From the time that you initially decide to begin investing in real estate to buying your first property, there is a seemingly endless amount of work to be done. This is a considerably daunting thing to many people. Believe it or not, the business of owning property is a tough one and one that is full of land mines that can blow your returns to smithereens. There are many things to consider and many people that will need to be involved.
Before You Start Your Search For A Property
There are probably some things that you might need help with before buying property. A CPA can assist you with determining the amount that you have available to invest as well as assisting you with deciding if you will actively manage the property once you invest or if you have the necessary fiduciary stability to hire a property manager.
Beyond that, a CPA can help you find out what the current income (if any) of the property is as well as what the yearly expenditures will be.
Property taxes are not standard and can vary from area to area. As an investor who is looking to make money, one thing that is crucial to know is the amount of taxes that will be due yearly on the property. This needs to be weighed with the rate of occupancy.
Let’s look at an example. Say you want to invest in an apartment complex. This particular complex is in a college area which means that there will be certain times during the year that you will have a lower rate of occupancy. If the taxes are high, then you could end up just breaking even with an investment like this. However, if the complex is in an affluent part of town and occupancy is pretty stable then you could end up making more of a yearly profit.
Try figuring all of that out without a CPA and see how far you get.
Your Search for a CPA
You will need to find a CPA or CPA firm that has quite a bit of experience with the real estate business and that keeps current on all of the LLC and real estate tax laws. After just one short meeting with one of the available Houston Accountant firms, you might be surprised at the number of deductions that they can find. For example, are you aware that you might be able to deduct for an office run from your home?
On the flip side, yet just as important, the accountant can make sure that there are no illegal deductions taken as well as when you buy a property or even perform renovations; they will be able to let you know which expenses you can deduct and which will just need to be depreciated.
Finding what the rest of the process needs from a CPA
A CPA can assist you in determining what your real estate niche should be as well as any strategies that will be needed for you to have any success with the investment. There are various approaches, and without a CPA you may find yourself spread thin trying to cover all of the approaches. A CPA can assist you in determining which of those approaches will be best to tackle first.
You will also need a business plan and a qualified CPA will be essential in this area. The business plan will be the foundation that your real estate investments will be built on, and the stronger the foundation is, the better your investments will turn out.
You will not pay for your real estate in the same way that you would pay for bread. That said, there is a small variety of payment methods to choose from. Which method you opt for can make or break the investment and this is a great thing that a CPA can assist you in determining.
At the end of the day
You will also need to know what your exit strategies are and when to execute them. It does not matter if you exchange your property, rent it, or sell it, it is crucial that you understand the options and utilize them at the right time for the maximum profits or minimum loss.
How many of these things can you do without a CPA and how long would it take you? Not many and a long time.
If you struggle determining what your real estate investing needs from a CPA are, contact ABIP CPA today! One of our accounting experts will be able to answer any questions you may have!
