All Forum Posts by: Joseph James

Quote from @Joe Splitrock:

Quote from @Joseph James:

Good afternoon, BP investors.  I have a duplex purchased in 2021 that I am thinking of doing cost segregation study on, to capture bonus depreciation for the 2021 tax year.

It is a duplex in the Miami, FL area that I bought for $500,000.  Two units: 3/2 in the back of duplex, 2/1 in the front of the duplex w/ a fenced yard, concrete parking lot for 4 cars, some landscaping.  Quite nicely finished on the inside from previous owner w/ tile floors, quartz countertops and stainless appliances.

I am wondering if anyone has some estimates for how much an engineering study on this would cost, and what I could expect to save, given the purchase price?

Any mentions of people I could contact would be great.  Does the engineering business that does the study have to be in Miami?  Do they have to do a site visit and walk the grounds?

Any help or experiences you might relate would be awesome.  Thank you

 Based on the price point an engineered study would probably be cost prohibitive. People do the DIY algorithm based studies and they can cost under $1000. This may or may not hold up during an audit because nobody actually visits the property. Also be aware that cost segregation accelerates expenses that you would otherwise get over time. That can be great your first few years, but also means less in your later years. Make sure that is really what is best for you. It can be a big surprise in future years when you get hit with huge tax bills due to little depreciation expense. 

Joe,  thanks for the reply.  I don't intend on selling this property any time soon if ever, so would prefer to have my depreciation now, as opposed to many years from now.  This will enable me to reinvest/improve this property and some adjacent properties that I also own.

It looks like from some reading, a rough estimate of the bonus depreciation I receive as a result of the cost segregation would be $80k-$120k.  Is my understanding accurate?  That is a good chunk of money.  How much would a cost segregation study be, so as to render the above savings not worth the cost?

Seems like it would be a TVM-type calculation, wherein I invest an amount (cost of the cost segregation), and then pull forward monies from the future into the present, where each dollar is more valuable.

If Joe or anyone else has additional thoughts or details, or experience, I would be most grateful.  

Good afternoon, BP investors.  I have a duplex purchased in 2021 that I am thinking of doing cost segregation study on, to capture bonus depreciation for the 2021 tax year.

It is a duplex in the Miami, FL area that I bought for $500,000.  Two units: 3/2 in the back of duplex, 2/1 in the front of the duplex w/ a fenced yard, concrete parking lot for 4 cars, some landscaping.  Quite nicely finished on the inside from previous owner w/ tile floors, quartz countertops and stainless appliances.

I am wondering if anyone has some estimates for how much an engineering study on this would cost, and what I could expect to save, given the purchase price?

Any mentions of people I could contact would be great.  Does the engineering business that does the study have to be in Miami?  Do they have to do a site visit and walk the grounds?

Any help or experiences you might relate would be awesome.  Thank you

Originally posted by @Timothy Hero:

Mixing primary and rentals in one loan would be interesting.

You wouldn't be over the max, so I don't see why not.

Good morning, everyone.  @Timothy Hero perhaps I did not explain myself well, or use the correct verbiage.

I don't want to combine primary & rentals into one loan.  I want to do two re-fi's at the same time: 

1. a cash out re-fi on a free-and-clear rental (so I can pay off the principal on higher interest mortgages on some other rentals),  and

2. a re-fi on a Jumbo mortgage I have on my homestead.

I am looking for someone who can do both of these at the same time, so I don't have to go through a couple months' wait for one to complete, to start the other.

Is this possible?  Perhaps a mortgage broker with access to a wide variety of loan products would be the one to see this through?

I am a strong borrower, and doing these re-fi's would only strengthen my balance sheet and monthly cash flow.

Thank you, and hope everyone is having an excellent weekend. :)

Originally posted by @Raymond J. Rodrigues:

@Joseph James feel free to reach out. I am also located in Miami.

I appreciate your reply in this thread, and the direct message.  I will be in touch.  Thank you. 

