Benefits of Cost Segregation with David Deshotels & Jodi Nielsen - CREPN #219
Commercial Real Estate Pro Network
Release Date: 10/24/2019
Infinite Banking Money Multiplier Method with Brent Kessler - CRE PN #531
Commercial Real Estate Pro Network
Today, my guest is Brent Kessler. Brent Kessler was a chiropractor, and after implementing the money multiplier method, Brent paid off $984,711 in third party debt in 39 months, he became so passionate about how powerful this concept was, he began sharing it with others, and in just a minute, we're going to talk with Brent Kessler about Infinite Banking through the Money Multiplier Method.
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BIGGEST RISK with Brent Kessler
Commercial Real Estate Pro Network
J Darrin Gross And so if you're willing, I'd like to ask you. Brent Kessler, what is the biggest risk? Brent Kessler Yeah, well, let me answer it a couple different ways on there. But so as far as a risk, okay, as far as in our business, and what we do when you have this type of policy, I tell people all the time, there is no risk at all, because nobody's ever lost money in a whole life insurance policy. But then I stop, and I say, wait a minute, there is one risk. The risk is you, the risk is you the client and how you use the policy. So you're the only one that can screw this up. You...
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Commercial Real Estate Market Cycle with Travis Watts - CRE PN #530
Commercial Real Estate Pro Network
Today, my guest is Travis Watts. Travis is a multifamily apartment investor, public speaker and the Director of Investor Development at Ashcroft Capital. And in just a minute, we're going to speak with Travis Watts about Lessons Learned Through the Market Cycle 2022 to 2025.
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BIGGEST RISK with Travis Watts 2025
Commercial Real Estate Pro Network
J Darrin Gross I'd like to ask you. Travis Watts, What is the BIGGEST RISK? Travis Watts I would say, in 25 we talked a lot about market and rates and the discounts, and you know why we're bullish, or why I'm bullish on multifamily, I would say it's more than ever. It's the operator that you're about to invest with. Okay, do they have a lot of distress on their books? Are they losing properties currently? Are they not? Not that any single answer to that is like a red flag and rule them out. But you want to dive a little deeper and make sure that they're dedicated to staying in this...
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Affordable Housing Public-Private Partnerships with Danielle Ash - CRE PN #529
Commercial Real Estate Pro Network
Today, my guest is Danielle Ash. Danielle Ash is a partner in the real estate group and co chair of the ground leases practice as well as the impact practice at Adler & Stachenfeld, a law firm based in New York that is solely focused on real estate. And in just a minute, we're going to speak with Danielle Ash about Demystifying the Reality of Affordable Housing Returns and Risk Profiles.
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BIGGEST RISK with Danielle Ash
Commercial Real Estate Pro Network
J Darrin Gross I'd like to ask you. Danielle Ash, what is the BIGGEST RISK? Danielle Ash Well, I'm going to give a self serving answer, and then I'm going to give more of an investor based type answer. So the self serving answer, I think, is, you know, people come to me from all different sectors of real estate and at all different parts of their career, from early stage developers, sponsors to, you know, super high net worth sovereign wealth funds, who've been investing for 50 plus years. And I do think one of the biggest mistakes or risks that people face is not having good counsel...
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Flexible Workspace Solves Human Interaction Need with Mark Goldfinger - CRE PN #528
Commercial Real Estate Pro Network
Today, my guest is Mark Goldfinger. Mark Goldfinger is the General Manager Head of North America at Mindspace, a global flexible workspace provider that redefines the workplace experience for companies of all sizes, and in just a minute, we're going to speak with Mark Goldfinger about flexible workspace solutions.
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BIGGEST RISK with Mark Goldfinger
Commercial Real Estate Pro Network
J Darrin Gross I'd like to ask you, Mark Goldfinger, what is the BIGGEST RISK? Mark Goldfinger I think it's great question. I think in the co working ecosystem, or in the flexible office space, you know, ecosystem, I think one of the biggest risks is landlords starting to take on the opportunity to create their own turnkey sublet solutions for smaller companies, and kind of take business from us. Now, I don't think that they're able to really run the hospitality arm that we are, because that's not their business, and we put a lot of pride into that. But I think that's definitely one thing we...
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Non-Performing Loan Real Estate Investment Litigation Strategy with Chris Zona - CRE PN #527
Commercial Real Estate Pro Network
Today, my guest is Chris Zona. Chris Zona is a partner at Mandelbaum Barrett PC in New York, and a trial attorney specializing in Complex Commercial Litigation, and in just a minute, we're going to speak with Chris Zona about Turning Conflict into Capital Litigation as a Real Estate Investment Tool.
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BIGGEST RISK with Chris Zona
Commercial Real Estate Pro Network
J Darrin Gross I'd like to ask you, Chris Zona, what is the BIGGEST RISK? Chris Zona Sure. So I think it really fits within what we're talking about. I think the biggest risk for investors that are in this this realm is that you need to be comfortable with taking over a potential non performing note, right? Like there is no way to avoid risk when you're making this sort of play. So what you need to do is kind of, you know, balance minimizing the risk through your diligence process, because you don't want to take on something that you're not ready to you don't want to overextend in...
info_outlineCost Segregation is a tool given by the tax code to real estate investors that improves cash flow instantly.
