#cost segregation real estate calculator

[expertcostseg-us]

Some commercial real estate investors have initially been reticent due to the high payoff ratios of cost segregation for real estate. https://www.costsegregationcre.com/

[p-oconnor]

https://www.diycostsegregation.com/

DIY cost segregation in its purest form would be you or your tax preparer generating a guesstimate of the short life property found in your asset. It is legal providing you do not materially overstate the amount of depreciation. However, the IRS standard for calculating depreciation is specific. https://www.diycostsegregation.com/

[developerwith1]

Bonus Depreciation Breakdown: Real Estate Tax Benefits Unveiled

Navigating the waters of personal tax can sometimes feel like trying to decipher an ancient map. For real estate investors, however, there's a "X marks the spot" that could lead to treasure: bonus depreciation. This tax benefit can seem complex at first glance, but it's a powerful tool in the savvy investor's toolkit, offering a way to significantly reduce taxable income. Let's break down bonus depreciation in a way that's as easy to understand as finding your favorite coffee shop.

What Exactly is Bonus Depreciation?

Imagine you've just bought a piece of equipment for a treasure hunt. Instead of waiting years to get the full value from your investment, you get a huge chunk of it back in your pocket right away. That's the essence of bonus depreciation. It allows businesses, including real estate investors, to deduct a significant portion of the purchase price of eligible property in the year it's placed in service, rather than spreading it out over the asset's useful life.

How Does Bonus Depreciation Impact Personal Tax?

For real estate investors, bonus depreciation is like finding a shortcut on your tax journey. By accelerating depreciation, you can reduce your taxable income, which in turn lowers your personal tax bill. This isn't just a drop in the ocean; it can be a significant wave of savings, especially in the early years of your investment.

Eligibility Criteria for Bonus Depreciation

Not every treasure chest can be opened with the bonus depreciation key. To qualify, the property must be of a certain type (think improvements to nonresidential property or certain types of tangible personal property) and placed in service after September 27, 2017. The rules have nuances, so understanding the eligibility criteria is crucial.

Calculating Your Bonus Depreciation Benefit

Calculating bonus depreciation is like following a recipe: you need the right ingredients in the right amounts. Essentially, you'll determine the cost of the eligible property, then apply the current bonus depreciation rate (which has been as high as 100% for recent years).

Examples of Bonus Depreciation in Action

Let's bring this to life with some real-world examples. Imagine you've purchased new appliances for a rental property. These aren't just upgrades; they're investments that can potentially lower your tax bill today, thanks to bonus depreciation.

The Relationship Between Bonus Depreciation and Cash Flow

By reducing your tax liability, bonus depreciation can improve your annual cash flow. This isn't just about saving money; it's about having more capital to reinvest, pay down debt, or explore new investment opportunities.

Strategies to Maximize Your Bonus Depreciation

To fully benefit from bonus depreciation, you need a map and a plan. This might involve timing your property improvements or acquisitions to maximize deductions or leveraging a cost segregation study to identify more qualifying assets.

Common Misconceptions About Bonus Depreciation

Many investors mistakenly believe bonus depreciation is too complicated or not worth the effort. However, with the right guidance, it can be a straightforward and valuable component of your tax strategy.

Future of Bonus Depreciation: What Investors Should Know

Like all good things, the current bonus depreciation rules won't last forever. Staying informed about legislative changes is crucial for planning your long-term investment strategy.

Integrating Bonus Depreciation into Your Tax Planning

Bonus depreciation shouldn't be an afterthought. Integrating it into your overall tax planning can help you make more informed investment decisions and potentially unlock significant tax savings.

FAQs: Bonus Depreciation Simplified

Got questions? You're not alone. This section breaks down the most common queries about bonus depreciation, providing clear answers that demystify the topic.

Conclusion

Bonus depreciation is a potent tool in the real estate investor's arsenal, offering a way to significantly reduce personal tax liabilities and enhance cash flow. By understanding and strategically applying this benefit, you can unlock financial opportunities that might otherwise remain buried. Remember, the path to maximizing your real estate investments and minimizing your tax burden is not just about finding treasures; it's about using the right tools to unearth them.

Diving into the world of bonus depreciation can seem daunting, but with the right knowledge and strategy, it can open up a world of savings and opportunities. Whether you're a seasoned investor or just starting out, understanding how to leverage bonus depreciation can make a significant difference in your personal tax situation and overall investment success.

[nrtc]

Stone Mountain Real Estate Investor Tax Guide: Strategies for Financial Success

As a real estate investor in Stone Mountain, Georgia, it's important to understand the tax implications of your investments. By taking advantage of tax breaks and deductions, you can maximize your returns and keep more of your profits.

Here are a few essential tax tips for real estate investors in Stone Mountain:

Depreciation

Depreciation is one of the biggest tax benefits for real estate investors. It allows you to deduct a portion of the cost of your property from your taxes each year, even if you're not selling the property. This can help you offset the income you earn from rent and other sources.

To calculate depreciation, you'll need to know the purchase price of your property, the date you purchased it, and the depreciation schedule for your property type. You can find depreciation schedules online or in the IRS Publication 946.

Repairs and Maintenance

You can also deduct the cost of repairs and maintenance on your rental properties. This includes everything from fixing a leaky faucet to replacing a roof. Be sure to keep good records of all your expenses so that you can substantiate your deductions.

Travel Expenses

If you travel to manage your rental properties, you can deduct your travel expenses. This includes airfare, hotel accommodations, and meals. You must be able to prove that the travel is necessary and ordinary for your business.

