In-House vs. Outsourced Accounting for Real Estate: What It Actually Costs

Most real estate investors underestimate what building an accounting department actually costs. The salary number is just the start. By the time you factor in turnover, training, software, benefits and the very real possibility that you’ll struggle to find qualified people at all, the math looks very different from what you expected.

During a recent Real Estate Industry Update episode, Daniel Roccanti and Kyle Paxton broke down the true cost of in-house vs. outsourced accounting for real estate companies and why getting this decision wrong can slow your growth at exactly the wrong moment.

When Your Accounting Function Starts Limiting Growth

Growth exposes weaknesses. For real estate investors, one of the first places that shows up is the back office.

The warning signs are easy to miss at first. A late monthly close here. A few unanswered investor questions there. Decisions made from a bank balance because the financial statements aren’t ready yet. By the time it becomes a real problem, it’s usually already affecting the people whose confidence you need most.

Kyle points to a pattern he sees repeatedly: “You have investors yelling at you for K-1s, you have accountants yelling at you to get questions answered to get those K-1s out, you have banks yelling at you to get the completed tax returns.”

That pressure doesn’t stay contained. It spreads to your team, your contractors and your lender relationships. And in today’s tighter lending market, banks are digging into tax returns and financial statements with more scrutiny than ever. Gaps in your books don’t just create internal headaches. They create problems at closing.

The Real Cost of Building an In-House Accounting Team

Understanding the warning signs is one thing. Deciding what to do about them is another. For most growing real estate firms, the conversation starts with a simple question: do we hire in-house or outsource?

Salaries Are Just the Beginning

The most common mistake real estate investors make when evaluating in-house accounting is anchoring on a single salary number. A functional accounting department isn’t one person. Daniel puts it plainly: “Most accounting departments are going to be a team. It’s going to be like three to five, five and plus people.”

Those people cost more than their base pay. The full picture includes:

• Payroll taxes and benefits: On top of every salary, every year.
• Recruiting fees: Finding qualified accounting talent takes time and money, and placements aren’t cheap.
• Training and onboarding: Every new hire needs time before they’re operating at full capacity.
• Software subscriptions: Property-level accounting software like Yardi isn’t free, and it requires people who know how to use it.
• Management oversight: Someone has to manage the team. That time has a cost too.
• Turnover coverage: When someone leaves, and someone will leave, you need a plan for the gap.

The CFO Misconception

One of the more expensive mistakes growing real estate firms make is underestimating what real accounting expertise costs. Kyle describes a pattern he sees often: “I have a lot of clients who go and then say, ‘I would love to hire a CFO for $60,000.’ The reality is you can’t.”

What happens instead is a bookkeeper ends up in a makeshift CFO role. The work gets done at a surface level, but the business ownership oversight, the financial planning, the lender communication. That’s where the gaps appear.

Talent Shortage Makes It Harder

This isn’t just a budget problem. It’s a supply problem. A survey from CFO.com found that 87% of CFOs reported a current talent shortage in finance and accounting. Daniel and Kyle see it firsthand in their own hiring. If a key employee leaves, you may not be able to replace them quickly, or at all, with someone who has the right expertise.

When In-House Accounting Actually Makes Sense

In-house accounting isn’t always the wrong answer. Kyle is direct about this: there are situations where having a dedicated internal team makes real sense.

Those situations typically involve high daily transaction volume, complex internal processes that require constant on-site attention, and enough scale and stability to justify the overhead. If you have a predictable growth trajectory and the capacity to hire, train and retain good people, building in-house can give you the control and responsiveness you need.

For most growing real estate investors, though, that description doesn’t fit. Real estate accounting is, as Kyle puts it, “very repeatable and scalable.” The in-house model tends to make sense when you’ve already outgrown the outsourced model, not as the first step after outgrowing a single bookkeeper.

What Outsourced and Hybrid Models Actually Offer

For firms that aren’t ready for a full in-house team, or that have simply outgrown their current setup, outsourcing and hybrid models offer a different path forward.

Flexibility Without the Fixed Cost

The biggest practical advantage of outsourcing is flexibility. When your portfolio changes, when a deal closes, when you sell a major property, your accounting needs shift. With an in-house team, those people are on salary regardless. With an outsourced model, you can adjust.

Daniel frames it well: “You can work with your outsourced accountant and your needs change and switch. It’s just like that. And then you’re basically dealing with expertise that’s already there for you.”

Industry Expertise on Day One

Outsourced accounting firms that specialize in real estate bring something an internal hire rarely can: exposure to a wide range of operators, structures and situations. Kyle describes the value directly: “Working with a large variety of real estate clients of various shapes and sizes, I have a good pulse on what works and what doesn’t work in this back office space.”

That includes staying current on tax law changes, identifying planning opportunities and knowing which software tools actually work for property-level accounting.

The Hybrid Option

Many growing real estate companies end up somewhere in between. A hybrid model keeps some internal oversight (a CFO or controller function) while outsourcing the day-to-day accounting work. This gives operators visibility and control without the full cost of staffing an accounting department.

There’s a trust benefit here too. When a third party is involved in producing and communicating financial information, investors and lenders tend to have more confidence in what they’re seeing. As Kyle notes, “that extra third-party comfort that someone’s involved that’s not just under this umbrella does seem to add an extra level of trust in the system as a whole.”

What This Means for Your Business

Growth will expose your accounting weaknesses. The question is whether you identify them early enough to act, or late enough that they’re already damaging investor relationships and closing timelines.

If your monthly close is late, if you’re making decisions from bank balances, if investors are starting to ask questions you can’t confidently answer, those are the signs. The model you choose to fix it matters less than deciding to fix it before it compounds.

Watch the full episode to hear Daniel and Kyle walk through every piece of this decision in detail.

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