Jodi Nielsen, National Senior Account Manager & David Deshotels, Executive Vice President of Cost Segregation Services Inc provide real estate investors with the how and why they can utilize the tax code to lower their taxes, save money, improve cash flow.
FREE: TAX SAVINGS COST ANALYSIS
Cost Segregation Study
Cost Segregation Study takes an engineering approach to determine what the components of the building are. Then, it breaks the whole building into its components parts. These component parts are then categorized as personal property, and assigned a life expectancy of 5, 7 or 15 years.
Depreciation
Depreciation is the accounting of a portion of the whole that has been used up, and is loss. This loss reduces its value and is accounted for annually when filing income taxes. It is an expense against income. Subtracting this depreciation expense from income reduces your taxable income.
Straight line vs Accelerated
Start with a value of $100,000
Pre Tax income of $20,000
Straight line:
27.5 years: $100,000 / 27.5 = $3,636 annual depreciation expense.
Taxable income: $20,000
Depreciation: - $3,636
Taxable Income: $16,364
Accelerated Depreciation:
5 years: $100,000 / 5 = $20,000 annual depreciation expense.
Taxable income: $20,000
Depreciation: -$20,000
Taxable Income: $ 0
This shorter timeline accelerates the depreciation and increases the depreciation expense, which lowers the Taxable Income and increases cash flow.
The net result can be tax free income for the real estate investor. This is especially true in the early years of ownership. This is one of the primary incentives for investors to hold real estate.
Bonus Depreciation
Bonus Depreciation used to be available only for buyer or builder of a new property. The new tax laws allow you an additional 100% depreciate any eligible property if it is new to you. This adds to the value of a cost segregation study.
Partial Asset Disposition
Partial asset disposition allows you to take into account and write off the loss of the unused property when you replace elements of your building. For instance, if you buy a building and have to replace the carpet. If you expense the cost of the new carpet, you will get to record the expense of the new item, but will not get the benefit of the unused property that you tossed in the dumpster.
Additionally, if you have not done a Cost Segregation study, you will miss out on the additional depreciation allowed in the 2017 tax act. Bonus Depreciation provides an additional amount of depreciation for qualifying property in year one of purchase.
Tax Payor Status
Your tax payor status will determine how much depreciation you are allowed to use.
Real Estate Professional
For those investors who are full time investors and do not have a W2 job, they can utilize the depreciation against 100% of their gross income.
Passive Real Estate Investor
If you are a passive investor, and have a W2 job, you are allowed to deduct up to the amount of passive income received. If you have more deductions than you can take, the deductions will be carried forward for future use. This can be used to offset the taxable gain when you sell the property.
Misconceptions of Cost Segregation
There are some common misconceptions around cost segregation. Following are a few:
Misconception: I can’t do a cost segregation study on my old building.
FACTS: This is not true. As long as the building is new to you, you are eligible to utilize cost segregation.
Misconception: My building is not worth enough to utilize cost segregation.
FACTS: As long as your building is worth $150,000, cost segregation may be of benefit to you.
When Not to Use a Cost Segregation Study
A cost segregation study will not work for you if you are a non profit that does not pay taxes. Additionally, if you are looking to flip a property in less than 3 years, it may not be worth doing a study.
The recapture rate of Personal Property can be negated if planned for properly. If you exchange into a new building, the Personal property recaptured, will be calculated at a higher rate than the permanent structure. However, if you do a cost segregation study on the new property, you will have a new schedule of depreciation plus the bonus depreciation in year one.
BIGGEST RISK
Each week I ask my guest, “What is the Biggest Risk Real Estate Investors face?”
BIGGEST RISK:
Per Jodi: The biggest risk is you're sitting basically if you own a building you definitely owe it to yourself op to look at. Because you're sitting on cash that you don't have to sell another widget. You don't have to make another widget. You don't have to find another contract. It's your money that you're just basically sitting on by owning a building that you could use now. And so why not at least look at the look at the numbers to see if it makes sense for you at this time instead of letting more time go by just straight lining. And then also with the partial asset disposition I would say it's very important to take advantage of it.
Per David: We've had plenty of companies that have called us back years after having done their study. And they suffered catastrophic loss be it a tornado or fire or whatever it is and they won't say, do you guys still have those 500 pictures of my building that you took when you did the study? It's like sure we've got those and it's so we have they're building just completely documented from top to bottom one in the other. We'll come out and take hundreds and hundreds of pictures depending on the size of the property to completely document that. So if there is catastrophic loss it's it's a documentation to say hey here's what the building was. Here's all the furniture fixtures and so forth. And it's been very helpful to people in times of crisis.
For more go to:
Jodi Nielsen
Phone: 651-210-1921
Email: jodi.nielsen@costsegregationservices.com
David Deshotels