Interest on Mortgage Loans

If you have a mortgage on your rental properties, you can deduct the interest you pay on the loan. This can be a significant deduction, especially in the early years of your investment.

Other Tax Deductions

There are a number of other tax deductions that may be available to real estate investors, such as:

Property taxes

Insurance premiums

Legal and accounting fees

Association fees

Management fees

Utilities

Marketing costs

Tax Strategies for Real Estate Investors

In addition to the tax deductions listed above, there are a few other tax strategies that real estate investors can use to maximize their returns:

Pass-through entities

Pass-through entities, such as limited liability companies (LLCs) and partnerships, can be a good way to structure your real estate investments. Pass-through entities allow business income and losses to pass through to the owners' personal tax returns. This can be beneficial if you have losses from your real estate investments, as you can offset those losses against your other income.

Like-kind exchanges

Like-kind exchanges are a way to defer capital gains taxes when you sell a rental property. To qualify for a like-kind exchange, you must exchange your rental property for a similar property of equal or greater value.

Cost segregation

Cost segregation is a tax strategy that allows you to accelerate depreciation deductions on your rental property. Cost segregation involves dividing your property into its component parts, such as the building, the land, and the equipment. Each component part is then assigned a separate depreciation schedule. This allows you to deduct the cost of each component part over its shorter useful life, rather than over the longer useful life of the entire property.

Tax Planning

It's important to work with a tax professional to develop a tax plan for your real estate investments. A tax professional can help you identify all of the available tax deductions and strategies, and they can help you structure your investments in a tax-efficient manner.

Contact Us

If you're a Real estate investor taxes Stone Mountain, Georgia, and you need help with your taxes, contact us today at +1 404-2989-413. We can help you maximize your returns by taking advantage of all the available tax breaks and deductions.

[oconnor2024]

IRS Cost Segregation Services

Our real estate professionals provide cost segregation reporting for federal income tax reduction by calculating costs of property components and segregating each to the correct depreciation. Visit https://www.poconnor.com/cost-segregation/

[kirankowda]

Google Ads Management Ideas From Top 25 Experts

As an eCommerce store owner, most of your effort goes into creating and setting up a perfect PPC campaign. Once the campaign goes live, the chances of the campaign’s success lie in continuous monitoring and changes made to the campaign. The chances reduce drastically if it is not managed properly. Results could be even worse if it is mismanaged by some adwords account managed services.

Before you start the PPC Management process of your campaigns, you should consider the following important points.

Answers to these questions help you to get a clear idea about your business which in turn helps in creating better campaigns for your business.

Google Adwords management Ideas from Experts:

After setting up a google ads campaign and ad group, it needs to be optimized regularly to get the desired results. Optimizing all of your campaigns is the most complex task in Google Adwords. It means along with a lot of hard work, you should be able to extract actionable insights from data and be able to put those insights into action.

According to experts, the following are a few areas which they recommend you to concentrate on to optimize your campaigns and get desired results.

1.Keyword Managing ideas

Keyword selection is core to campaign performance. Better keyword selection leads to better campaign performance. More often than not, you would find out that your keywords are not performing as you had planned. The following are a few areas where you can investigate and optimize your keywords.

1.1- Poorly performing keywords

The first step regarding keyword Management is to find out those keywords which are generating clicks but not generating enough conversions. Reduce the bids to a smaller amount for these keywords to avoid too much ad spend. If the keywords do not convert at all, You might want to add them as negative keywords. It is better to use the budget elsewhere than spending it on non converting keywords.

AdNabu automates the above by automatically reducing bids for poorly performing campaigns during bid optimization. You only need to set a cost per conversion target and AdNabu will make changes automatically.

1.2 — Negative keywords

Next, you should concentrate on negative keywords. Negative keywords are those keywords using which you can avoid showing ads for irrelevant searches.

For example: If you are selling calendars, the online calendar keyword should not trigger your ad.

Make an extensive list of negative keywords. It is a best practice to keep updating your negative keywords regularly. Though it is a time-consuming activity, it is a very important factor in the success of the campaign. We highly recommend creating a shared negative keyword list so that it can be used for multiple campaigns.

AdNabu’s negative keyword tool automatically suggests negative keywords based on conversions. Our software will find keywords which are getting a lot of clicks but not resulting in any conversions (included in conversion tracking feature).

1.3 — New Keywords

You should also keep adding new keywords to your campaign. With continuous changes in your external environment (such as campaigns from competitors, changes in the economy or any other viral trends), you need to keep adding new keywords to be relevant with your audience. AdNabu’s long-tail keyword tool can automatically find long-tail variations of the keywords used by users in Google. But it is highly recommended to discover new keywords manually once in a while.

Working in the above-mentioned areas is just a starting point with respect to keyword optimization. Although time-consuming, the impact of these tactics is huge. You can automate most of the tasks if you are using AdNabu. In addition to AdNabu, we highly recommend you to look at campaign health once in a while.

2.Improving your google ads quality score

Google Adwords calculates a quality score for every single keyword in your account. The higher your keyword Quality Score, the better your ad positioning and lower will be the cost.

Quality score depends on click-through rates, ad relevance, and landing page experience. These parameters are evaluated by Google and a score gets assigned to every keyword. Although the exact way Google calculates quality score is still a mystery, Improving the CTR (which also increases return on investment), relevance, as well as landing page experience, can have a positive impact. We have created a guide to improving quality score.

