All Forum Posts by: Susie C.

Taxes and insurance are escrowed, meaning they will be part of your payment, however the payments shown are just principal and interest. So your monthly payment will be higher than what is shown here.

I question if you really want a 3 year pre-pay penalty? The interest rates have already moved down and should continue to go lower in 2024. It could go low enough that you may want to refinance, but with a 3 year pre-pay penalty you will not really want to refinance or will pay a healthy penalty if you do so.

I would get a quote for a 1 & 2 year PPP to see where you would be at with those PPP timeframes.

I hope this helps?

Thanks! Very helpful and this is where I was hesitant as well and brought up to the lender. Their other option was to consider a hard money loan (higher interest rates), but lower time frame and from my understanding, I would just pay for the time period that I need the loan? Any reason why this shouldn't be considered if lets say rates drop substantially by the end of this year?

0 Votes

Tacoma, Washington

Quote from @Nicholas L.:

that's just principal and interest - it does not include taxes

Thank you! Yes, I ended up confirming this with the lender

0 Votes

Tacoma, Washington

I am planning to secure my first DSCR loan. I have a property in mind that is 350k. The lender sent me the following options (attached photo). I am a little bit confused on why the monthly payment is so little? For example, I have another property with 315k balance left, 3.375% interest rate and the total monthly for it is $2030 (includes escrow + taxes).

The DSCR loan is for interest rates that are double, slight less loan amount (~35k), but even with the difference in loan amount the monthly payment feels like it should be much more.

0 Votes

Tacoma, Washington

Quote from @Stephen DiJulius:

I might be biased but my clients have great success around Notre Dame in South Bend. No HOAs around the campus, no state or local regulations. It’s not hard to find a deal that nets 40k on a 40% occupancy.

How are tenant / landlord laws in IN?

0 Votes

Currently have some STR but cities have some regulations. Anyone else invest in STRs?

If so, what city are you in and how are the regulations/policies?

Any signs/concerns with policy changes that would limit and/or ban STR?

If you've STR out of state are you self managing or using a service (Vacasa, Evolve, private property manager)? What are the challenges you've face?

Big plus if there’s cities with warmer climate throughout the year as we’d love to have a vacation home we can use ourselves as well.

1 Vote

Quote from @Michael Plaks:

Quote from @Susie C.:

'You can't do an online cost seg unless it is new and put in service for the current year, not for prior years. You would need to go through a cost seg company and get an official report since they would also prepare the form 3115 that we include with the tax return. We cannot do the cost seg or do your taxes without that form. I sent you to the Cost Segregation Authority they are who we work with the most, but you are free to use anyone you wish, so long as they also prepare the 3115 in addition to the cost seg report, which you need for that particular property since it was placed in service back in 2019.'

Their answer can be misleading. Yes, you will need to prepare Form 3115 along with the related calculations, incorporate it into your tax return and file it in a rather weird way (must be sent to two places.)

However - this is NOT part of cost segregation study. It is a step AFTER cost segregation study. It is the same step whether you use a full-service cost seg company or a DIY website like KBKG.

Normally, 3115 is a job for your accountant. Some (not all) full-service cost seg companies include preparing Form 3115 with their package. Some do it well, and some mess it up. I had to redo a few of them for my clients.

Finally - "It’s fairly common and most CPA’s should be familiar with how to do this" - is not the reality. The form itself, and especially the calculation of that "481a adjustment" are complex and confusing. Very few tax accountants have experience doing it, and I recommend choosing one who specializes in real estate and knows how to do it.

Thanks. There's a lot to unpack with the statement made by the tax preparer I am using and the feedback I am receiving on BP. Would you be able to help clarify?

- Is an online cost seg valid for a property placed in property in 2019 or do I have to use a full service cost seg company to come out? From another cost seg thread: "Whether it’s online or an Engineering Firm doing cost seg they don’t like to do them after properties been in service for > 2 years (and if you do it will need to be an Engineering Firm, not self-service)."

- If we can use the KPKG cost seg, it seems that the 3115 is what they are missing and wanting? If they refuse or say they're unable to do this then I assume I should look for a different tax company that would be able to assist?

