This post was written for The Rentables Apartment Blog as the eigth part of a series entitled “Building Your Real Estate Investment Team.”
Welcome to the 8th part of our series on building your real estate investment team. To round out your team you’ll need a good accountant to oversee your financial picture. Having a professional who can act as your financial quarterback and evaluate the financial impacts of your decisions will help keep you on the right course as you build your real estate investment portfolio.
A good accountant will do more than just bookkeeping, taxes, and preparation of financial statements. They will be able to advise on tax issues, how to setup your business(es) and help you make level headed financial decisions that move you closer to your goals.
Real Estate Investment Team selection criteria
Here are the 6 things you want to look for when selecting members for your real estate investment team:
- Owns investment real estate themselves
- Cares about your goals
- Has the appropriate qualifications
- Has specific experience working with investment properties in the area
- Has reasonable fees
- Provides positive chemistry
Why Add an Accountant to Your Team?
Whether you add an accountant early on in building your team, or select someone later in the process, you’ll want to know who you will be working with by the time you complete your first deal. Your accountant can advise on a few items which are time sensitive and which should be dealt with upfront. Some of the things your accountant can help with include:
- Advise on ideal company structure for your unique circumstances and goals to minimize liability and maximize your profit
- Setup a bookkeeping system
- Setup systems for controlling cash and handling funds
- Provide tax and financial planning advice
- Prepare tax returns and financial statements
Having a trusted accountant on your team will provide you with confidence that you are on track financially and help you make the most of your real estate investment portfolio.
As is the case with many other professionals, accountants typically charge by the hour. You’ll want to make sure that the hourly charge is in line with the experience and expertise of your particular accountant. Some accountants may charge different rates for different types of services, so get clear on the fee structure up front. Finally, some accountants bill for their staff’s time at different rates. If you plan to use their office for bookkeeping for example, this will likely be billed at a different rate than complex tax advice. Whatever the case may be, the important thing is to ensure you are clear on these rates up front.
Finding an Accountant
The easiest ways to find an accountant are by grabbing your local Yellow Pages, using an online search, or by contacting the governing accounting association in your region. The easiest way to find a good real estate specific accountant is to seek referrals from other investors or members of your real estate investment team. Your accountant is one team member you will want to have plenty of real estate investment experience, preferably owning an income property of their own. As someone helping to ensure your business is profitable, it is imperative that they are up to date on the rules and know how to make your invested dollars work hard.
There are usually regional or national associations which serve as governing bodies for accountants, and you should look for a professional that is affiliated with an appropriate organization in your area and who holds the required designation to practice as an accountant. In the United States the CPA is the primary designation, whereas in Canada accountants may have a CA, CGA or CMA designation.
Investment specific experience
Taking the time to find an accountant who has experience working with investors is important. As an investor you will encounter unique situations that require your accountant to be familiar with real estate specific rules and strategies. Finding someone who owns investment real estate themselves will help you connect and ensure you are on the same wavelength when making financial decisions.
To find the right accountant, look for a few recommendations, arrange to meet, and then consider whether they meet the 6 criteria above. Once you find an accountant with the experience, expertise and attitude you’re looking for, get to work and watch your portfolio grow.
Check back soon for Part 9 of Building Your Real Estate Investment Team where we’ll provide some suggestions on working with other vendors and cap off this series.
Building Your Real Estate Investment Team Series:
Building Your Real Estate Investment Team – Part 1: Introduction
Building Your Real Estate Investment Team – Part 2: Selecting a Mortgage Broker
Building Your Real Estate Investment Team – Part 3: Selecting a Realtor
Building Your Real Estate Investment Team – Part 4: Selecting a Lawyer
Building Your Real Estate Investment Team – Part 5: Selecting a Home Inspector
Building Your Real Estate Investment Team – Part 6: Selecting an Insurance Broker
Building Your Real Estate Investment Team – Part 7: Selecting a Property Manager
Building Your Real Estate Investment Team – Part 8: Selecting an Accountant
Building Your Real Estate Investment Team – Part 9: Conclusion
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