It is important to have a good quality score which in turn helps in achieving better chances of success. One easy way to find opportunities to increase the quality score is to look for parameters which are average or below average.

3.Bid Managing ideas

Bid Management helps to minimize costs by finding the most effective keywords in your campaign and focusing on them exclusively.

To optimize your bids, you should identify the conversion rate of every single keyword. This data will then help you segregate high performing and low performing keywords. While manually optimizing campaigns, you can follow the simple rule of increasing bids for high performing keywords and reducing bids for low performing ones.

This task, however, is repetitive and error-prone. We highly recommend the bid optimization software by AdNabu which does all the heavy calculation automatically.

AdNabu only needs a number to optimize on (either the cost per conversion or the ROI), It can then do all the calculation down to keyword and device level to get maximum conversions out of your campaigns.

4.Ad Copy Management ideas

Ad copy plays the most important role in conveying your unique selling points to the consumer. The ad with high relevance leads to high click-thru rate and lower CPC automatically.

An expanded text ad consists of 2 Headlines, a Description line, and 2 URL paths along with the final URL. We will explore each of these parts of the ad copy and the ways to optimize them.

4.1. — Headline

Headlines are displayed prominently in Google Ads. They are usually the first line of the ad with a bigger font size. Both headlines can have a length of 30 characters each. Since this is one of the first things your prospective customer would be seeing, We highly recommend to include an attractive offer or service as one of the headlines.

One can also use dynamic keyword insertion to improve the relevance of ads. The ad text or part of it will be replaced by what the user is searching for while using this feature.

4.2 — Description line

Once you get the customer’s attention, the description lines convey the value proposition of the service or product. You can express the reasons why your product should be given priority over others here.

An 80 character limit gives description line the maximum ability to express the product or service in detail.

4.3 — URL Paths

Two URL paths now constitute display URL now along with the auto-generated domain name URL. URL paths need not be valid URLs and are simple to make the ad look attractive. There is a 15 character limit of URL paths and they are not compulsory unlike headlines and description line. We at AdNabu, highly recommend you to use URL paths as they increase the real estate of ads and make them more prominent.

4.4 — A/B testing of ad copy

A/B testing is nothing but comparing two versions of the ad to see which one performs better. You can do A/B testing with the complete ad or with a section of the ad. We at AdNabu recommend you to test things one at a time.

For eg: Test your 2–3 variations of Headline 1 or Test 2–3 variations of description line.

Doing multiple tests at the same time might not give you desired results easily as it takes much more time. Also, decide why you are doing an experiment. It can be to increase CTR or to increase conversion ratio but it cannot be both.

5.Usage of Google Ads Extensions

Extensions expand your ad with additional information-giving people more reasons to choose your business. They typically increase the click-through-rate of an ad by several percentage points. Extension formats include call buttons, location information, additional links, additional text, and more.

To maximize the performance of your text ads, Google Ads selects extensions to show in response to each individual paid search on Google. For that reason, it’s a good idea to use all the extensions relevant to your business goals. Some of the common extension used by businesses are listed below.

5.1 — Sitelink Extensions

Sitelink Extensions allow you to promote additional landing pages below your standard ad text. These sitelinks helps the users to directly land on the specific page of interest.

For eg: You main ad might lead the user to the homepage but a sitelink can directly take the user to a subcategory page.

Additional lines also give more real estate for the ad compared to your competition. This helps you stand out and get even more clicks.

5.2 — Call Extension

With call extensions, you can add your phone number to Google ads. This makes it easier for users to call your business, especially on mobile phones.

If you generate leads to your business through phone calls, it makes sense to have this extension for all your campaigns.

5.3 — Location Extension

Location extension helps the advertiser to add your business location address and phone number. This extension can be used by users to navigate directly to your business and can show helpful information like opening hours. It is highly useful for brick and mortar businesses like restaurants, salons, etc.

5.4 — App Extension

App Extensions allow you to add a mobile app download button next to your Search Ad. It attaches thumbnail icon, name and text below your main ad. This should not be confused with app install campaigns whose main aim is to drive installs and show up only on devices which are eligible to install them.

5.5 — Review Extension

Review extension helps advertisers to show reviews from google trusted websites. In order to use review extensions, you need to have reviews on reputable third-party sites like TrustRadius, TrustPilot, etc. The main point is that it has to come from a third-party site that’s well-known enough to get approved by Google.

6.Improved ad targeting Ideas

Targeting ads to ideal customers lead to better campaign performance and lead to the success of the campaigns. Geography and device play a major role in targeting your ads efficiently. An ad which works in city A might not work in city B. Below we will explore the ways to optimize your ad targeting based on geography and device.

6.1 — Optimization based on Geography

Ad performance varies with geographies due to multiple reasons. To optimize your campaign, you should review the campaign performance in each one of them.

You can go to the Dimensions tab, then click the View button and select “Geographic.” to see the campaign data based on geography.

Find out top-performing geographies which have the highest conversions and lowest cost per conversion. If you are getting leads from the geographies where you can’t serve, you should exclude those geographies from the campaign. You can also concentrate your top-performing geographies, reducing your spend on poorly performing geographies.

6.2 — Optimization based on Device

Increased consumption of mobile devices has lead advertisers to think about ad placement on various devices differently. Ad performance varies with the size of the device on which ad is delivered.

You would be able to see three categories, computers ( includes desktop & laptops), mobile devices with full browsers, Tablets with full browsers.

