Real Estate Investing
Ted Lanzaro on the accounting mistakes new real estate investors make
A CPA and longtime investor explains why mixed bank accounts, missed administrative deductions and slow offers quietly cost new landlords money.
Top Real Estate Investor Accounting Mistakes with Ted Lanzaro
Video from Seth Ferguson.
Generated from the canonical interview transcript and validated against source data by Guests on Air.
What accounting mistakes do new real estate investors make most often?
The most common mistakes are keeping poor records and missing deductions. Ted Lanzaro tells investors to run every income and expense item through one dedicated business bank account, then claim the administrative costs most people overlook, such as auto mileage and part of a phone or internet bill, even when passive loss rules delay the benefit.
Ted Lanzaro has spent about 30 years around real estate, both as a CPA serving construction and property clients and as an investor who bought, renovated and flipped houses in Florida. On Purchase to Profits with host Seth Ferguson, he described the accounting mistakes he sees new investors make, and the habits that let him buy with confidence.
His starting point is simple. Most tax trouble begins long before a return is prepared, when an investor pays bills from whichever card or account is closest. By the time an accountant sees the year, income and expenses are scattered across personal and business records, and real deductions are hard to prove or easy to forget entirely.
The conversation also covered why preparation matters when buying, how depreciation shelters rental cash flow, and what one deal he passed on taught him. Together the lessons show how an investor's books, offers and long-term plans connect, and why small, early habits decide how much of each deal the investor actually keeps once the tax return is filed.
Key takeaways
- Open one dedicated bank account for the real estate business and run every rent payment and bill through it.
- Reimburse yourself from the business account for anything charged to a credit card, so the records stay complete.
- Track administrative costs such as auto mileage and a share of phone and internet bills, not only property expenses.
- Do the after-repair value and cost homework before a viewing so you can make an offer on the spot.
1. Records come first, and one account makes them easy
Asked about the most common accounting errors, Ted Lanzaro put record keeping at the top of the list. New investors often do not know which records to keep or how to keep them. His fix starts on day one: form the company, usually an LLC, open a business bank account, and decide that every transaction the business makes will flow through that single account from then on.
That means funding the account before paying startup costs such as marketing and administration, then collecting rent and paying property bills from the same place. The pattern he warns against is common: some costs go on a personal card, others come from a different account, and the bookkeeper receives five bank accounts and six credit cards with nothing clearly marked as real estate. Sorting out the business items then becomes the hard part.
If something does land on a credit card, he says to reimburse yourself out of the business account so the trail stays in one place. The payoff for that discipline comes at the end of the year. Even an investor who did no bookkeeping at all can hand over bank statements and copies of checks, and the accountant can rebuild what happened during the year from those records alone.
2. The deductions most investors leave behind
The second mistake is not knowing which deductions an investor is entitled to claim. Lanzaro splits them into two groups. Property expenses are the familiar ones: mortgage interest, real estate taxes, insurance and repairs. Most people claim those without prompting. The second group, the administrative costs of running a real estate business, is where he sees investors miss money on their returns.
Those costs include auto mileage and a portion of a cell phone or internet bill. As an ordinary person you probably cannot deduct them, but once you are in the real estate business you can allocate part of those expenses to it. He says there is a whole list of them worth reviewing with an accountant before the return is filed.
Passive investors are not exempt from this advice. Even when passive activity rules stop them from taking rental losses against earned income, Lanzaro says they should still claim every administrative expense. The unused losses build up a carryover that can be used in a future year, so a deduction skipped today is value given away later rather than a cost that simply does not matter.
3. Preparation, depreciation and a deal that got away
Lanzaro's buying habits came from trial and error. On his first rehab, workers phoned his office and sent him to Home Depot for paint and plaster. Later he built a simple checklist. Before a viewing he estimated the after-repair value, then walked the house with a pad of paper, priced the repairs and could make an offer on the spot, often with a contract ready in his folder.
That speed matters because leads from marketing are expensive and many are off market. When a seller calls you directly, nobody else knows about the property, so a signed contract that day beats chasing listings every other investor has seen. The same discipline applies to rentals: know market rents and your criteria in advance, and the cash flow answer is ready before you arrive.
Depreciation is why he sees real estate as such a strong tax tool. A rental can put cash in an investor's pocket while depreciation, often accelerated through cost segregation on larger syndications, produces a net tax loss on paper. He also shared a lesson about hesitation: a Vero Beach house he and his partners passed on was later renovated and sold by another investor for a profit of about $250,000.
