22 rentals - what would you charge?

[dkss]

Hi everyone!

I have a man (from Nantucket)(not really) with 22 rentals, mostly single family houses with a couple of small commercial properties, SSA-1099, multiple 1099-r's and 1099-int's, quarterly estimates, and state return. His records are in decent shape.

A few years ago, I felt I was undercharging him, so I starting increasing his fee - but he also kept adding more rentals!

What is a reasonable charge? This is not a major metropolitan area.

Thanks for any and all input!

Debbie

[JohnH]

If you charge an hourly rate, you never have to concern yourself with how the fee compares to the number of properties. He pays based on how much of your time is required to do the work.

[AZ-Tax]

New client w/11 residential rentals

The previous preparer charged the TP about $1500 but subtracting a couple discounts, the bill ended up $800. Records are not to bad but none of them are pc generated meaning no spreadsheet, QB reports etc. Due to the TP being priced conscience, allowing us to create/maintain his books and allowing me to file an ext if need be, I quoted him $600.

[JohnH]

If I may offer a highly biased opinion. You can take it for what it's worth - maybe it's worth nothing.

My experience with owners of multipe rental properties in the past was not good. The ones I dealt with (and I personally wouldn't even consider one now), tended to be overly price-conscious, to the point that they are constantly negotiating with everybody to lower their prices, including their accountant.

Since they are usually dealing with all sorts of trade contractors and service providers, most of whom they do not trust, haggling over everything becomes second nature. They are frequently invovled in disputes with tenants to some degree or another, so it's second nature to be combative. Having your charges constantly questioned by someone who acts as though they are entitled to a big discount can be tedious.

My apologies for disparaging the multiple-unit landlords who make good clients - but I just never met one. Maybe your experience will be different.

[Gretel]

If I may offer a highly biased opinion. You can take it for what it's worth - maybe it's worth nothing.

My experience with owners of multipe rental properties in the past was not good. The ones I dealt with (and I personally wouldn't even consider one now), tended to be overly price-conscious, to the point that they are constantly negotiating with everybody to lower their prices, including their accountant.

Since they are usually dealing with all sorts of trade contractors and service providers, most of whom they do not trust, haggling over everything becomes second nature. They are frequently invovled in disputes with tenants to some degree or another, so it's second nature to be combative. Having your charges constantly questioned by someone who acts as though they are entitled to a big discount can be tedious.

My apologies for disparaging the multiple-unit landlords who make good clients - but I just never met one. Maybe your experience will be different.

Wow, you know, you are totally right, it's the nature of the beast. I guess I am really lucky that my best client who is heavily involved in building and buying, and by now owns about 500 unit, is a nice guy. He is exactly the way you say, pressing the last drop out of everybody, but he truly appreciates what I do and he never tried this with me, to the contrary. When I raised my our rate considerably at the moment he offered me an additional job, he just said: Well I have no idea what your time is worth, you need to decide what feels good to you.

[dkss]

I inherited this client when I bought the family business. He has been a client since at least 1976 (Wow, I was 4 at the time - lol)! He has not complained or haggled about the fees. I don't want to undervalue my service, but I don't want to shock him with a huge price increase either.

[dkss]

If you charge an hourly rate, you never have to concern yourself with how the fee compares to the number of properties. He pays based on how much of your time is required to do the work.

JohnH - maybe someday I will charge an hourly rate. Just don't know if I can handle the time tracking with all the interruptions!

[JohnH]

Good for both of you. Maybe if I had run across one like the clients you two have, I wouldn't be so unsympathetic toward this niche. (or maybe I'm the one who's unreasonable.. )

[Gretel]

I inherited this client when I bought the family business. He has been a client since at least 1976 (Wow, I was 4 at the time - lol)! He has not complained or haggled about the fees. I don't want to undervalue my service, but I don't want to shock him with a huge price increase either.

Depending on the actual involvement with depreciation details and how easy the information is provided I probably would charge between $900-$1500.

[GeneInAlabama]

22 rentals - what would you charge?

I have always tried to charge APPROXIMATELY by the hour. I found it was impossible to charge by the hour due to interruptions so I would try to estimate how long it would have taken if I hadn't been interrupted. Last year I started charging by the form but that doesn't work to well either. I may go back to charging by the estimated time spent.

[JohnH]

Well, if you lose track you could always use those estimates that IRS provides for how long it should take to complete each form. We know how reliable THAT info is.

[luke]

hourly charge

the hourly charge should NOT be for the ACTUAL time spent on a particular return - as an example, the auto mechanic / the body shop charges an "hourly" rate based on what it SHOULD take to complete the work - if they finish in less time guess what? (if they take more time then they usually find a way to "add on" something that was missed in their intial "estimate"?)

[David1980]

Really depends on the client. Once everything is setup, all assets entered, etc.. and you're only entering income/expenses it is just a question of how organized the client is. If they provide excel with totals it could be very quick to enter the new info each year. If they're a "shoebox" customer it's probably a PITA to do.

[geekgirldany]

I had a client with 10 rental houses. I charged him $580. He had an partner that I did separate Schedule E's for him. He went to someone else to do his personal return. So I charged another $280.

This person I believe was a price hunter. He ended up going to his partner's accountant when I would/could not get his tax returns finished by April 15th. He brought them April 1st.

[taxea]

The previous preparer charged the TP about $1500 but subtracting a couple discounts, the bill ended up $800. Records are not to bad but none of them are pc generated meaning no spreadsheet, QB reports etc. Due to the TP being priced conscience, allowing us to create/maintain his books and allowing me to file an ext if need be, I quoted him $600.

you are out of your mind...what I charge for a rental depends on how many forms or worksheets other than the Sch E are required for each rental. I have a client that had 8 K-1s for trust rental properties and the bill, with their other documents came to over 1300. (2 states included).

A K-1 is not as complex as the actual preparation of a rental so I am sure it would have billed out much higher than that, however, my fees are still less than CPA's and big box stores.

Your client is paying for your expertise. How much would your average rental form bill out at? Times that by the number of rentals, plus other forms on his return and I am sure it would be at least double the $600. You are selling yourself too short. Do you have any idea how many hours this return will take to complete? Divide that into the 600 and I bet you will see that you are be grossly underpaid for the work you are doing.

Call a few storefront preparers and tell them you are pricing your return before deciding where to take it. Tell them that at this late date you are willing to file an extension and have it done after the season. Tell them you usually do it yourself but it has gotten to the point where you are not sure whether you are missing items you could deduct. If they ask to call you back tell them you don't have time to wait for a call back...is there anyone in the office that could work up an estimate for me? Give them a phoney name and if they are not willing to give you a ballpark figure thank them for their time and go elsewhere.

Be sure to let us all know what estimates you have been able to get.