For example, If you find that the cost of conversion on tablets is significantly higher than mobile, you can adjust the bid in bid adjustment column and reduce your total costs. AdNabu automatically does device based bid adjustment for your campaigns once you have set it up in bid Management job.

Final words

Apart from the changes you make to your campaigns, there are many parameters that may impact your campaigns. For example, new products launched by your competition or a new substitute for your product/service or change in government regulation or sudden change in weather or local events may impact your campaign performance.

It is important to take those data points into consideration while analyzing your campaign performance. With a continuously changing environment, it is advisable to monitor and take steps to optimize your campaigns to get the best results out of your campaigns.

AdNabu was built to automate above mentioned and other mandatory tasks that help online advertising free up their time for other critical tasks of business. The tool helps every Pay Per Click advertisers to put your adwords campaign on autopilot and reduces the stress of managing large Google Ads accounts campaigns.

Source: Google Adwords management ideas - AdNabu

[interproperties]

The Pros and Cons of Multifamily Investing

The real estate market is one of the biggest in the world, valued at $11.4 trillion. It's a vast industry with several real estate investment opportunities for individuals and corporations. People are constantly looking for opportunities in this market with a value that will appreciate, and that's where multifamily investing comes in.

What is Multifamily Investing?

Multifamily investing has recently gained much traction for those looking for real estate investment opportunities. It refers to propertiessuch as apartment complexes, condo buildings, and even duplexeswith multiple spaces for rent. It can significantly increase the investors'cash flow and boost their net operating income. This type of investment requires buying and maintaining various properties. It needs extra time, expenses, and overheadbut has a more significant potential to boost monthly income than a single-family property.

The Pros of Multifamily Investing

Many investors are leaping to invest in multifamily properties because it provides various benefits.

1. High Cash flow

Investors mostly like multifamily properties for the cash flow. In a strong market, rents aren't only predictable but generate a steady cash flow. In addition, becausethere aremultiple units, they can easily be re-leasedto ensure that cash flow stays constant over the years.

You can easily calculate if you have a consistent cash flow with such an investment. First, check the fair market value of your unit, and assess whether the rental income will exceedyour net operating costs,such as taxes,property management service, etc. If it does exceed and your property is in a solid rental market, you will fill vacancies quickly and get a good cash flow.

2. Easier to Secure financing

When securing financing, multifamily properties perform better than single-family homes. This is because the cash flow for an apartment building is more predictable than a single-family rental. For example, if you have five units and one of your tenants moves out, you still generate income from the other four units. Whereas for a single-family rental, if a tenant moves out, you'll have no income during the vacancy, just costs. Banks usually find it a safer investment, and you could even aim for a lower interest rate.

3. Valuation Potential

It'd be a fool's errand to believe that propertyvaluewill only appreciate. For example, many investors suffered significant losses during the 2008-2009 housing market crash. However, if you're looking for long-termreal estate investment opportunities, you'll find that multifamily properties perform better. They are also more resilient to economic downturns. And despite the ebb and flow in real estate values, it tends to continue upwards.

4. Low Risk

Multifamily properties are safer investments because people need a place to live even during economic downturns. In fact, during recessions and challenging times, many people are forced to sell their homes and find rentals. This can create a prolonged demand for multifamily property. Comparatively, investment properties like retail almost always depreciate as the economy slows.

5. Tax Benefits

Multifamily property investment has impressive tax benefits. There are multiple costs that you can deduct, including maintenance and operation costs, such as:

Property management services

Insurance

Maintenance repair expense

In addition, some properties have an increase in market value and are appreciating, but due to their ‘aging’, where it has been a considerable time since it was constructed, depreciation and cost segregation tax benefitscan be deducted.

6. Simplicity

Multifamily properties are relatively easier to handle than commercial real estate or multiple single-family rentals. You can purchase multiple units with one loan instead of getting individualloans for each single-family home. You can also keep your investment safe with the help of insurance companies specializing in creating policies for multifamily property investments.

7. Passive income

Real estate is a great way to earn passive income, especially with multifamily properties. You can hire aproperty management servicefor maintenance, communication with tenants, and day-to-day operations. You'll have time to focus on your other investments and interests.

The Cons of Multifamily Investing

As beneficial as multifamily property investment is, there are also some cons you need to be aware of:

1. Higher initial expense

As lucrative as it may be down the line, it's undeniable that the upfront cost is high. Small apartment buildings can cost millions in expensive cities like San Francisco or New York. Of course, you can always get financing from a bank, but you'll have to come up with a 20% down payment. However, there are other financing options you can try as well.

2. Extensive management required

Even if you managed to get the down payment and investment and secure the right multifamily property, your work has just begun. Since there are multiple units, there's a bigger responsibility to manage them,requiring a lot of time and attention. In addition, there are a lot of landlord responsibilities and day-to-day tasks. Fortunately, there are property management services that you can hire to take care of this instead.

3. Competition

Lastly, since multifamily properties offer so many benefits, it generates much interest from individual investors in the real estate market. There is a lot of competition in purchasing such a property. Some developers and property management companies are also competing for the same properties. Some even pay in cash, making it difficult for newcomers to break into this market. However, you can find a real estate investment company that can help.

The Top Multifamily Real Estate Investment Company

Real estate investment is the perfect opportunity to diversify your investment portfolio. It offers many options like single-family homes and multifamily homes. Real estate opportunities are better than ever, and Inter Properties is here to ensure you make the most of them. Are you looking to buy or sell a property? Or maybe you're just looking for short-term rentals? We can help!

