The Biggest Real Estate Tax and Bookkeeping Mistakes Investors Make — And How to Avoid Them

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Show Summary

In this episode, Michael Glaspie shares his journey from problem solving and real estate investing to becoming a fractional CFO and tax strategist. Discover how proactive bookkeeping, understanding tax nuances, and leveraging industry expertise can help real estate professionals grow profitably and avoid costly mistakes.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • G2 Business Solutions’ Website
    • Michael Glaspie on LinkedIn
    • Michael Glaspie on Facebook
    • Michael Glaspie on Youtube

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Michael Glaspie (00:00)
  Yes, yeah, absolutely. You know, it’s about being more proactive than reactive. And one of my favorite sayings, you I didn’t create this obviously, but it’s not about how much money you make, it’s more about how much you keep. And when you really understand taxes, you can actually keep more of that money.

  Dylan Silver (01:48)
  Hey folks, welcome back to the show. Today’s guest, Michael Glaspie is a seasoned real estate entrepreneur, fractional CFO and founder of G2 Business Solutions. G2 is dedicated to helping investors master their numbers and grow profitably. With leadership experience across private equity, lending and brokerage and a personal portfolio of over 130 properties, he brings real world financial strategy to business owners nationwide. He holds an MBA from UNC Chapel Hill, teaches as a CCIM instructor. He also served as a US Army Special Forces veteran.

  Thanks for joining us today, Michael.

  Michael Glaspie (02:21)
  Yeah, thanks for having me, Dylan. I really appreciate it.

  Dylan Silver (02:23)
  Now, when we talk about

  bookkeeping, accounting, tax strategy, I often say that sometimes people don’t think about this until they’ve got a big tax bill to pay, right?

  Michael Glaspie (02:34)
  Yes, yeah, absolutely. You know, it’s about being more proactive than reactive. And one of my favorite sayings, you I didn’t create this obviously, but it’s not about how much money you make, it’s more about how much you keep. And when you really understand taxes, you can actually keep more of that money.

  Dylan Silver (02:51)
  What came first for you? The passion for ⁓ accounting and helping people with taxes and tax strategy or the real estate portfolio and the passion for real estate?

  Michael Glaspie (03:01)
  It, you know, the precursors to it all was kind of problem solving. I’ve always liked, you know, Rubik’s cubes and games and all of these types of things. The reason real estate really kind of accelerated in my life was because I learned very early on that you’re only limited to your creativity with how much money you can make in real estate. So it definitely started in that realm. And I was doing the real estate licensed agent, got part of a property management company, so forth and so on.

  even though I had a background in finance, it was the real estate that kind of elevated it. Then after a while, you start to realize that a lot of accountants aren’t just, they’re not familiar with the industry. They don’t really understand it. And so I saw an opportunity there to niche down and help others through the same pains that I went through when I was getting started as well.

  Dylan Silver (03:49)
  You know, one of the things I’ve noticed from being a licensed agent myself in Texas is you realize how much you can save in taxes, not just if you’re, you know, a 1099 or a business owner or a realtor, but if you have like a W-2 job, you can even offset some of those taxes with real estate investing and real estate related activities.

  Michael Glaspie (04:11)
  It’s right and you know, there’s all kind of nuances to it, you know, the devil’s in the details and so you can do these things but you have to do them right and oftentimes

  an agent might go out or just anybody might go out and buy a piece of real estate thinking that just inherently, just because I bought it, I now get a tax discount. It’s like, no, there’s a process. You have to record how many hours you did it. You have to ⁓ self-manage in certain situations. You have to show proof of this. You have to have it occupied or on the market certain amount of days. There’s all these different nuances that really apply. But to your point, it’s available.

  And I feel like this, say this all the time, but I feel like real estate is the one industry where you should get high on your own supply, right? If you’re selling it, go out and buy it, learn it, use it, manipulate it, because it can be very beneficial if you have the right team behind.