0 Votes

Quote from @Christian Block:

Quote from @Susie C.:

Quote from @Christian Block:

In our practice we have used quite a few cost segs from KPKG (just one example), which are calculated using software. They are not as robust as having an actual engineer come out to preform the cost segregation, but are much less expensive; probably $600-$1,000. We are comfortable using these on residential properties (they generally error on the conservative side), but for a commercial property, or even a multi-unit residential property, I think you want the cost segregation performed by an actual engineer.

Thanks Christian for this detailed information. I have currently purchased a cost seg study from KBKG. When I sent this over to the tax company I use, this is what they said (below). Is this true? I looked up the form 3115 and it seems like it is something they should be able to completed. For clarification, I spoke with the owner of the company and he said I could use an online cost seg, never mentioned anything re: Form 3115. The person who prepares my taxes said the below:

I agree, you will need to file a change in accounting method if the property has been previously placed in service and depreciated. The “extra” depreciation you take from the cost segregation will be a 481a adjustment and will need to show the calculations on Form 3115. It’s fairly common and most CPA’s should be familiar with how to do this.

I sent you a PM.

0 Votes

Quote from @Sean O'Keefe:

Quote from @Susie C.:

Quote from @Sean O'Keefe:

Quote from @Susie C.:

Anyone use online resources for cost seg? Cost is ~ $400-600 vs $1500-2000. I own a condo and SFR I want to cost seg.

Companies I've found and the cost they would charge for 1 property under 500k

KBKG - $450 - (audit support included)
Re Cost Seg - $1800 (audit support included)
DIY Cost Seg - $495 (+ additional $195 for audit support)

Would love feedback to before settling on one. The estimate I got from DIY Cost Seg was the highest. KBKG was the lowest.

This is helpful @Susie C.

I wasn't aware of Re Cost Seg from this list. We have clients ask for resources on cost segregation reports all the time. It's helpful to have creditable place to send them for support. I'll look into Re Cost Seg - I'm already familiar with the other 2.

Thanks Sean, I just completed the KBKG one. This one provided me with the study, but when I sent it over to my CPA they said they can't use it because there's no form 3115. Can't the CPA complete the 3115 themselves or does this need to be completed by the cost seg company used? When I've researched this, it looks like it can be completed by the CPA, but perhaps I am wrong?

Property was in service 2019, doing cost seg for 2023 year. Need return amended.

Susie C. The CPA can prepare the Form 3115.

Self-service cost segregation reports don't include this.

Thanks Sean. This was the reasoning from them. Does the property being placed in service in 2019 matter at all?

"You can't do an online cost seg unless it is new and put in service for the current year, not for prior years. You would need to go through a cost seg company and get an official report since they would also prepare the form 3115 that we include with the tax return. We cannot do the cost seg or do your taxes without that form. I sent you to the Cost Segregation Authority they are who we work with the most, but you are free to use anyone you wish, so long as they also prepare the 3115 in addition to the cost seg report, which you need for that particular property since it was placed in service back in 2019."

0 Votes

Tacoma, Washington

Quote from @Christian Block:

0 Votes

Quote from @Sean O'Keefe:

Quote from @Susie C.:

Anyone use online resources for cost seg? Cost is ~ $400-600 vs $1500-2000. I own a condo and SFR I want to cost seg.

Companies I've found and the cost they would charge for 1 property under 500k

KBKG - $450 - (audit support included)
Re Cost Seg - $1800 (audit support included)
DIY Cost Seg - $495 (+ additional $195 for audit support)

Would love feedback to before settling on one. The estimate I got from DIY Cost Seg was the highest. KBKG was the lowest.

Property was in service 2019, doing cost seg for 2023 year. Need return amended.

0 Votes

Tacoma, Washington

All Forum Posts by: Susie C.

Susie C. has started 15 posts and replied 46 times.

Post: First DSCR - Are these costs normal?

Post: First DSCR - Are these costs normal?

Post: First DSCR - Are these costs normal?

Post: STR Friendlier Cities?

Post: STR Friendlier Cities?

Post: Cost Seg, price.

Post: Cost Seg, price.

Post: Online Cost Seg Companies for Residential

Post: Cost Seg, price.

Post: Online Cost Seg Companies for Residential