Inter Properties has been around for decades and has a network of the best vetted real estate agents! Whether investing in vacation rental or theluxury real estate market, we ensure you connect with the world's best real estate opportunities. Contact us today for more information!

[cutmytaxes1]

What Every Real Estate Investor Needs To Know About Cost Segregation?

As a real estate investor, you must definitely be putting efforts into how to minimize your tax liability. One tax strategy you should be focusing on is cost segregation. It acts as a shield in reducing taxable income for real estate owners by depreciating a few components at an accelerated rate. This blog is all about cost segregation, what it is, and the benefits of conducting a CSS.  Before we deep dive into cost segregation let’s first understand what depreciation is.

An Introduction To Depreciation

As mentioned in one of our previous blogs, depreciation refers to deducting the loss from the value of an asset over a certain period of time. Please refer to the blog “the impact of cost segregation on property tax“. So now, let’s quickly get into how a cost segregation study works, when should a CSS be conducted, and the role of the Tax Cut and Jobs Act.

How does a cost segregation study work?

A CSS separates a few items like carpeting, wall coverings, special plumbing, phone system, etc, and these are usually considered 1250 properties. The assets that qualify vary based on the property type and hence, it is better to refer to the IRS Audit Technique Guide for detailed information. It is always better to hire a professional who has years of experience in engineering, construction, and tax.

When should a cost segregation study be conducted?

Professionals always recommend conducting a study either immediately after the purchase of a property or after remodeling or construction. Otherwise, a cost segregation study can be conducted in the first year in order to maximize the tax benefits. Initially, there were separate categories for qualified properties like a restaurant property, leasehold improvement property, retail improvement property, etc. Both personal and real property qualified for the like-kind exchange treatment. After the changes brought by the TCJA, cost segregation became a major part of a tax strategy. It is essential for property owners to have an eye on the TCJA changes in order to reduce taxes and increase savings.

The role of the Tax Cut and Jobs Act

The Tax Cut and Jobs Act have added a lot of provisions to the IRS code and this has allowed business owners to take a 100% bonus depreciation for assets in year one instead of depreciating it over a longer period of time. This provision is available only till 2022 and is likely to diminish by 2027.

The bottom line

Cost segregation can help you save thousands, and sometimes millions, of dollars in taxes. Now with the 100% bonus depreciation, it has become the right move for every investor. If you are considering conducting a cost segregation study on your property take up the free analysis. Use our cost segregation calculator and calculate your potential savings. If you feel you might benefit from a cost segregation study, enroll today. Our studies are IRS tested, CPA approved, and warrantied for the duration of your ownership of the asset studied! Satisfaction is guaranteed; if you are not satisfied, you do not pay.

Know more @ https://www.cutmytaxes.com/

[expertcostseg-us]

Cost segregation is a technical process where short-life items are separated from long life items. It typically doubles or triples depreciation during the first five years of ownership. https://www.whatiscostsegregation.com/

[p-oconnor]

https://www.whatiscostsegregation.com/

“What is cost segregation” is still a regular question years after the IRS endorsed cost segregation as the preferred means of calculating depreciation for real estate. Cost segregation seems to be overlooked by income tax professionals and real estate investors. https://www.whatiscostsegregation.com/

[oconnor2024]

Does calculating cash flow offers benefits!!

Yes, calculating cash flow for your real estate investments, including single-family rental properties, offers several benefits like, minimizing the risk and optimize the investment strategy for long -term success. Read more from https://www.expertcostseg.com/cost-segregation-for-houses/

[chrisvarneyus]

Raising Unsecured Debt In Israel: A Competitive Financing Alternative For U.S. Multifamily Developers

How Israeli Bonds Can Help U.S. Investors Finance Multifamily Properties

Israeli investors are seeing many U.S. commercial real estate companies and multifamily owners contemplating Israeli debt-based financing as an alternative avenue to obtain competitive capital. Prominent multifamily commercial real estate owners such as The Cornerstone Group, Copperline Partners, and The Related Companies are just a few of the firms with bonds currently being traded on the Tel Aviv Stock Exchange.

The Israeli bond financing model is based on raising unsecured corporate level debt by borrowing against the equity in a larger pool of assets. Approved by over 40 banks and almost all agency lenders, the platform allows borrowers to access one of the most competitive sources of multifamily subordinate financing at a reasonable cost.

To date, 36 companies have issued Israeli bonds in a total amount exceeding $7 billion. 68% of U.S. related bond issuances were attributed to the residential sector, totaling $4.7 billion. But why has the Tel Aviv Stock Exchange become so popular amongst these companies as an alternative source of financing?

This article shares the reasons for its popularity, why developers and investors choose Israeli bonds, noticeable legal nuances, and the advantages for the multifamily industry as a whole.

The Advantages

The Israeli bond financing structure can refinance the equity in a large pool of assets and is subordinate to any traditional senior, agency debt, or mezzanine debt in the capital stack. It is non-recourse with no UCCs or pledges, strongly resembling a credit line-type structure.

One of the main attributes of this type of financing is its flexibility. Other benefits include:

Acquiring LP-GP partners

Fresh equity for acquisitions (no need to for external equity partners)

Cash injection for development

Replacing existing senior debt or (bridge/mezzanine)

Offering low fixed interest rates between 3.5% and 7%, the Israeli corporate bond market can be an excellent long-term financial solution for real estate investors and developers. These bonds are given a favorable credit rating by local affiliates of Standard & Poor and Moody’s (Midroog). Both agencies use a local rating scale which has a 5 notch difference from the global rating scale (i.e. US BBB- will be rated as AA- in the Israeli market).

