All Forum Posts by: Matt Hein

Has anyone tried online DIY Cost Segregation services like https://diycostseg.com/ ?

I have a SF rental with about $140,000 into it and am trying to decide:  1) Is cost segregation worth doing at all?  2) What is the value of cost segregation?  3) How does that value compare to the expense. 

I'm an engineer and can probably just figure this out by reading and spreadsheets but would prefer to just use a pre-built tool to save time/effort.

Thanks in advance for sharing experiences related to cost segregation of lower-cost rental property

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $111,000
Cash invested: $35,000

First property. Goal is to simply start.
A great opportunity to move from theory to reality and determine my strengths/weaknesses and preferences -- I don't like tenant property management but love project management.

What made you interested in investing in this type of deal?

Income diversification and investment diversity.

How did you find this deal and how did you negotiate it?

Found through a realtor on MLS. Estate sale needing lots of renovation work.

How did you finance this deal?

10-1 ARM

How did you add value to the deal?

It's a single story with a full basement. We renovated the first floor to be a 2-bed 1 bath unit and plan to convert the basement to 2nd unit in a couple years.

What was the outcome?

Renovation complete. Tenant in with a good 12-m lease.

Lessons learned? Challenges?

I knew going in that renovation would be more expensive; and I was right.
Contractor management -- if you don't make your project their priority they will find something else to work on.

Your strategy has equity and cashflow benefits. You could validate the equity benefit by looking at what people are buying now -- people are voting with (a lot of) dollars on the type of home they want. You can then find a good-bones home to fix-up and build equity. The next layer would be cashflow in the future. Again, what are people renting now? Assume they're likely going to look for something similar in the future. That gives you the future metrics to build towards. Go ahead and play out a worst-case scenario and see if you break even after 5-years.

The life experience gained from this would be worth ~$10,000 in my estimation. (Just compare it to a year of college) So I'd think anything above a negative $10k return is 'profit'!

Godspeed!