  Dylan Silver (05:52)
  Now when people talk tax strategy, I’m speaking from personal experience here. I feel like it really is hard to conceptualize until you have a tax bill to pay. But I also feel like because there are typically some costs, know, paying for bookkeeping, paying for, you know, tax strategy or someone that’s going to file your taxes for you, CPA, enrolled agent, et cetera. People don’t really do it until they’re like backs against the wall or they have a big tax bill, right? You know, is there a

  Michael Glaspie (06:03)
  Yes.

  Dylan Silver (06:22)
  way that you’ve seen just on an interpersonal level to bridge that gap from where people are able to see the value before they have the tax bill.

  Michael Glaspie (06:31)
  100%. You know, if you’re getting a refund, you’re, you’re doing pretty well. All right. So when you start making a significant amount of money, it’s hard to get a refund. You’re going to start owing the tax man, especially when you’re at 10 99 and you’re not necessarily paying those quarterly estimated payments. Uh, I will, I will die on this Hill. I think that every business owner, small or large needs bookkeeping fundamentally bookkeeping.

  And the reason I say that is, you know, it might cost you a hundred bucks or 500 bucks a month, but throughout the year, you have a very clear picture of what is going to be my tax liability before it ever arises. And so now we’re not worried about, what’s going to happen when tax season comes. We can look at it. Let’s just say theoretically in June and say, all right, I actually do need tax strategy because I have a large tax bill coming. So biggest recommendation, just get bookkeeping as a bare minimum.

  Dylan Silver (07:24)
  One of the things that I’ve noticed as far as like a common error that people make is not understanding that their situation is like.

  not super rare. have this idea that, well, I’m in some super niche situation and I got to figure this out on my own. Or like, I have this tax bill coming up. You know, I made some extra money in real estate or something along the lines of this, that no one’s going to understand my situation. And then what I think worsens the situation to your earlier point, Michael, is, you’ll go to a CPA or some type of, you know, tax preparer, tax professional, and they might not understand the real estate game in that regard. And

  And you know, then their feedback to you may be, as a real estate investor, as a realtor, may further substantiate that bias that, no one understands my situation. And so that kind of creates even further distance between that person who’s that realtor, that investor getting bookkeeping, getting tax services, finding someone to help them in their niche. But as I’ve discovered, and as I’m sure you’ve lived, there’s a whole field of people out there who are dedicated to helping real estate professionals.

  Michael Glaspie (08:34)
  100 % and I’m glad you said that because I think that we should live in our superpowers and we should leverage our weaknesses, right? But when we do leverage, we have to bring in team members who understand what we’re going through and understand our industry. There’s plenty of tax professionals and accountants out there who are amazing. Maybe graduated from Harvard or from Wharton or whatever, but if they don’t know real estate, they don’t know how to help you. They don’t know what to look out for.

  And so absolutely, you gotta find the right people. But there’s no situation, and I have to remind myself of this all the time, but like you said, people, we tend to believe that our situation is so unique to us, and all the history of the world.

  I can guarantee that we’re not the first one to experience anything, right? And so we should reach out and as Tony Robbins says, stand on the shoulder of giants, see what other people have done before, learn from their mistakes so we can move a lot quicker.

  Dylan Silver (09:34)
  I would like to, I guess, back up a bit here and talk about bookkeeping. And really, for folks who may not see the value in it or maybe think I can do this myself, from where I’m at, what is the value of bookkeeping? For someone who may be just starting out and that $100 to $500 a month, it may seem like that’s large expense. What’s the value of bookkeeping to that individual?

  Michael Glaspie (09:58)
  This is a great question. So

  bookkeeping is accounting. It is not just, hey, this transaction, let me just write this here. So every transaction must be reported a certain way. And the IRS doesn’t care what your experience level is. If they were to do an audit, they want to see that it was actually done correctly. So if you don’t have an accounting background,

  You may put something together, but if you get audited, now you’re stuck trying to defend it, right? The value of bookkeeping not only should be clarity, right? You should be able to understand your books very clean. It helps you save time, but it’s also that compliance measure that a lot of business owners, especially when they’re starting out, they’re not even considering. You’re a business now. Compliance actually does matter, and bookkeeping can help accomplish all of that.