Key Market Drivers

The Israeli capital market is very liquid & bond efficient, with a strong preference for unsecured debt products. Markets are driven by a mandatory pension program which translates into $3 billion of freshly accumulated cash that needs to be deployed on a monthly basis. The local bond market as of today:

Spans over 639 issued bonds from 223 companies

Has a market cap of U.S. $90 billion, with an average annual issuance of U.S. $15 billion

Issuances are 80% unsecured bonds & 70% are dominated by real estate & financial companies

In general, Israeli investors appreciate investing in the multifamily sector due to its low volatility and stability when compared to other property types.

Key Requirements

Portfolio of assets: Minimum 10+

Income producing portfolio: Up to 25% development projects; all asset classes allowed

Shareholder stake across the portfolio: 50% or above

Equity value: U.S. $150 million or higher

Minimum net operating income: U.S. $18-20 million

Minimum bond issuance size: U.S. $70 million

Typically, a company can raise up to 50% of the equity value in a pool of assets.

Time to Market 

The initial issuance will generally take between 90 to 120 days (or 3-4 months). However, upon issuing the first bond series, the owner will establish a footprint in the Israeli bond market, supporting future issuances in less than 1 week based on the same portfolio & terms. This flexibility, paired with the high liquidity of the local market, will help companies refinance their debt and grow their activities.

The Process & The Bonds Position in the Capital Stack 

A pool of assets will be transferred to an offshore entity incorporated in the British Virgin Islands, forming a segregated portfolio company with a portion of the owner/developer’s equity ownership assets. The structure enables such entities to have their own balance sheet, allowing them to spread out the risk and avoid any tax or legal implications. The bonds issued collectively serve as a second layer of leverage for the company, and the debt’s payoff is expected to derive from the net operating income from all the properties in the holding company. The new bonds will be subordinated to any type of traditional secured debt that the company currently has (senior or mezzanine). The net leverage of the portfolio including the bonds will reach up to 65%.

Israeli bond financing must comply with International Financial Reporting Standards (IFRS) and overcome a different set of regulations. For example, in order to stay compliant, reporting must be completed on a quarterly basis, minority board members (typically 2 to 3 external/independent directors) must be nominated, and other ongoing reporting requirements must be abided by. The real estate is reported at full market value, reflecting a more accurate representation, and construed to be more informative to investors in terms of its true performance. It can often be higher than the historical cost method utilized by traditional bank evaluations, allowing the issuer to capture additional equity and raise more funds based on the existing portfolio.

The Duration

Most bond series are issued for a 7-year maturity with a fixed rate, however, once the company has established a presence in the market, it will have an ability to refinance every time an amortization payment is due, which will, in effect pay off the first issuance.

Opportunity for Multifamily Developers

Multifamily assets are often financed with long term debt (such as HUD multifamily loans) for 10-40 years during which the loans have amortization payments. The Israeli bonds assist the company in creating a leverage efficiency, issuing unsecured debt for covering any amortization payments or to capture any changes in the assets’ value.

In the case of properties funded with LIHTCs (Low Income Housing Tax Credits), even though the developer owns 1% of the deal, he is entitled to the vast majority of the revenue, reflecting close to 80% to 90% ownership (similar to different promote structures), therefore based on fair market values and according to the IFRS, the owners' equity is calculated based on its effective share (upon a liquidation event) which paves the way for an LP buyout.

Due to the segment’s stability, the multifamily sector is a top candidate for issuing bonds in Israel. Developers benefit both from a better credit rating, which translates into a much favorable interest rate, and from higher financial flexibility driven by the long-term senior debt and value appreciation created over the years.

How Do You Get Started?

After an initial introduction call, within a week, InFin’s team will provide you a no-cost analysis, including the issuance structure, the expected rating, our estimated interest rate and the amount of proceeds. All of this will be based on your individualized real estate portfolio.

About the Author:

Ari Schrier is a Business Development Executive at InFin Capital, based in Tel Aviv. Ariel has over 3 years of experience in business development in Israeli capital markets and U.S. real estate markets. Prior to his position at InFin, Ariel served as a real estate broker where he acquired extensive experience in negotiations, financial analysis and due diligence. Ariel holds a B.A in Economics & Management from the Open University and is a licensed real estate broker. Ari Schrier can be reached at ariel@infin.co.il or (213) 337-8640.

About InFin:

Since 2017, InFin has raised over $5.8 billion acting as the lead bookrunner & advisor in over 35 transactions. To date, InFin exclusively issued over $1.6 billion for 8 U.S.-based real estate companies totaling more than 15 transactions for clients like The Related Group, Cornerstone Group (Miami), Encore Enterprises & many more. InFin is one of the most active rating advisory firms in Israel, providing ongoing advisory services for 17 companies, including 7 companies with an AA group rating. Founded by Mr. Yehonatan Cohen & Mr. Yossi Levi, previously the CEO & Issuance Manager of Clal Finance Underwriting, respectively. Yehonatan & Yossi bring over 25 years of combined experience in the Israeli capital markets, during which they were responsible for issuing more than U.S. $30 billion in debt.

from Loan News https://www.multifamily.loans/apartment-finance-blog/raising-unsecured-debt-in-israel-competitive-financing-alternative-for-us-multifamily-developers

