Yes, You DO Need a Real Estate Accountant: Here’s Why

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Successful real estate investors are those who do the essential things right.

For instance, business structuring, tax preparation and deductions management are vital aspects of the real estate business that must be handled scrupulously. And it is on these vital things that smart investors outdo the rest of the competition by enlisting the services of professional real estate accountants.

While many new investors wish away the idea of hiring a CPA or a tax professional, smart investors know that having accounting experts saves them lots of money in their investment pursuits.

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Why Hire an Accounting Professional?

1. Accounting experts help real estate investors to structure their operations and investments in a tax efficient manner.

Typically, accounting professionals participate in budget, planning, investment and tax reporting activities and help real estate investors to make wise decisions. Usually, the accountants prepare financial reports and records for all real estate transactions, which may include rentals, property sales, time-sharing and leases.

Related: Finding Your Accountant. How Can a CPA Help Your Real Estate Business?

The reports usually include items like operational costs, development expenses and profits. Accounting professionals also develop reports on expenditure and revenue cycles, cash-basis income statements, lease abstracts and other finance-related items. Moreover, from the regular reports, real estate investors can derive realistic and effective financial and investment strategies.

2. Hiring an accounting professional allows the real estate investor to have year-round access to the bookkeeping twists that may make or break their investments.

Hired professionals usually take their time to study the investment industry on behalf of their employers and to master the trends and tax changes that may be relevant to their client’s investments. Therefore, the accountants work with real estate investors to ensure that there is creative financing.

3. When the investor makes decisions with the help of an educated accounting advisor’s perspective, the investments are protected from sudden market shocks.

The accountant will also coordinate appraisal, capitalization activities and asset evaluation.

4. A good accountant can aide in the process of finding other individuals you need to work with as an investor.

Finding the best insurance agents, attorneys, real estate agents and other professionals to work with is usually a tricky affair for real estate investors. However, having a competent accountant can make the task easier because the accountant will be well acquainted with different business structures, levels of legal protection, and financial perspectives of hiring other experts.

Moreover, the accountant will offer impeccable advice on hiring strategies that will save money.

5. Accountants can help real estate investors to use leverage prudently and at very low risks to grow their holdings.

Indeed, successful real estate investors usually achieve such feats not by searching for receipts and going over financial spreadsheets, but by having professionals go through such tasks and offer them the best advice.

Choosing an Accountant for Your Real Estate Investment

Real estate investors should choose accountants whom they can trust and who are aggressive enough to help them save lots of money and increase their returns on investment. But the accountants should also be conservative enough to help the investors keep out of trouble with the tax authorities. With such clear goals, real estate investors should be prepared to interview several CPA professionals before they can pick the ones they can work with.

The investors can get CPA recommendations from members of their Real Estate Investor Associations, investors in their locality and other professionals that they have good relationships with, including real estate agent and attorneys. Usually, the expected relationship with accounting professionals is typically longterm, and investors should go for the right professionals whom they can work with for longterm success.

Related: My Accountant and Retirement Secrets

When interviewing the prospective accountants, real estate investors should find out about the training, certification and licensing of the accountants. They should ask for the accounting and tax areas in which the accountants specialize and the services they offer.

Furthermore, real estate investors should find out the background of the accountants, including whether they have personally invested on real estate property, their schedule fees, tax preparation and strategy, references, and accounting software. The accountants should also explain their communication strategies and ability to help with business structuring and registration.

In conclusion, even if you start your real estate business throwing your receipts into a shoe box, you should make efforts to ensure that you can access the services, planning and financial prudence of a CPA professional. An accounting expert can help you to build your real estate empire intelligently and to exploit the many tax strategies involved in property investing.

Indeed, real estate investors can multiply their returns on investment and overcome the myriads of risks involved in real estate investments through the counsel of CPA professionals.

Do you employ the services of a CPA professional or do you go it alone? Will this argument sway you to change your ways?

Let me know in the comments below!

About Author

Gerald Harris

Gerald Harris is the Founder of Save Houses which offers real estate news, resources, articles and tools for users to make informed real estate-related decisions. The site also provides resources for like-minded real estate buyers, sellers, agents, investors and enthusiasts.

6 Comments

  1. I presently use a retired CPA that doesn’t have lots of time to work with me towards a plan to help reduce my taxes in the future. He’s very inexpensive but it may be costing me! Maybe this will be the article to spur me to find another accountant!

  2. Great post Gerald!

    I forward it to my CPA as we are just starting our relationship and I hit a bump on the road with him that is costing me money.

    However, I believe in second chances and after explaining my expectation again, I’m giving him a second and last chance.

  3. Frankie Woods on

    Great information! I currently do not use a CPA as I am a technical guy. However, as my business grows, I’m seeing that it is becoming increasingly apparent that I may need to hire some help. This is compounded by the knowledge CPAs have in reducing an individual’s tax hit every year…

  4. Thank you for this post!
    It has reiterated my existing conviction to surround myself with professional support.
    Is there some sort of rule of thumb what hiring a CPA would cost? I’m interested in the same for a RE lawyer. It’ll help me get an idea of what my fixed costs will look like.

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