All Forum Posts by: Michael Plaks

That's more than we usually agree on :)

Firm size matters because you may have someone other than the owner to conduct interviews and/or consultations.

@Nat Rojas

Good question. There's no trend because tax businesses are not similar to each other. We have 20+ accountants on this board who specialize in REI and qualify as what you called "elite CPAs/EAs." I know some of my colleagues better than others, and I know for sure that we do NOT run the same operation.

Some CPAs/EAs are one-person home offices, and some are multiple-office firms with several accountants and supporting staff. Some work with beginner investors, and some work only with seasoned investors. Some focus on tax preparation, and some provide a wide range of services. Some charge per project, some charge hourly, and some offer all-inclusive advisory programs. It's really all over the board. So you can't compare apples to apples here.

Besides the major differences in our operations, there're differences in those initial contacts that you vaguely labeled "consultations/interviews."  See - this is a problem right here. Consultations and interviews are two very different things. Consultations are when you ask us for advice on your business. And this is exactly what we sell: our time and our knowledge. So you're asking for something that we normally charge for and make our living from. Some of us allow you a "free sample" and some don't. It should make sense. In my firm, consultations are not even available, free or paid, until after you sign up with us as a client.

Interviews are an entirely different arrangement. This is to determine whether we are a fit to work together, not to get tax or business advice. Interviews are free by definition. Problems arise when investors try to obtain a free consultation under a disguise of an interview. Some investors and gurus believe this is a legitimate strategy: call 10 accountants for a free consultation and pick their brains. Many of us refuse to play this game.

Here's a way to think about it. Imagine you pay me several thousand dollars for access to my expertise and my time, as a client. Then you see me giving this same time and expertise to others for free. Wouldn't it bother you?

So my (free) advice is to start by deciding what is it that you are looking for: a one-time consultation on some specific current issue, preparing your tax return or an ongoing relationship with tax planning and various other services. Then, browse this forum and see what we post and how we answer questions. This will give you a clear picture of our expertise and personality. Then contact those experts that you like and compare their services. 

@Jason Serrano

On Amazon, look for books either by Stephen Fishman or by Sandy Botkin

She possibly could. My point was that she did not need an LLC for that.

You know what's even more expensive? Having one day to deal with the consequences of leaving this stuff to chance and hoping nothing bad ever happens. Like natural disasters, car accidents, losing jobs, divorces, health issues, lawsuits, injuries, death...

@Chris John

This is not really something that can be properly addressed in a short online post. So here're some pointers to start the discussion, but not enough to finish it.

- If you consider these properties belonging to both of you equally, you can form an LLC, treat it as a partnership and transfer your respective properties into this partnership. There's no tax due in this process, but there're legal, lending, and insurance complications that need to be taken care of.

- Partnership is risky. I know you're loving brothers. Unfortunately, I also know several families of investors where being close relatives did not prevent business arguments and other negative developments. In some cases, it ruined families. When holding properties separately, you had an easy breakup process if it ever came to it. But if creating a joint business, it needs to have a lot of "what-if"s discussed and then put in writing. It is called an operating agreement and is a lawyer's job. 

- Once in a formal partnership, you will need to change your day-to-day business procedures, such as banking, paying expenses, reimbursements, bookkeeping etc. 

- Buying new properties under a new LLC/partnership name may be more difficult than what you used to do. Borrowing money, legal issues and insurance are all important and can make the closing more complicated.

- State law matters. Your state may have special requirements, restrictions, fees and reporting for LLCs. Need to know it in advance to avoid unpleasant surprises down the road.

- Besides taxes and operations, another major purpose of an LLC is legal protection against lawsuits, creditors and each other. This is for lawyers (I'm not one), and lawyers tend to disagree of how businesses need to be structured. You have regular LLCs, Series LLCs, land trusts and other options. None of them change taxes, but they do affect legal protection.

And there is more to discuss before making a good decision.

@Ken Goodman

There're more than 20 accountants contributing to this forum who specialize in REI. Browse the forum, look who seems to fit your criteria based on their posts and reach out to them.

If you have time to think about rewards and points, you're playing a small game and not using your precious time well. 

This is a lending question, not mine. I'm not sure how lenders underwrite loans for one spouse only when the couple files a joint return and only the other spouse has sufficient income. 

Putting properties in an LLC has absolutely nothing to do with qualifying for RE Pro status