Thread is of interest.  Following. 

Hello, all.

Here is my scenario: I am looking to refinance/consolidate debt on some four-plexes that I have, as well as refinancing the Jumbo mortgage on my homestead.  I have a lender who will do the refinance/consolidation on the fourplexes but not the Jumbo , and I have a couple of banks that will do that homestead Jumborefinance but not the fourplex refinance.

What is the most efficient way to discover the lenders/mortgage broker who will provide me with the best terms? Doing the refi on the investment properties and the jumbo will net me significant monthly saving in terms of payments over what I have already been consistently paying, so it should be a slam dunk for the lender.

Properties/mortgages listed as follows:

1.  3 Four-plexes  I want to re-finance into one loan:

a. November 2019 30 year at 4.875%: 323,000 remaining balance

b. Feb 2012 15 year at 4.25%: $60,000 remaining balance

c. Feb 2012 15 year at 4.25%: $60,000 remaining balance

For a total outstanding loan balance of $442,000, with a combined payment of $4,213 per month.

I have multiple free & clear four-plexes with a value of $650-750k that I could do a cash-out refinance for $442,000, pay off the outstanding balance on the above loans, and get myself a monthly payment of less than $2,000, depending on the rate.

2. Homestead refinance:  30 year mortgage at 3.875% with $885,000 outstanding balance, current payment of $4,400.  Property value of about $1.3MM.

I see that Jumbo refi rates are below 3%, and this could net me a payment saving of $800-1000 per month, which is not trivial.

As far as personal balance sheet, credit score, and income go, all get top marks.

I am interested in getting the best rate/lowest payment for the above existing debts, which I have paid without fail since they were originated.  The above savings on payments would be in excess of $30,000 per year, so I am anxious to get this move done.

Any help/advice on the most efficient way to get this done would be appreciated.  

I am in Miami, FL, (both home and investment properties) if that makes any difference.

following this discussion

Originally posted by @Nat C.:

@Joseph James

It sounds like you are holding the properties in your personal name. Some people think this is completely acceptable if you have adequate insurance. Well did you know that holding real estate in your personal name, increases your chance of being sued astronomically

It’s undoubtedly better to avoid being sued at all. Insurance companies typically settle with a claimant before it even goes to trial because it’s cheaper than paying a team of attorneys. And then your insurance costs will substantially increase.

Most people think they're protected with the real estate within an LLC. Well guess what, that's a false feeling of safety.

Firstly, the owners name is still on public record. Anyone can go to the Secretary of State website and see your name as the managing member of the LLC. That means everyone knows exactly what you own.

Feel free to PM me if you need any help.

Nat Chan,

Thank you for the wonderful reply.  I appreciate it.  PM sent, and thank you again.

Originally posted by @Nat C.:

Maximum of one million dollars inside one LLC. Each LLC is owned by a WY Holding Company.

The subsidiary LLC's are disregarded entities and the income flows back to the holding company for consolidated banking and tax filing. The holding company can be any entity you choose (c-corp, s-corp, LLC) and should be selected after a discussion with your CPA.

There is no 'one size fits all entity or structure', however the above structure is an excellent asset protection method for real estate investors. 

This is interesting info, @Nat Chan.  I have a portfolio of properties in/around Miami, that are past due to receive this kind of asset protection treatment.  Additionally, I am under contract for an additional acquisition.  I am imagine it is during a time of addition/change like a property purchase, that there are strategies involved specific to this change, yes?

Do you recommend any further resources for reading up on/education myself on this stuff?  As I grow in portfolio size and value, I feel the need for more protection and sophistication in structure and approach.

Originally posted by @Kevin Kohler:

@Chanie Chriqui are you still looking for the right lending institution to help you lend against your portfolio?

Kevin, 

I am in S FL, and will be looking in the next ~6 months for a bank willing to lend against a multifamily portfolio.  If you have any names/referrals, I would be most appreciative.