How to Know You’ve got a Bad Tax Advisor

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A new client booked an initial consultation because he had heard I worked with a lot of real estate investors and personally invested in real estate.

During our first conversation, he told me the story of his current accountant. He was a CPA who had been around for a long time and was ethical and did a good job.

There was just one problem.

My client wanted to start investing in real estate. He got the details of his first possible investment and gave them to his accountant to review.

“Is it a good deal?” he asked.

“No, it’s a horrible deal!” the accountant replied.

He did some more research and found a second possible deal. He got the details and the projected ROI (return on investment) and gave the details to his accountant.

“Is this a good deal?” he asked.

“No, it’s not! Run, don’t walk!” the accountant replied.

Still not disheartened, my client did even more research. He read some books, took an online course and studied how to make prospective financial statements to see what the possible reward and risk would be.

He gave all of the research to his accountant and asked his opinion.

“This is a horrible deal!” the accountant replied.

My client then asked the question that he probably should have asked first.

“What makes a good real estate deal?”

“Nothing! All real estate deals are bad. I don’t even own my own home,” the accountant replied.

And that’s when my new client realized he’d been asking the right questions but asking the wrong person.

It’s not just experience and education that makes a good professional advisor. It’s also point of view. If your advisor doesn’t understand or like real estate, he or she should not be your real estate advisor.

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