[expertcostseg-us]

Bonus depreciation takes many forms, including Section 179 depreciation. There have been scores of depreciation programs that give property owners additional depreciation since the Tax Code was introduced in 1913. Of course, additional depreciation increases expenses, with a non-cash expense. https://www.bonusdepreciationcalculator.com/

[ourbalajisymphony-blog]

THE IMPACT OF GST CHANGE ON REAL ESTATE PROPERTIES IN PANVEL

The Goods and Services Tax (GST) Council from March 31, 2019, had cut-down the rate on under-construction residential Property in Navi Mumbai to 5% for normal category and 1 % for the affordable housing category from April 1, 2019. Moreover, the Council has also revised the size of what constitutes the term “affordable home”. According to the new definition, homes with carpet areas 60 sq. mt in metro cities and 90 sq. mt in non-metropolitan areas, valued at up to Rs 45 lakh, will now be categorised as affordable housing. Previously, the limit was a uniform carpet area of up to 60 sq metres for a house to be qualified under the affordable housing segment. However most developers did not react positively to this announcement because they were worried about its impact on the input stock they had already bought before as a part of their long-term purchases. This resulted in most Builders in Panvel charging an incremental basic sale price from the buyers. This in turn negated the very basic purpose of reducing the GST to help reduce the cost of property to the buyer as well as augment the sales for the developers.

To address these apprehensions the GST Council has now permitted Builders in Navi Mumbai to exercise a one-time option to choose between the Old GST rates and the New GST one for their under-construction residential Property in Panvel to help them resolving issues pertaining to input tax credit. Real estate experts believe that this will provide flexibility to real estate developers in selecting the  most suitable tax option. So developers now get a one-time option to continue paying tax at the old rates (effective rate of 8 percent or 12 percent with Input Tax Credit or ITC) on their on-going projects, that is for buildings where construction and actual booking both started before and which will not be completed by March 31, 2019. A simpler GST structure will protect the interests of property buyers, as it will eliminate the problem of Input Tax Credit benefits not getting passed on to the end users.

However, the option yo choose between the two rates for ongoing real estate Projects in Panvel is not going to be an easy one with concerns as how the over-used credit will be calculated and adjusted in case the new rate is taken by the developer and what the customer reaction will be if the builder chooses to stay with the old rate and there is no reduction in the prices of Flats in Panvel.

This is however a very smart move by the government as now the Builders in Panvel will choose an option which is most suitable and beneficial for him. This will ultimately benefit the home buyers as the developer cannot charge any incremental basic sale price from the buyers due to the flexibility offered to them for ongoing projects and bookings before April 1, 2019. This realistically is a practical move and  will enable the realtors to segregate under-construction projects from new projects and would provide relief to builders who were worried about the loss of input tax credit. This would also enable them to price the loss of input tax credits in the new projects.

However to avail tax on the lower GST rate a pre-condition was imposed that 80 per cent procurement by developers should be from GST Registered Vendors. The multiplicity of rates in the previous regime had created a lot of confusion.Inflationary pressures and certain short-term adverse impact resulting in difficulties in the compliance for the first few months. The global precedence says that GST has been beneficial and leads to better economic transactions.

The new tax rates of 1 per cent (on the construction of affordable houses) and 5 per cent (on other than affordable houses) shall be available only subject to the condition that the input tax credit shall not be available and that 80 per cent of inputs and input services shall be purchased from GST registered vendors only.

[oconnor2024]

IRS Cost Segregation Services

Our real estate professionals provide cost segregation reporting for federal income tax reduction by calculating costs of property components and segregating each to the correct depreciation, including short-life classifications. To know more, visit https://www.poconnor.com/cost-segregation/

[bountyofbeads]

https://www.newyorker.com/magazine/2019/07/22/kicked-off-the-land

This article makes a strong case for reparations. Two brothers spent years in jail for a civil contempt CHARGE for trying to protect their property. THEY WERE NEVER CHARED WITH A CRIME.

Kicked Off the Land

Why so many black families are losing their property.

By Lizzie Presser | Published July 15, 2019 | New Yorker Magazine | Posted July 19, 2019 | Listen 👂 to article on website.

This article is a collaboration between The New Yorker and ProPublica.

In the spring of 2011, the brothers Melvin Davis and Licurtis Reels were the talk of Carteret County, on the central coast of North Carolina. Some people said that the brothers were righteous; others thought that they had lost their minds. That March, Melvin and Licurtis stood in court and refused to leave the land that they had lived on all their lives, a portion of which had, without their knowledge or consent, been sold to developers years before. The brothers were among dozens of Reels family members who considered the land theirs, but Melvin and Licurtis had a particular stake in it. Melvin, who was sixty-four, with loose black curls combed into a ponytail, ran a club there and lived in an apartment above it. He’d established a career shrimping in the river that bordered the land, and his sense of self was tied to the water. Licurtis, who was fifty-three, had spent years building a house near the river’s edge, just steps from his mother’s.

Their great-grandfather had bought the land a hundred years earlier, when he was a generation removed from slavery. The property—sixty-five marshy acres that ran along Silver Dollar Road, from the woods to the river’s sandy shore—was racked by storms. Some called it the bottom, or the end of the world. Melvin and Licurtis’s grandfather Mitchell Reels was a deacon; he farmed watermelons, beets, and peas, and raised chickens and hogs. Churches held tent revivals on the waterfront, and kids played in the river, a prime spot for catching red-tailed shrimp and crabs bigger than shoes. During the later years of racial-segregation laws, the land was home to the only beach in the county that welcomed black families. “It’s our own little black country club,” Melvin and Licurtis’s sister Mamie liked to say. In 1970, when Mitchell died, he had one final wish. “Whatever you do,” he told his family on the night that he passed away, “don’t let the white man have the land.”