  Dylan Silver (11:23)
  Yeah, I think you mentioned a number of different segments there. You know where every dollar is going, compliance, right? And then also I would further that with, in many cases that I’ve seen, people end up getting into tax trouble ⁓ or not paying their taxes, kind of kicking that can down the road.

  Because you know errors start with something small and snowball into something bigger. They’re not exactly sure how much money they made They may be having like two businesses that kind of coalesce or overlap or even like vertically integrated and they might be in their infancy Right and then next year now to larger business now It’s their full-time job. And so these habits start to roll together and then

  Like we were earlier saying, people will often think, okay, well, I’m the only one that’s dealing with this.

  Michael Glaspie (12:18)
  Right.

  Dylan Silver (12:19)
  And then they might not pay for a couple years. When you’ve seen people who get into that type of position, one of the things that I’ve noticed, and I’m curious to get your feedback, they feel like I’m the only one going through it. And you know, basically there’s nothing that I can do to be helped, but there’s so many people that have gone through that situation and you can do payment plans. There’s a number of different things that you can do. might be penalties and interest. What are you, what’s your feedback? You know, when folks do get into those types of situations where maybe they haven’t paid in a

  Michael Glaspie (12:40)
  Yep.

  Dylan Silver (12:49)
  couple years or they owe back taxes for one reason or another. How do those situations typically happen? Is there an overall theme why these people are getting into those situations?

  Michael Glaspie (13:00)
  You get the nail on the head, Dylan, it starts small and then it snowballs or compounds and it grows. ⁓ Oftentimes when these situations happen, you know what we have to do? We actually have to stop and go back to the beginning, figure out what went wrong, fix it, and then kind of grow from there. So again, going back to the value of bookkeeping is avoiding a lot of those things. When you come and you have a large, this happens all the time. mean, probably three to five clients every single year come in and say, Hey, I have in five,

  since 2017 or haven’t filed in past seven years, six years, five years. And we have to just gradually grow and take it one bite at a time. And that’s how all of this kind of plays out. But it’s the little, little things I just wanted to recap back on that you’re not even aware of oftentimes.

  For example, the question become, I depreciate this? Is it an improvement? Can I write this off? And the answer is, it all depends. Yes, if, right? If you do things the right way. And when you don’t do them the right way, the IRS can come back and audit you up to seven

  is what they say. Up to seven years. So you could have done something, waited six years and all of sudden they’re like, hey, this is wrong. Now you have penalties. Now you have interest. Let’s change this. But if they detect fraud,

  which they could do if they audit you, well then there is no statute of limitations. They go back as far as they want to audit you. So it’s a compounding potential risk when you’re not doing it correctly from the beginning.

  Dylan Silver (14:25)
  Wow.

  Now I know that people have so many options, right? And it can be overwhelming and you know, people might go online, they might try to do it themselves and they might feel like I’ve done it myself in the past and it hasn’t been all that bad of experience, right? But what I also know is that real estate itself is very tricky and it changes like every year. And so there’s tax laws and changes in regulation to where even from the previous year, your tax professional who may be a real estate tax professional

  has

  got to be on top of their game, so to speak.

  And so to me, as an outsider looking in, that’s the real advantage of working closely with a real estate tax pro and someone who’s specialized in bookkeeping is that’s their job. Like I’m able to like delegate that to them. I don’t have to spend a bunch of time learning about the tax deductions that are available to me or what may not be available to me. I can kind of free up some mental bandwidth and say, okay, I’m gonna focus on selling homes or

  Michael Glaspie (16:10)
  Right.

  Dylan Silver (16:12)
  requiring properties or wholesaling deals. And I’m to let the tax pro do their, you know, their due diligence and help me manage my books.

  Michael Glaspie (16:18)
  Right, right,

  I agree with you 100%. It goes back to, know, there’s so many people, I’ve heard this in the past, work on your weaknesses, you know, work on your weaknesses. I believe just focus on your strengths, do what you do, and then leverage out your weaknesses to somebody else who loves doing that type of thing, and that’s how you scale quickly.

  Dylan Silver (16:33)
  Focus on your strengths.

