Real estate accountant: What is the definition of one? And why should you care? Being a real estate accountant myself, I thought I would look in the mirror (frightening enough at times) and try to answer this question.
A real estate accountant is someone who speaks your language
Real estate accounts spend a significant portion of their time on real estate matters in their professional life…thinking about, researching, and putting into practice systems, accounting measures and tax planning for real estate investors. If you’re frequently teaching your accountant real estate investment terms, how much value are you going to receive from the relationship?
That said, I’m eagerly learning all the time, and don’t mind picking your brain.
A real estate accountant invests in real estate
In my opinion, a real estate accountant needs to have some skin in the game. Investing in real estate myself means, selfish as it sounds, I have an added incentive to stay up-to-date with the latest accounting and tax developments because it affects my personal bottom line. And, yours too.
I’m not saying they need to own 100 plus units (although this wouldn’t hurt), but I think you want them to have a least 20 units to show they’re serious or some larger investments in specialized investments. (Interested in seeing what I’m up to? See Real Estate Investing with George.
A real estate accountant is like a heart surgeon
Just as doctors have their own specialties, so too do accountants. Having a generalist can be very good for specific situations and businesses. But real estate is a specialized area. You want a heart surgeon for a heart bypass surgery. If you’re a serious investor, you want a real estate accountant working with you on your real estate investments. You want someone who can bring the technical know-how to the table, while integrating the practical experience. Having the right knowledge when making business decisions about your real estate, including assessing tax impacts, is key. Poor advice is expensive now, and in the future when you hire a real estate accountant to fix it.
How to tell if you have a real estate accountant
Whether you have an accountant already, or are looking to build your team, here are a few questions you can ask them to find out if they are indeed a “real estate accountant”.
- Do you invest in real estate?
- How long have you invested?
- What kind of real estate holdings do you and your clients have?
- What percent of your accounting practice is devote to real estate matters?
- How accessible are you and your team?
Yes, you need to be able to talk with your accountant. In our case, we work as a team to help get you the answers you need in a timely manner. But, you can also help by giving notice on deals – avoid waiting until the last minute. Frequently, a good real estate accountant is coordinating not only with you but also with the legal and finance team to make deals happen – all of them require lead time to ensure the right plan is in place. And, some tax strategies require planning ahead.
