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What is an Outsourced CFO?


As businesses begin to scale, they often find it valuable to bring in experienced executives to help lead their next phase of growth. One of the most crucial elements of that team is a Chief Financial Officer, or CFO. A CFO is tasked with heading up high-level financial strategy and building robust systems that enable the business to operate efficiently at greater scale.

In the real estate industry, investors often start to think about seeking out the services of a CFO as they begin to add more and more properties to their portfolios. A great CFO helps solve all kinds of issues: from optimizing the cash flow of your properties to helping you raise external capital or debt financing to acquire new assets.

But you can’t hire just anyone to be CFO––you need an experienced executive with a proven track record. The best CFOs are well-established financial leaders with vast experience. Unless you own hundreds of properties, it’s unlikely you have the budget to meet their salary expectations.

Instead of bringing a CFO in full-time, many real estate investors work with outsourced CFOs. These independent professionals bring the required financial expertise on a part-time consultancy basis. But what exactly does an outsourced CFO do, and how do you know when it’s time to hire one to help out with your real estate business?

What Does an Outsourced CFO Do?

An outsourced CFO performs many of the same tasks that an internal CFO would perform. These include:

  • Creating financial processes and internal controls: effectively managing any real estate portfolio demands a sophisticated financial infrastructure. If you own more than a few properties, you likely operate multiple bank accounts and LLCs. Real estate is a cash-intensive business, and accurately tracking cash flows is crucial in ensuring financial statements and tax returns are accurate.
  • Shaping investment strategies: an experienced CFO will advise on portfolio growth strategy. They may identify new properties to acquire, advise you on the best types of property to invest in, and more.
  • Forecasting and reviewing budgets: you should have budgets for each property that roll up into an overall budget for your entire portfolio. Pulling together these forecasts and tracking performance against them is key to achieving investment goals, and is a process that a CFO can help set up and manage.
  • Managing controllers, accountants, and bookkeeping staff: a CFO provides high-level strategy, but you shouldn’t expect them to manage every aspect of your finances. Instead, ask them to oversee the work of your accounting and bookkeeping team to make sure everything is being done correctly.
  • Raising capital: if you’re looking to accelerate portfolio growth, you may be considering accessing debt financing from a lender or raising equity funding from investors. A CFO can identify potential partners, ensure you have the right documentation to secure funding, and help negotiate terms.
  • Address financial challenges: you’ll inevitably experience financial challenges at some point in your real estate investing career. An experienced CFO has likely seen these challenges before and has the experience required to help overcome them.

Many real estate investors work with an outsourced CFO on an advisory basis. You may have a contract for a few hours of work per week or just work with them on an as-needed basis. Every outsourced CFO will have their own way of working, but in general, the relationship tends to be very flexible.

There are many benefits to working with an outsourced CFO that’s specialized in the real estate industry. These professionals have a wealth of lateral experience partnering with investors in similar situations and are well-positioned to advise on best practices that you can adopt.

How to Know When You Need an Outsourced CFO

It’s often difficult to pinpoint exactly when to hire an outsourced CFO for your real estate business. While it’s never too early to get expert financial advice, you probably don’t need to hire an outsourced CFO on an ongoing basis until you own several properties. After this stage, it becomes increasingly difficult to manage every element of your portfolio without the right support.

As you continue to grow, existing financial processes and systems often begin to struggle with an increased level of scale. That makes sense: the systems that help you manage three or four properties are entirely different from the systems needed to manage thirty or forty.

The decision to partner with an outsourced CFO can often be triggered by some other event in your real estate business. One example of this would be hiring a bookkeeper and then realizing you lack the financial infrastructure for them to be successful. Or perhaps there’s an opportunity to acquire a new property that’s different from your existing portfolio, and you need a qualified professional to advise on the deal.

In many situations though, it isn’t necessary to hire an outsourced CFO. There are many different types of financial advisors in the real estate space, including established real estate accounting and advisory firms like Hall CPA.

Outsourcing To a Real Estate Accounting Firm

Instead of working with an external CFO, it may be more beneficial to partner with an established real estate accounting firm. At Hall CPA, we offer both outsourced accounting services and real estate advisory services.

Our outsourced accounting team handles the day-to-day accounting needs of your real estate business, freeing you up to focus on the tasks that matter most. We’ll help you save time and money by implementing a digital system and handling all monthly bookkeeping and financial reporting. In addition to that, you can set up a meeting at any time with a specialized real estate accounting advisor.

Already have a handle on your monthly accounting cycle? Our advisory team is available to provide the same guidance an outsourced CFO would. We’ll help optimize your tax strategy, acquire new properties, and leverage advanced strategies like cost segregation and bonus depreciation.

At Hall CPA, our entire firm is dedicated to serving clients in the real estate industry. Many of our partners have their own real estate portfolios and are uniquely well-placed to provide advice on scaling your real estate business.

Interested in learning more? Schedule an initial consultation today.