Financial Advice from an STR host CPA

Hey everybody. Welcome to the Boostly podcast. This is the podcast that gives hosts all over the world the tools, the tactics, the trainings and most importantly the confidence so you can go out there and get more direct bookings. My name is Liam Carolan and today we're on the spotlight series on the Booski Podcast. This is where we look at people, businesses, services that you need to know about as a short term rental host and also people who are involved in short term rental in general. So and we've got a special guest about to tell us his story, share some tips with us. And the cool thing is about this guest is that he is the go to guy for tax advice. He's us based, he's a cpa. The cool thing is he doesn't just give the advice on tax, but actually is a short term rental investor himself. And quite a varied kind of investor. Not just your traditional short term rental, but a few other cool things which we'll dive into. So we're going to welcome along Ryan Bakey. He is known or his business is called Learn like a cpa. And yeah, we're going to get his story and, and see his tips. So welcome along Ryan. Thank you for joining us today.

Awesome. Excited to be here. Thank you.

For those who may not be familiar with yourself, can you give yourself an introduction and share anything that you'd like to share with the audience?

Yeah. So my name's Ryan. I have, I went to school for accounting and finance. Accounting and finance really was my first love when it came to diving into what my genius zone is. And it's actually funny because I'm not the best at math. In fact, I actually almost failed my senior year math class because it was so, it was so hard. But I did understand basic addition, addition, subtraction, multiplication and division. And if you can understand that, then you can understand real estate investing. So I tell people all the time, outside of school or after school, I went to work at Deloitte. So Deloitte's a huge consulting firm. They have offices nationwide, you know, nationwide worldwide large consulting firm. I helped a lot of investment management, banks, hedge funds, syndications, real estate syndications. Basically people who are already rich and wealthy help them become even more rich and wealthy. And I decided that I wanted to help not the everyday person, but the person in their family that was going to change their family tree. So that's when I started my brand Learn like a cpa and then my, my consulting firm that focuses on basically small mom and pop investors, help them, you know, acquire short Term rentals, help them analyze tax benefits, tax savings, help them make decisions about their portfolio, should they exit, should they, you know, refinance all these, all these good things and, and just be that good third party advice. Because what I like to do is I like to help people alleviate the emotion from the equation because oftentimes a lot of short term rental investors, they have a lot of time in these projects and they have a lot of emotion and I try to be that sounding voice to say, hey, here's what makes sense, numbers wise, and remove that emotion from the equation.

What does the short term rental side of your business look like at the moment?

Yeah, most of our clients now are primarily short term rental investors. It's just becoming so popular, you know, within the last couple of years. I think, you know, Covid really was the catalyst for short term rental real estate investing, in my opinion, because you had a bunch of people who, you know, they didn't, you know, maybe they didn't want to have to listen to a company or a boss or be tied down to their place of employment. I think that's when a lot of people started investing. And then, you know, in America we had super low interest rates. So that made it really enticing for somebody to be able to buy a property. I, you know, manage it, use the income to help replace their W2s. And you know, I myself kind of left my W2 job to go into real estate full time, you know, half. Half CPA consultant, half investor, you know, but I've also helped guide tons of people and seen tons of people make the transition from full time W2 to full time real estate in a matter of sometimes less than, you know, a year, year and a half maybe?

What would you say is some of the challenges that you've seen, I guess, or some of the ones that you've gone for yourself, but also some of the ones that you've seen, some of these investors have. What are the challenges when they're trying to move from their W2 job to, you know, to create a successful portfolio that cash flows to allow them out of their job?

I think that I'll say two things. Number one is you have to have a plan when you go into this space. You really have to have a, you know, not just a, okay, here's what I want to do, but you know, a one year, three year, five year, you know, even 10 year timeline of what it is that you want out of real estate investing. You know, is it to, is it to leave your job full time? You Know, is it to leave your W2 job so you don't have to listen to a boss, or is it, hey, I just want some supplemental income, maybe I want to diversify my retirement, you know, my stocks. You see, you see a huge shift to real estate investing anytime the stock market plummets, right? So you, so is it, is it that you need to have that plan? Because what I've seen, especially in America, so we're, we can buy houses based off, you know, what's called our debt to income. And so if you don't have enough, basically reoccurring income, whether that's through your W2 or rental properties, the bank's not going to give you a loan. And oftentimes I see investors get capped out on being able to scale their portfolio because they're not balancing what's called their debt to income very healthy. The number, the number two thing that I would say that is really important is to really avoid lifestyle creep. And so lifestyle creep, I learned when I originally was taught personal finance, lifestyle creep is anytime you have a change to your situation, typically for the better, you know, you either make more money or you have a huge windfall or whatever it is, you start to outspend what you've earned. And so, you know, if I'm, let's say I, let's say I'm making 60 grand a year and my budget, you know, I need 40 grand a year to live, okay, so I have a $20,000 year surplus. So then what happens when I make 80,000, 60,000, what am I doing with that additional 20,000? And the sad part is, a lot of times I see short term rental investors, they take that surplus income and the cash flow that they made from their short term rentals and instead of using that to go back into their situation, they paid on some of their debt, they're using it on lifestyle assets like vacations, travel, new cars. And so you'll never actually get out of your W2 job if you're just taking what you're making on the side or in short term rentals and not redeploying it into your business.

Some people based in the US some people based in the UK I feel I should just clarify. Cpa, can you just tell us what that means? Because from my understanding, I understand this tax based, but is, is it kind of attorney based as well? Like, just, just to clarify what CPA actually is? Yeah, UK listeners.

So the CPA in the United States is a designation that, so all account, you know, all CPAs are accountants but not all accountants can be CPAs. It's kind of is that graduating. So, you know, once you go to accounting school and you. And you learn, you're going to learn a little bit of tax, what's called auditing. You're going to learn consulting financial statements, you're going to learn basic economic principles. But in order to get your CPA license, you actually have to take a very rigorous exam that is a combination of all those. So, as in order to get your CPA license, you have to be very proficient in tax. You have to understand financial statements. You have to understand auditing, like if you were to go audit a company, a company's financial statements. And you also have to understand, you know, really good economics. What, what incentivizes people to act a certain way. How can the government. You know, in the United States, we have really good monetary fiscal policy that's at least most of the time we try to, anyway, that the government can kind of pull a lever or push down the lever to make, you know, the economy do what it wants to do. If, if the economy is spending rapidly and inflation's running up, you know, we need to basically get money out of the market. And so you have to understand that in order to get your CPA license. But as a cpa, though, to be honest, you know, I think they're very similar to doctors. So not all CPAs are going to understand real estate. Not all CPAs are going to understand cryptocurrency or small businesses or, you know, I get a lot of inquiries a lot recently about farming. You know, I know nothing about farming. Well, in fact, I know I knew just a little bit to be dangerous, to be able to help this guy. But I don't, I don't know about farming. It's almost similar to, you know, doctors. You're not going to the same guy that's a pediatrician or a child doctor. You know, he may or may not be the guy that's going to fix your heart or fix your foot. Right? So it's the same thing with CPAs in America. You know, you want to find a CPA that focuses on what you're doing.

Awesome. Thank you so much for your time and again, thank you. If you're listening to this on the Boostly podcast, we know there's a lot of places you can put your attention, and I really appreciate you putting it with us here at Boost Lee, thanks very much. Bye for now.

Having a blast. Going to get it on the Boost Lee podcast. Bruce Lee. Like Bruce Lee. Cause it's so hard and the T is loose leaf making up those rhymes don't write it, just do it loosely.