouldn’t sit down with me for less then $200 for a consult. Do some research. I bet you can find someone good. The most important part is finding a person that is a good fit for you and has your interests in mind when doing tax planning.

Does anyone have a recommendation for a CPA in or around Champaign, IL? I'm under contract for my first SFH that I'll be house hacking while renting out rooms, and I'd like to have someone be able to review the tax information.

I know a couple other real estate investors and myself use Bryan James with Martin Hood in Champaign. 

Shoot me a message if you want to know my network local. I recommend going to REIA and getting other perspectives as well. I went through a lot of contractors, etc, but finally think I got my team established for the long haul after trial and error.