Posted by elaboratefun on August 16, 2006 at 14:13:16:
Jimmy,
Thanks for the good advice. I will use attorneys when I need them. What qualifications did these attorneys have that made you choose them?
Questions to ask when choosing attorney and CPA - Posted by elaboratefun
Posted by elaboratefun on August 15, 2006 at 16:28:04:
Hello. I am a beginning real estate investor and I am going to first add an attorney and CPA to my team. My question is: What questions do you ask each attorney and CPA to determine which is the right one for you? What qualifications must each have to satisfy you?
Wait Until You Need Them - Posted by Jimmy
Posted by Jimmy on August 16, 2006 at 12:32:52:
I would wait until you have a need for these services. as a beginner, you ned to learn the biz first. Your learning curve is steep, as there is a lot to know. This board can help–a LOT. go back through the archives and read threads that interest you. there is a ton of info here.
attorneys and CPA’s are expensive. use them sparingly. I know. I am both a tax lawyer and CPA.
if you are computer smart, you can probably avoid the CPA altogether with a combination of Quicken (or Quickbooks) and TurboTax. once you learn how to use Quicken, your accounting is really easy. I can hit a couple of buttons, and have 100 different kind of reports. Preparing P & L’s is a snap, and makes tax return compliance easy.
as for the lawyer. the first time you should talk to one is when you get to the point where you want to create an entity. I would not do this right away. Get a couple deals under your belt first. make sure you like ths biz and plan to stay in it for the long haul before complicating your life with an entity. but if you get to that point, find a tax lawyer. and ask about the best arrangement for your particular state. HINT: what works best in Utah may be very different from Florida. don’t take generic legal advice from gurus.
over time, you may find that you need several attorneys, with different skills and specializations. In the past couple years, I have used a commercial litigator (to defend a lawsuit againt me), transactional real estate attorney #1 (to take back a defaulted property from my debtor), transactional RE atty #2 (to hammer out a property line agreement with an encroachment), transactional RE atty #3 (for general business counsel, big money deal issues, avoiding liability in sticky situations, etc.).
TRE atty #3 is $300 an hour, so I only use him for stuff that is really important. for example, I learned that I had a registered sex offender in one of my units. I wanted to handle it exactly the right way, and not get my butt sued (by the RSO or by the other tenants). I was willing to pay for top quality advice on that one. and then I had a worker cut his fingers off in a saw at one of my job sites. Guess which atty I called for advice? and I had a furnace malfunction last winter, and was spewing carbon monoxide into one of my units. tenants spent a couple days in hospital Guess who I called?
the point: when a big money/big liability issue pops up, I call my guy in Dallas and pay him top dollar. For other stuff, I use local attorneys who are half as expensive. You should do the same.
Re: Wait Until You Need Them - Posted by John K Haslach, CPA, MST
Posted by John K Haslach, CPA, MST on August 24, 2006 at 13:33:33:
I am surprised you are being given advice like that from a lawyer and CPA. “attorneys and CPA’s are expensive. use them sparingly.”?? The mistakes you make can cost you a hell of a lot more than any CPA’s fees I know of. Maybe he can do his own accounting because he is a CPA, but someone with no knowledge of accounting would have a hard time coming close to being correct. Someone with no knowledge of taxes can get themselves in big trouble!
Ask the attorney or CPA how experienced they are dealing with real estate. Ask some questions about choice of entity, 1231 gains, like-kind exchanges, state filing requirements. If they do not seem comfortable, move on. You many find a professional with your local REIA. Or you may ask some of the members how their CPA is. Be careful getting “free” advice from members, it is worth what you pay for it.