Real Talk: The Reality of Real Estate Finances

education getting started mindset Apr 16, 2024


Recently, I posted a question in my Facebook group about having finances in order, and the discussion was enlightening. That's why I've decided to expand on my thoughts here.


Besides the mastermind I run, I am in many others and have had numerous conversations with successful investors around the country. From these interactions, I've come to the conclusion that successful investors are often not the best at bookkeeping. Before you send me hate mail, I understand there are exceptions, but overall, this seems to hold true. It's as if the part of the brain that lights up for successful investing causes the part that enjoys bookkeeping to dim. πŸ™ƒ


My journey with finances has been long and challenging, but incredibly rewarding. Here's my story to help you navigate the challenges more smoothly and efficiently.


I bounced around different CPAs until I found the right fit for me, Charles Shapero. In our first meeting, I paid him to review my previous year's tax return. He uncovered some errors, showed me the IRS website to explain why they occurred, and then provided clear instructions on how to amend my return. The best part? I was owed money!


When selecting a CPA, here are a few qualities I look for:

- Someone who is also a real estate investor.

- Someone willing to engage in discussions and provide insights on ideas I bring from educational courses.

- Someone who can assist with tax planning.

- Someone with a confident ego, as it suggests they won't tolerate mistakes on my return.

-The sharing of bourbon with Charles is a bonus!


My friend Jeff Watson recommends asking these four questions when interviewing a CPA:

-How much REI do you own?

-How many other businesses do you own?

-How many other RE investors do you do tax returns for?

-How much continuing education do you take that applies to real estate investing?



Charles, my CPA, recommended I use QuickBooks, and at the time, Erin had some extra time because I had retired her from having to be at a job. She offered to help, which excited me because it seemed like a money-saving opportunity. ⚠️MISTAKE! ⚠️ This decision strained our relationship, a scenario I've seen play out repeatedly with other couples. I'm grateful we learned the basics of QuickBooks, though, by paying Charles during the off-season for one-on-one training.


"When the pain exceeds the pain to change, you will change."

The discomfort of hiring a professional bookkeeper eventually became less than the strain on Erin and my marriage, prompting me to decide to hire one. This wasn't just any bookkeeper; it was a professional who specialized in real estate investor bookkeeping and charges a higher fee. After a few months of getting my books in order, I arranged a Zoom meeting between the bookkeeper and my CPA to ensure the QuickBooks files aligned with my CPA's preferences. After all, the CPA's time is the highest per hour, so I want to make their job as easy and efficient as possible.


At this point, I felt good, but I couldn't answer financial questions as quickly as the super-successful investors I' knew. That's when I decided to hire a fractional CFO. I explained my situation, and he estimated it would take about six months to optimize my financial management. Six months later, I felt like I was just scratching the surface—not because of any shortcomings on his part, but because we uncovered issues in my financial record keeping and I was initially resistant to change. Now, I'm fully committed. I have bucket accounts, money allocated before it even comes in, and savings accounts for all future bills. I still have weekly calls with my CFO, which I view as coaching sessions. We discuss areas for improvement, growth strategies, and review what went right and wrong financially in the business.


This journey has been long and challenging, but as everyone who's gone through it would agree, it's WORTH IT!


Remember, how do you eat an elephant? One bite at a time.


Where are you on your journey?

How can I help you?

What referral do you need?


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