Bookkeeper, Accountant, or CPA: What Do Real Estate Investors Need?


16 Dec Bookkeeper, Accountant, or CPA: What Do Real Estate Investors Need?

As a real estate investor, it’s important to develop a portfolio that helps you make money! A real estate investment (REI) portfolio is a collection of past and present real estate investment assets. Depending on your investment preferences, a portfolio can include flipped homes, rental properties, real estate investment trusts, and more. 

What’s the best way to keep track of investments, income, expenses, and tax deductions? When building a successful real estate investing team, property investors must partner with the right financial professionals. These experts include bookkeepers, accountants, and Certified Public Accountants (CPAs). So, what do these professionals do, how can they provide tips for real estate investing, and how can they help you develop your REI portfolio? Here’s what a real estate investor needs to know when evaluating accounting needs. 

Binders on desk in the office

What Does a Bookkeeper Do?

A bookkeeper helps investors keep financial books updated. Most tasks a bookkeeper performs are transactional and straightforward. Essentially, they’re responsible for preparing income statements, balance sheets, cash flow statements, and statements of change in equity.

When it comes to real estate investments, a bookkeeper can help you make better budgeting decisions, keep your books in order, and understand your financial health in terms of costs and profitability. At a minimum, property investors need a good bookkeeper when starting a real estate investing (REI) team. 

When Do Real Estate Investors Need Accountants?

Accountants and bookkeepers are often seen as interchangeable titles, but they’re quite different. While bookkeepers help individuals and companies with surface-level finances, accountants look at the bigger picture. So instead of simply gathering applicable financial information, accountants go a step further and interpret it.

A real estate investor can benefit from higher-level tasks conducted by accountants, including:

  • Checking financial documents for accuracy and compliance with the law

  • Creating forecasting and risk analysis assessments

  • Evaluating finances to determine problems, make recommendations for best practices

Accountants must pay careful attention to detail, understand how a real estate business operates, and use various accounting software programs. Having excellent communication and analytical skills are a must as well. 

If you’re looking for the best way to get started in real estate investing, you may consider hiring an accountant to help you develop your REI portfolio. An accountant’s analytical skills will be essential, as they’ll be able to help you identify trends and make future planning decisions based on investment returns. 

Why Should a Real Estate Investor Consider a CPA?

In many ways, CPAs (or certified public accountants) are similar to accountants. However, their certifications distinguish these professionals in some crucial ways.

A CPA has an additional level of credibility and expertise. Certified accountants pass specific exams and meet other state licensing requirements to qualify for additional certification. In addition to preparing and reviewing financial statements, CPAs also prepare tax returns for businesses and individuals.

So, what sets a CPA apart from an accountant? CPAs can offer professional financial planning, consulting, tax preparation, and auditing and reviewing services. More importantly, CPAs can offer reliable tips for real estate investing that can help you properly develop and maintain your REI portfolio. 

Who Should You Add To Your Real Estate Investing Team?

If you’re newer to the real estate profession and just getting started with your REI portfolio, it’s best to first hire a good bookkeeper. A knowledgeable bookkeeper will help a property investor:

  • Invest when the time is right. As you begin investing, a bookkeeper can help you run numbers, so you’re making wise investment decisions at the beginning. 
  • Track your investments. For all new and ongoing properties in your real estate portfolio, your bookkeeper will help you record everything. 
  • Stay organized. As you continue making investments, your bookkeeper will keep all of your records organized. 

While a bookkeeper is an excellent addition to your real estate investing team, savvy investors with plans for long-term success must also consider a CPA. 

Next Up: Hire an Accountant or a CPA

As you continue gaining experience with investment properties, you may want to become a serious investor and turn it into your full-time job. On the other hand, you may decide to continue utilizing your bookkeeper and their key skills when it comes to organization and tracking—but building a long-term real estate investing career requires more financial expertise to support your portfolio. 

While an accountant is a good next step as your real estate investing business grows, it would be smart to consider a CPA instead. The right CPA helps property investors with next-level support, including. 

  • Expertise in real estate. A CPA specializing in finances for investment properties is a valuable asset for investors. Not only can a CPA help you track your ideas and investments, but they can also determine what investments make the most sense for you. They understand the real estate market and can help you make the most financially sound and informed decisions.

  • Maximizing cash flow and equity. CPAs can also help you maximize cash flow and equity. Work with this REI team member to figure out your cash flow situation, track transactions between properties and companies, and understand how you can benefit from each one. 

  • Jump on excellent investment opportunities. When you hire a CPA with an understanding of property investing, they’ll be able to help you jump on excellent investment opportunities. Since your CPA will be on top of your finances and books regularly, they can help you determine which opportunities make the most sense for you.

  • Maximize depreciation and cost segregation. A great CPA helps you understand how to maximize depreciation and your segregation. Your CPA will also keep your tax strategy in mind as they help you with these critical aspects of being an investor.

  • Tax preparation. CPAs have expertise in business, finances, and tax preparation, and the latter will certainly come in handy when tax season comes around. They understand the best strategies when it comes to state and federal taxes you’ll need to pay as a real estate investor. Your CPA will also be able to help you save money and even lower your taxes too. 

employee accountant man hand press on calculator for make financial report

While a CPA might seem unnecessary if you have a good accountant or bookkeeper, it’s worth considering this extra level of expertise depending on your long-term goals. 

Choose the Best Financial Support For Your Real Estate Investing Team

So, do you need to hire a bookkeeper, an accountant, or a CPA? Do you need one or all three of these team members? The answer is ultimately up to you and your long-term property investment goals. 

Most experts agree that it’s smart to hire a bookkeeper when buying your first investment property so they can help you stay organized and track your expenses as you learn where to start real estate investing to meet your goals. However, hiring an experienced CPA as your real estate portfolio gains momentum will give you the support you need while making more money, building your portfolio, and properly planning your tax documents. 

Along with the best financial professionals, make sure you utilize the best resources to find properties in your favorite markets at the best prices! With the Privy Advantage, property investors receive daily insights into available properties and investor trends. Using this information along with insights from an experienced CPA is one of the best ways to build a successful portfolio and maximize long-term returns! Reach out to learn more about how Privy works.

Who else should be on your real estate investing team? Find out with our free resource, “Assemble Your Real Estate Investing Team: A Worksheet.”


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