  Now I also want to pivot here Michael and then talk about the the personal portfolio You’ve got a pretty large personal portfolio for 130 doors, right? When we talk about scaling that kind of a portfolio I’ve seen it go a number of ways. I’ve seen people start with you know ⁓ Wholesale deals then graduate till I fix and flip buy and hold short-term rentals midterm You know year-to-year leases, but then I’ve also people just say hey if you’re gonna buy start buying big like just buy You know 30 units I’ve had people

  and tell me, look, if you’re gonna buy 30 units, you can’t really afford property management at 30, just go buy a 50, because then you can afford property management and partner with someone who knows maybe more what they’re doing than you do. So you might have to take a smaller equity stake, right? If you were gonna start all over again, no properties, how would you start today?

  Michael Glaspie (17:17)
  Right. Right.

  ⁓ Great question if I was gonna start over again. All right. So in the military we have this beautiful thing called the VA loan All right zero money down. However, you know FHA loans and even conventional loans Sometimes you can get them at three and half percent to five percent down. So I still believe I’m working a job I’d go out and I’d buy a multifamily two to four unit with one of these loans either zero money or or Very low money down. I’d live in one read out the units. I’d wait one year and I would do it again

  I would do it maybe two to three years in a row, and then I would refinance that portfolio into a commercial loan to free up my debt to income yet again to potentially do it for one or two more years. You know, obviously it depends on your tolerance for that patience, but I would go that route to put very little money down and acquire as many multi-units as I could.

  Now by year four or five, depending on what market you’re in, maybe you have a little bit of equity that you can leverage, but you should have a pretty decent cashflow and portfolio at that point in time. And so that’s helping you save up some additional money and kind of go from there. I’m a very concerned, I’ve made a lot of mistakes, a lot of mistakes, and I’ve learned that, you know, growth isn’t always good if you’re not doing it right. So I would be very, ⁓

  Dylan Silver (18:43)
  Hahaha

  Michael Glaspie (18:52)
  very moderate with my growth, I’d focus on one property a year and hopefully have it be multiple doors.

  Dylan Silver (18:58)
  ⁓ Biggest win, biggest loss in real estate.

  Michael Glaspie (19:04)
  Biggest loss was one of my early wholesale deals. I was being ready to be deployed and I tried to assign it to someone else. doing a wholesale. I tried to assign it to another wholesaler and I had already worked off the negotiations and everything and the seller at the time had to kick their brother out that was living there in order for us to sell the home.

  And I come back from the deployment to find out that that wholesaler never followed through. The brother was kicked out and the property got foreclosed off. And I felt absolutely horrible that I felt like I started that train and I couldn’t finish it. ⁓ Biggest win. The biggest win is when I bought my first home. I rented out a bedroom just to another single soldier at the time. And ⁓

  I don’t know, maybe nine months later, I went to a Robert Kiyosaki two day event and they were saying something, something, something house hack. And I was like, wow, I’m already house hacking. Yeah. I was like, I’m already doing it. And that was the light bulb moment for me to say, Hey, if I’m already doing it and if it’s really that simple, let me go all in on real estate. And that’s, that’s changed my life.

  Dylan Silver (20:06)
  I’m doing that.

  We are coming up on time here, Michael. Any new projects that you’re working on and then as well, what’s the best way for folks to reach out to your team?

  Michael Glaspie (20:29)
  Absolutely, best way to reach out to us, you can find us on our YouTube channel, you can go to our website directly. And on the website, there’s the link to schedule a call and there’s our phone number there as well, and I’m sure that might be in the show notes. Biggest project for us right now is we’re really trying to push out our clear profit system and make sure that everybody understands what it is that we do and how we systematically go through helping our clients find more of those profits.

  So if anybody’s in real estate in any sense of the word project management syndication real estate ownership flipping wholesaling subject to lease options ⁓ Roof repair you can reach out to us and we can we can help you out

  Dylan Silver (21:11)
  Michael, thank you so much for joining us today. Thanks for your time.

  Michael Glaspie (21:15)
  Absolutely, Dylan. Thank you.