From CPA to Real Estate: The Birth of a Property Accounting Firm

Mark Kappelman - Real Estate AccountantI often get asked questions like, “Where did the idea for REA come from?”, “Why did you start REA?”, or “Why Property Accounting?” To answer these questions, we have to go back about 21 years.

When I started college, I didn’t know what I wanted to major in, but I was interested in business. After talking to a couple of my uncles, I was encouraged to pursue a degree in accounting, as it was the ‘language of business.’ Assuming I pursued the CPA, I would graduate with a professional credential that would provide job security (solid advice for a naïve 18-year-old, I’d say!). Fast forward five years, and I had received both undergraduate and master’s degrees in Accounting from Arizona State University.

Post-graduation, I believed there were only two tracks—audit or tax with the Big 4. Although there were plenty of other options, that’s all I was focused on. I spent the next six years in public accounting (three years in audit, three years in M&A financial due diligence), earning my CPA and eventually the CFA Charter holder designation.

Key checkpoint #1 – I’m now a CPA.

While studying for the CFA exam, I became very interested in real estate (can’t recall why) and was led to the book Rich Dad Poor Dad. I couldn’t get enough of it. I vividly remember my key mindset shift when I read this sentence from the book: “Why climb the corporate ladder when you can own the ladder?” It was at that moment I decided to start investing in real estate to create passive income, and suddenly, I wasn’t sure if I wanted to be a partner at an accounting firm.

Sometime in late 2012/early 2013, my then-fiancée (and now wife) Kim (who had heard me talking about real estate for several years at that point) heard an ad on the radio that went something like, “Learn how to make more money than you could ever dream up flipping real estate with no money down.” It just so happened the group running that ad was hosting an event in River North (Chicago) directly on my walk home from work, so Kim said we should go, and I agreed. About nine months later, we bought our first ‘flip property’ and our first rental property. We proceeded to keep flipping single-family homes and bought our first multi-family property (a 6-unit building in Logan Square). In the process, we were raising money from LPs, underwriting deals, drawing up operating agreements, etc.

Key Checkpoint #2 – We are now Real Estate OPERATORS.

Next, I faced an issue. At this point, I had left my job in the Big 4 and was working at a tech start-up, but real estate was still our side hustle. Unfortunately (or maybe fortunately), I was now spending nearly all of my nights and weekends doing real estate, including my own real estate accounting. In other words, accounting by day and night. At the time, I was reading the book E-Myth, which had a chapter that said something to the effect of, “focus on revenue-generating activities and outsource all administrative activities.” So, what was the first thing I outsourced? Accounting!

Unfortunately (or again, maybe fortunately), it was a bad outsourcing experience:

  • Communication wasn’t timely
  • Work wasn’t done well
  • They didn’t understand a closing statement
  • R&M versus capex was a foreign concept
  • Accruing for taxes and insurance to get NOI right wasn’t being contemplated

This was around 2016, and I would say this is the moment REA was (somewhat) conceived.

Fast-forward to late 2018, and I found myself having a conversation with one of my best friends, who also happened to be the most entrepreneurial guy I know—my co-founder Adam. [Side note for context: Adam was the guy selling Xboxes on Craigslist in college while the rest of us held part-time jobs making minimum wage.] Adam had recently exited the first company he co-founded with his brother,, and was contemplating his next move. At the same time, I was considering leaving my day job at the tech company to become a full-time real estate operator. However, there was one catch—I now had a wife, two kids, and a mortgage, and thus needed some form of consistent income. I told Adam I was going to take a part-time CFO job two days a week and do real estate the other three days a week, and this is more or less how our conversation went:

  • Adam: “Why go to work for a CFO consulting company? Let’s start our own.”
  • Me: “Interesting idea, but CFO services are technical and hard to scale. If we’re going down this route, I’d want it to be something more along the lines of bookkeeping.”
  • Adam: “Then let’s start our own bookkeeping company! We outsourced our Yidio books for 15 years, and I managed the accountants. It worked great!”
  • Mark: “Really? I mean, if we’re going to do bookkeeping, we need to start with a niche, and the two topics I know best are accounting and real estate. We actually outsourced our accounting books two years ago, and it was awful!”
  • Adam: “See! Perfect. Let’s put a website together and see if we can get some leads.”
  • Me: “Ok, let’s do it…”

And the rest, as they say, is history. We began getting leads, understanding client issues, learning the various property management software, and then started building the team.

Key Checkpoint #3 – We are now Property Accountants!

Conclusion: The path was anything but linear, but as I write this, I realize it was a natural progression from CPA to Real Estate to Real Estate Accountant.