All Forum Posts by: Costin I.

@Neil Narayan - what do they call "the hottest ZIP codes"? 

The ZIPs with the most activity? With most inventory? With most price drops (as in "hot, don't touch")?

I don't know about other areas in TX, but I keep a close eye on Austin-SAN corridor, and I'm familiar with the market in Kyle, New Braunfels and NE San Antonio. And IMHO, the prices are dropping big time (on avg. 10K/month...houses that were above 300K a year ago are not selling at 250K now) and the available rentals saturation is worse than I seen during summer season (with rents dropping from 1$-1.08/sqft to 0.8$/sqft and very little contacts and applications...just go in Zillow and look how many rentals are on the market now in Kyle, New Braunfels or Converse). 

So, hot Zip codes, don't touch or you'll get burned. Or buying opportunities if the bottom is reached soon. All depending on perspective.

I would take it with a big grain of salt, I think Opendoor is trying to drum up interest, given how many properties, they and other institutional buyers, are having on the market (e.g. AMH4Rent dumping their TX portfolio, just do a search in Kyle and Buda). 

https://www.cpapracticeadvisor.com/2024/12/27/boi-reporting-...

"A 5th U.S. Circuit Court of Appeals late Thursday reinstated a nationwide injunction that had been issued earlier this month by a federal judge in Texas who had ruled that the Corporate Transparency Act was unconstitutional, Reuters reported on Friday, thus suspending the deadline once again for most reporting companies to file beneficial ownership information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN)."

@Ashish Acharya @Clinton Davis

@Bob Dole - there is more to the cost segregation question than on the surface. Here is a CSS Decision Diagram flowchart intended to bring together all the various questions when assessing the benefits of a Cost Segregation Study (via a professional or DIY).
FYI - You can do a CSS for ~$400, ask @Malik Javed how.

@Brad Herb - one thing to watch when investing in a syndication with an SDIRA is the highly trumpeted ROI in early years via a cost segregation study and the accelerated depreciation it creates...which you'll not be able to take advantage of via a SDIRA.
The same is true for a house—placing a tax-advantaged asset into a tax-advantaged investing account cancels the tax advantages (or many of the immediate ones).
Maybe @Michael Plaks or @Kaaren Hall can explain this better or correct my understanding here?

@Bob Dole Two other benefits of CSS and accelerated depreciation via a cost segregation study: partial disposition and the death step-up basis.  

1. Partial Disposition Benefit: In a cost segregation study, components of a property are identified and depreciated on shorter schedules (like 5, 7, or 15 years). When an owner replaces or retires certain items (e.g., lighting, HVAC, or carpeting), they can claim a deduction for the remaining undepreciated value of those items. This allows the owner to “write off” the value of disposed assets immediately, rather than continuing to depreciate them. The result is an immediate tax benefit in the year of disposition, reducing taxable income.
2. Death Step-Up Basis: (bummer, you have to die for this benefit to kick in, but...) When an owner passes away, the property’s tax basis is reset to its fair market value on the date of death (this is known as the “step-up basis”). A prior cost segregation study increases the depreciation taken during the owner’s lifetime, lowering taxable income each year. Then, at death, the property’s basis resets, effectively erasing the accumulated depreciation. This benefit allows the owner’s estate or heirs to receive the property at a new, higher basis—reducing capital gains taxes if they choose to sell the property after inheriting it.

In short, partial disposition allows tax deductions for retired property components during ownership, while the death step-up basis resets the property’s depreciated value, providing tax relief for heirs. Both offer valuable tax strategies, particularly when cost segregation is applied early.

This is how the same area shows in 3 different flood map systems:

This is for a suburb of San Antonio, not a coastal region.
The first is the one used now by Zillow and Realtor, feeding from First Street - the house and whole neighborhood is not marked currently in a flood zone, but it's deemed a MAJOR risk with 30% chance of flooding in the next 30 years.
The second one is from SARA, and has some portion of the neighborhood in flood plain.
The third one is from FEMA and it shows some portions in 100y floodplain, and the whole neighborhood in a 500y floodplain.
So, which one should you believe?  

I guess, it depends on who you ask - there might be an "expert source" where this neighborhood is already a marina. Question is then, for an investor, should you consider a price premium for "water view"?

@Brett Jurgens if data is non-partisan, yes, it could be helpful if one can access it and knows how to interpret it. If it's used to promote an agenda or to scare you into doing something, then I take it very cautiously (like the jobs numbers, that were adjusted 340% retroactively...do you still place value on that reporting, after repeated significant adjustments?). IMHO, if something is based on fear, there is an agenda behind it. And a lack of solid arguments, otherwise the fear factor would not be necessary.  

Insurance in TX increased substantially in the last years, on average 10% per year, in some cases even experienced 30% annual increase.  

I agree, seeing migration patterns coupled with insurance costs and insurability might be a good macro-economic indicator. Not easy to do, not in a heavily regulated environment. I think a free market would sort this kind of thing in a very efficient manner. 

So, you need Zillow to tell you it's hot in TX and FL gets hurricanes? And that like it's something new, not going on for millennia?

Take it with a big grain of salt - I saw a property tagged with HIGH RISK of HEAT due to a 200% increase of days over 100F in the next 10 years....going from ONE per year to ...drum roll...TWO days per year.

Thank you @Ashish Acharya and @Account Closed!

@Account Closed Yes, this all stems from a major hail storm that damaged a whole neighborhood back in Sept 2023. We opened insurance claims and received insurance checks in 2023, had the roof, fence, AC, windows replaced with partial payments done in Dec 2023 and the bulk of contractors paid in 2024. 

In terms of insurance checks & repairs payments, it was a wash, probably even a loss because we had high deductibles and the insurance didn't pay for everything we had to repair. So, from that perspective, I like the idea of "involuntary conversion provisions" to not have to deal with increased "income" in 2023 (because of the insurance payments) and huge "expenses" in 2024 (because of paying the contractors).

I thought that has nothing to do with CSS, partial dispositions, having to "retire" the old assets and start tracking the depreciation of the new assets (after all, the CSS allocated 5K to the old roof covering, and we paid 18K+ for the new roof). Especially, if 10-15 years down the road we need to change the roof again. 

So, my question is using "involuntary conversion provisions" prevents you from doing partial disposition, recognizing a loss for remaining depreciation on the old roof, and depreciating the new roof?