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  • real estate CPA

    Yea yea yea... don't become a landlord. Well, I've decided to learn this the hard way. Just had an offer accepted on 2 SFH that I'll be renting. I looked through the WCI recommended tax advisors, but I wanted to see if anyone has a recommendation for a real estate CPA.

    jfoxcpacfp
    Moderator
    jfoxcpacfp Do you have anyone who you know/recommend?

    Thanks!

  • #2
    You are better off finding one locally if you can. I interviewed several CPAs and specifically asked if they owned investment real estate before choosing my present one.

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    • #3
      Sorry, missed this thread. Honestly, I have owned real estate for many years and my hubs for many more, so very familiar with real estate transactions. However, the recommendations in the fad real estate seminars now are a bit too much for me to stomach (clean your own B&B’s to allow you to report on sch C, for example) and I cannot encourage this path.

      For real estate ownership, you should be able to work with most any “good” CPA (I say that with reservation). I find it’s more important for readers of this site to work with a CPA who is familiar with the principles of this site and/or who has deep doctor experience. Nothing wrong with trying out real estate - I’d say at least 1/2 of our clients own or plan to own in one way or another. Some of the recent recommendations, though, I would be about as likely to encourage as I would be recommend moving to bonds. They are mostly about timing rather than true tax savings.

      If you want a true “real-estate”-focused (as opposed to physician-focused) CPA, you probably need to just Google - they are out there. I imagine one of them will turn up as a recommended advisor here sooner or later.
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        Thanks Jfox. The entry into the space is more for income diversification. The tax benefits are a plus, but aren't really a homerun without professional real estate status.

        To the readers- yes I know REITs and syndications exist, but I'd rather spend the time owning a couple rentals.

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        • #5
          Originally posted by Brains428 View Post
          Thanks Jfox. The entry into the space is more for income diversification. The tax benefits are a plus, but aren't really a homerun without professional real estate status.

          To the readers- yes I know REITs and syndications exist, but I'd rather spend the time owning a couple rentals.
          I really have no problem with that. Go into it for the right reasons, eyes wide open, and be objective. Clients often ask what I think and I am honest in my evaluation, which is:
          1. True passive income is defined by the IRS and RE ownership, done right, is actually pretty “active”. If you want to be passively involved, invest in a well-diversified equity fund portfolio, based on a plan, rebalanced annually, and sit back. You cannot do this with RE unless you want to include REITs in your equity portfolio
          2. That does not make RE “bad” or “wrong”, but you need to understand that participation is not passive, it is not diversified, it is illiquid, may involve multiple state tax filings, and your true investment return is difficult to evaluate until you sell or have it appraised.
          3. That said, it is a challenge that many physicians who find themselves with extra liquidity and are tired of the boring stock market are interested in undertaking.
          4. Unlike most investors, physicians (typically) will be just fine if they underperform the market with their real estate allocation. Some will do better. Few actually measure and compare. Again, it typically is an interesting diversion, similar to stock-picking and studying businesses.
          5. Once you make the leap, do find a CPA who, in addition to being very good with complex tax issues, is also well-versed in real estate. I believe if you focus on a CPA who is entirely specialized in real estate, you risk making an association with one who is not so familiar with other areas of interest to physicians (back-door Roth’s, home offices, the interaction of various retirement accounts, physician contracts and terminology, etc.) Find an experienced, well-rounded professional.
          Fwiw, we send an initial questionnaire to prospective clients to complete before we meet. One of the questions is if the person plans to begin investing in real estate. That space was checked 15% - 25% a couple of years ago. It is now checked ~75%-80% of the time. This is obviously the current trend.

          I do not condemn real estate as an investment by any means. Many do just fine with it. A (very) few do quite well. BUT, neither do I paint a rosy picture that it is the great misunderstood secret deal leading to instant riches (if only you take a special course and follow the steps).

          Hope this helps.
          Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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