Imagine you bought a property for $2M.The land (excluding any structures) is valued at $400K.Since land is not depreciable in the eyes of the IRS, we subtract the land value from your purchase price to get your depreciable basis.Your depreciable basis is simply where a cost seg engineer starts from when allocating your eligible assets into either 5, 7, or 15 year property.In the scenario above, your starting basis would be $1.6M since your basis = your purchase price - the land value.Having an accurate land value is essential to getting your depreciation/bonus depreciation calculations right.This is the starting point for any cost seg study that you do.

This is our first BRRRR so we are still working out the numbers and how much to allocate for each of the main expenses like Vacancy, Maintenance, & CapEx. 

Say you buy a $4M apartment complex and allocate $1M of it to land.

It is my view that the duplex when properly allocating for maintenance/cap ex is not going to have any income this year. 

If its all in at 10% COC or 20% its up to you.Maybe you say you will allocate 70% of the funds so you have 30% in reserve for the next great deal.

The Treasury Dept just announced that 89% of the funding allocated to states for rent payments has yet to be released by the states.

)The problem for us is that since we only manage approx 10 units which are fairly well-run and low maintenance, there simply isn't a lot of work to allocate.

The idea is that this allocation would not be your main income driver, but it would balance off the public markets when they were doing badly.However, in my opinion a lot of the advice was skewed by the fact that the majority of traditional advisors only understand and know about public markets and many of them know nothing about directly owned real estate.

We allocated $35,000 to renovations, focusing on interior updates and enhancing curb appeal.

Negotiating doesn’t mean just a lower price- in many cases it’s the mitigation and allocation of risk.