All Forum Posts by: Bonnie Griffin Kaake

@Samuel Coronado  There are tax benefits that are likely available to you with these park purchases. The best way to find out how much in tax benefits and extra cash flow is available, you will need a no-cost, no obligation cost segregation pre-analysis/estimate. Then you and your CPA/tax professional can review it to decide how a study can benefit your specific tax situation. CSSI and I have done many of these estimates and studies with great results. There are some essential questions that need to be answered to calculate the results you can expect. The sooner you explore these available tax benefits the better. I can help. 

@Diane Bonheur  There are a couple things you might want to also keep in mind before you are too deep in a deal. New Jersey and CT have the highest property tax rates in the country. Also, check assessed land values versus assessed total values in the county where the property sits. If the land value is very high, it can limit your tax benefits and cash flow with cost segregation.

Cost segregation can give you tax benefits and extra cash flow the first year you own the property. If you need to do extensive improvements/renovations down the road you will also have some nice tax benefits. The key is getting a good RE consultant that specializes in no-cost consulting, engineering-based cost segregation estimates, and reasonable study costs who works with your CPA/tax professional. Let me know if you have additional questions. 

@Rich Sandman  Congratulations! You are on an adventure. Some states require attorneys to close on a property and others allow real estate agents/brokers and title companies to do the deed.

Sometimes investors get bogged down in the buying and selling of properties and either forget or simply don't know there are some wonderful tax benefits and extra cash flow available with cost segregation and other tax benefits that are not commonly known by tax professionals/CPAs who are stretched thin. It is not part of their skill set and it is calculation complex. To do it correctly and avoid IRS audits, it is best to get a no-cost estimate from an engineering-based cost segregation company that actually does on-site reviews of your property inside and outside.

No, you don't need an LLC to own property or for each property. Many investors own properties in their own names. At some point in the investing journey, a good CPA/tax professional will recommend an LLC.

Since you want to learn fast, find yourself an experienced real estate broker/agent. Take that person to lunch or breakfast, pick their brain and work with them whether you are buying or selling a property. 

@Aspen Potter  If you are thinking mid-term rentals, be sure you look near hospitals, or medical facilities such as infusion centers. Traveling medical personnel (nurses, lab tech, x-ray and more) are in short supply. Many are traveling for 3 month contracts. They tend to be very responsible, pay rent on time, and leave the place cleaner from my experience.

Mid-term rentals are considered long-term rentals by the IRS. Therefore, they are depreciated over a 27.5 year term instead of 39 years like a STR. They are also eligible for expedited depreciation with cost segregation which gives you extra tax benefits and cash-flow up front. Let me know if you have more questions. Estimates are free.

@Harris Khan I forgot to mention that you may want to do some research on how you might be able to take advantage of replacing some gas stations with electric charging stations. Just a thought that would need research and planning. 

@Harris Khan  You are smart to position yourself for the next and upcoming market. From what I am seeing, investors are renovating old office buildings, hotels and other commercial buildings into residential apartments and condos. It takes quite a bit of planning and investment but the results are very good.

Then, investors are leveraging the available tax and cash flow benefits of cost segregation and ECO construction to their advantage. Leverage these benefits into more properties like your dad did. A lot of the tax benefits were and are not available to gas stations. If you want more information let me know. Don't pay more in taxes than you need to pay.
 

@Jordan Moorhead While you are exploring opportunities in mobile home parks, get a no cost estimate for a cost segregation study, when you start focusing on one or two. You will benefit if you don't have to pay taxes for a while until you get the upgrades in place and work on increasing your rents. You have nothing to lose and a lot to gain. 

Quote from @Brandon Tarby:

Would this apply to a park that only has tenant occupied homes? I’m new to this, could you explain what the purpose and benefit of this study?

A lot of your tax benefits are buried in land improvements to provide power, water, and sewer to each unit. In addition, the concrete pads and driveways and parking are great for expedited depreciation. This can give you cash flow instead of paying taxes on the income for some time. It may help you bring the property up-to-date quicker and fill those empty spaces. Estimates are free and will give you what you and your CPA/tax pro what you need to decide how it will fit your specific tax situation. I have done many of these with surprising results.

@Jimmy Jam  When you put your current property up for rent, it becomes rental property that can likely benefit with a cost segregation study. You may be eligible for a tax benefit that gives you more cash flow for your investment in your next property. Keep accurate records of everything you do to your current property while getting it ready for rental. Depending on your tax rate, this could result in 6-8% of what you paid for your house plus renovations in the process of getting it ready for rent. Estimates are free and will give you an idea of what extra benefit you may have. 

Quote from @Jeremy Muehlbauer:

So, we are looking at purchasing a triplex. We would ideally transition at least 1 of them over to a STR. My question is when it comes to the cost segregation study and how you can use the bonus depreciation against your W2 income with the short term loop hole. When they do the cost segregation study if only 1 of 3 of the units is being used as a STR and we are self managing the unit are we only able to write off the bonus depreciation from the 1 STR unit off against our W2 income or can we write off the entire amount of the buildings cost segregation? Any info on this would help, thanks.

Hi Jeremy, from my experience, most triplexes as you are describing are done based on the predominate rental terms. I would recommend you get a RE savvy CPA. And, get a quality cost segregation estimate done (no cost) before you go in for your first appointment.

The accounting and bookkeeping required to keep STR separate from LTR is going to be brain damage for most people. Also, consider the fact that the STR would have a depreciation schedule based on 39 years. The LTRs will have a depreciation schedule based on 27.5 years. Are you getting the picture that your fees for accounting are going to go up as well?