How Do You Find A Good Financial Advisor?

Question

Hi All,

My wife and I are new to the income property scene, as a short summary my Dad went through some health issues last year and long story short is doing very well but is now in an assisted living facility where he's getting fantastic care. He set up a Trust with me as the sole inheritor of his house, and my wife and I wound up renovating and are now long term renting that property to help pay for the facility he is at. We had been saving to try and pay off our home (65k left on it) and were just about able to when everything happened. In the last year we decided to keep saving to potentially pay off my Dads house first since it had more owed on it (145k). I have always wanted to get into income properties so this has been a pretty great silver lining to everything, not only is my dad doing amazingly, but we're also accidentally in the income property world more than we ever have been before.

We're now in a place where we can just about pay off his house, but I have heard a lot of people talk about how reinvesting in a new property could be better than paying off a fairly low interest rate, etc. So I've been looking into finding a financial advisor who is familiar with income properties, but who also has a solid knowledge base about other areas as well. I tried setting up an appointment with Bank of America and their financial advisors, but after several meetings there always seemed to be some kind of miscommunication where they didnt know that we wanted a financial advisor, or were transferred to a mortgage lender, etc, etc. So I'm hoping the amazing people here can help share their experience and make finding someone a bit easier. For some small extra information incase it helps, we make just over 150k a year, and would love to continue to grow into several income properties over the next 5-10 years. We both aren't afraid of renovations, would prefer to avoid huge demolition projects though. Any tips or suggestions are greatly appreciated, thank you!

Michael S. · Answer

@John Campbell - I see my financial advisor whenever I look in the mirror.

I am far from perfect and have had investments go bad.  But I know where every dollar of my money is, and no one is taking 1 to 2% of my portfolio every year to invest in mutual funds and whole life insurance.

Educate yourself, and have a lawyer and CPA available for legal and/or tax matters.

Then when you doubt yourself, watch an episode of American Greed, and go back to educating yourself further.

There are legit, honest, and valuable financial advisors out there.  So if you find one, great.  But be very careful and do your due diligence.  And learn what warning flags to look for before your retirement funds vanish.

James McGovern · Answer

My dad had similar health challenges. we use Peter Cote of FR investments in Massachusetts. We live in Connecticut

Fulton Abraham Sanchez · Answer

@John Campbell, hi.If the loan rate is low, it’s often better to keep the debt and invest in another property to grow faster, while keeping the interest deduction.

Focus on cash flow, financing ability, and proper trust/tax setup—strategy matters more than paying off debt.

Daniel Murphy · Answer

First of all, I'm sorry to hear about your dad but it's good to hear that the financial side of things isn't causing additional stress.

I watched my dad pass away in front of me 2 years ago. Those difficult situations with your family can reframe how you think about things a bit...

I've been a financial planner for 18+ years and I've learned (my opinion) that most people are fairly agnostic about many financial things. Investments, taxes, etc., so these are pretty easy topics for financial planners to talk about with clients because many don't have a strong opinion either way.

Real estate, Social Security & a few other topics I've found are topics where people tend to have much stronger opinions. Plus, the planning is a lot more nuanced. I think this may be why some financial planners may not be as adept in these conversations with you.

Should you invest in a Roth or a Traditional IRA? That's a pretty easy question to answer...

Should you pay off your house, your dad's, or buy more property? That's much more nuanced...

There are a few things you may want to think through before you talk with a financial planner:

- How many properties do you want long term (and short term)?

- How comfortable are you with the risk/reward of rental properties, flipping time commitments & other intangibles of being a landlord?

- If you focused on paying off the properties, how would it change your taxes or cash flow and what would you do with the increase?

There are a lot of nuanced questions to think through. And sometimes you may end up choosing the "less than perfect" financial answer.

For example, I'm in the process of selling 2 of my properties because I want (need) to simplify things. I'm a newly blended family with 8 kids, two with eating disorders and a handful of other life stressors.  I'd rather transition to "easier" stock market investments rather than more complicated real estate investments.

Anyways, ramblings aside.  There are a lot of good financial planners on here. Hopefully more chime in to help you. Ultimately, talk to a few different ones. If it doesn't feel right, it's not the right fit. When it feels right, that's probably the one to work with.

John Campbell · Answer

Hi Daniel,

Those are some great questions to think about before hand. As far as how many houses I'd want long/short term, I would want several long term investment houses. I dont care for, or just dont know enough about short term to look into that at this point. But I would love to A) have 3-4 properties to ensure my wife and my retirement, or B) buy even more over time until my wife and I could retire from our current jobs and work on renovating houses for a living. We did that with my Dad's place and just loved it.

As far as comfortability with risk/reward properties, I would say that we're not super comfortable with the riskier options right now, renovating and fixing up houses a bit would be more ideal than a move in ready, but we would want to stay away from really poor condition houses, or those that are in bad areas probably. Once we had a few properties under our belts and had additional income I think we'd be more likely to try some more risky purchases, but for now there isn't much additional income aside from what we have left after bills.

If we paid off my Dad's property, I've calculated that it would leave around 800-900 left after bills and assisted living fees that I would want to just start saving up towards the next house. I wouldn't want to pay off his place until we had a solid emergency fund first, but after that, any extra funds each month would mostly go into saving towards the next property probably.

Again, those were great questions, thank you for the direction.

Jeff Roth · Answer

Hi John from Modesto/Merced, California-

Great question! You asked how to find a wealth manager who understands real estate investing along with other traditional wealth management and preservation strategies.

I would ask an experienced real estate investor or investor friendly Realtor who works with these professionals on a regular basis who they recommend.

Ideally, they should be real estate investors themselves.

To Your Success!

Doug Smith · Answer

I actually did that for a major bank for years, so let me say this. Most "financial advisors" are stock brokers...including the B of A people you mention. If that's what you want, then great. I always had people come to me saying they wanted to speak with a "financial advisor" when they wanted a financial planner...someone that was well-rounded and didn't have a mutual fund to peddle. Most FAs are going to want to push you out of real estate and into a product that pays them...period. I lived in that world for years and got in trouble a lot for not putting clients into products that provided revenue to the bank. A flat-fee CFP that does not sell products would be my recommendation, but even most of those don't really understand the intricacies of real estate investing.

Bill Hampton · Answer

@John Campbell

Sorry to hear about your dad and sorry to hear that you're having trouble finding a financial planner.

Many financial planners don't have experience with real estate investing.

I recommend finding a financial planner who specializes in real estate taxation and providing proactive advice.

Working remotely with your financial planner will expand your options. The best person for the job may not be local.

I would also recommend looking for an financial planner who will work with you throughout the year. You need an financial planner who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

Happy to answer any questions. Good luck.

How Do You Find A Good Financial Advisor?

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