Mitchell didn’t trust the courts, so he didn’t leave a will. Instead, he let the land become heirs’ property, a form of ownership in which descendants inherit an interest, like holding stock in a company. The practice began during Reconstruction, when many African-Americans didn’t have access to the legal system, and it continued through the Jim Crow era, when black communities were suspicious of white Southern courts. In the United States today, seventy-six per cent of African-Americans do not have a will, more than twice the percentage of white Americans.

Many assume that not having a will keeps land in the family. In reality, it jeopardizes ownership. David Dietrich, a former co-chair of the American Bar Association’s Property Preservation Task Force, has called heirs’ property “the worst problem you never heard of.” The U.S. Department of Agriculture has recognized it as “the leading cause of Black involuntary land loss.” Heirs’ property is estimated to make up more than a third of Southern black-owned land—3.5 million acres, worth more than twenty-eight billion dollars. These landowners are vulnerable to laws and loopholes that allow speculators and developers to acquire their property. Black families watch as their land is auctioned on courthouse steps or forced into a sale against their will.

Between 1910 and 1997, African-Americans lost about ninety per cent of their farmland. This problem is a major contributor to America’s racial wealth gap; the median wealth among black families is about a tenth that of white families. Now, as reparations have become a subject of national debate, the issue of black land loss is receiving renewed attention. A group of economists and statisticians recently calculated that, since 1910, black families have been stripped of hundreds of billions of dollars because of lost land. Nathan Rosenberg, a lawyer and a researcher in the group, told me, “If you want to understand wealth and inequality in this country, you have to understand black land loss.”

By the time of Melvin and Licurtis’s hearing in 2011, they had spent decades fighting to keep the waterfront on Silver Dollar Road. They’d been warned that they would go to jail if they didn’t comply with a court order to stay off the land, and they felt betrayed by the laws that had allowed it to be taken from them. They had been baptized in that water. “You going to go there, take my dreams from me like that?” Licurtis asked on the stand. “How about it was you?”

They expected to argue their case in court that day. Instead, the judge ordered them sent to jail, for civil contempt. Hearing the ruling, Melvin handed his eighty-three-year-old mother, Gertrude, his flip phone and his gold watch. As the eldest son, he had promised relatives that he would assume responsibility for the family. “I can take it,” he said. Licurtis looked at the floor and shook his head. He had thought he’d be home by the afternoon; he’d even left his house unlocked. The bailiff, who had never booked anyone in civil superior court, had only one set of handcuffs. She put a cuff on each brother’s wrist, and led them out the back door. The brothers hadn’t been charged with a crime or given a jury trial. Still, they believed so strongly in their right to the property that they spent the next eight years fighting the case from jail, becoming two of the longest-serving inmates for civil contempt in U.S. history.

Land was an ideological priority for black families after the Civil War, when nearly four million people were freed from slavery. On January 12, 1865, just before emancipation, the Union Army general William Tecumseh Sherman met with twenty black ministers in Savannah, Georgia, and asked them what they needed. “The way we can best take care of ourselves is to have land,” their spokesperson, the Reverend Garrison Frazier, told Sherman. Freedom, he said, was “placing us where we could reap the fruit of our own labor.” Sherman issued a special field order declaring that four hundred thousand acres formerly held by Confederates be given to African-Americans—what came to be known as the promise of “forty acres and a mule.” The following year, Congress passed the Southern Homestead Act, opening up an additional forty-six million acres of public land for Union supporters and freed people.

The promises never materialized. In 1876, near the end of Reconstruction, only about five per cent of black families in the Deep South owned land. But a new group of black landowners soon established themselves. Many had experience in the fields, and they began buying farms, often in places with arid or swampy soil, especially along the coast. By 1920, African-Americans, who made up ten per cent of the population, represented fourteen per cent of farm owners in the South.

A white-supremacist backlash spread across the South. At the end of the nineteenth century, members of a movement who called themselves Whitecaps, led by poor white farmers, accosted black landowners at night, whipping them or threatening murder if they didn’t abandon their homes. In Lincoln County, Mississippi, Whitecaps killed a man named Henry List, and more than fifty African-Americans fled the town in a single day. Over two months in 1912, violent white mobs in Forsyth County, Georgia, drove out almost the entire black population—more than a thousand people. Ray Winbush, the director of the Institute for Urban Research, at Morgan State University, told me, “There is this idea that most blacks were lynched because they did something untoward to a young woman. That’s not true. Most black men were lynched between 1890 and 1920 because whites wanted their land.”

By the second half of the twentieth century, a new form of dispossession had emerged, officially sanctioned by the courts and targeting heirs’-property owners without clear titles. These landowners are exposed in a variety of ways. They don’t qualify for certain Department of Agriculture loans to purchase livestock or cover the cost of planting. Individual heirs can’t use their land as collateral with banks and other institutions, and so are denied private financing and federal home-improvement loans. They generally aren’t eligible for disaster relief. In 2005, Hurricane Katrina laid bare the extent of the problem in New Orleans, where twenty-five thousand families who applied for rebuilding grants had heirs’ property. One Louisiana real-estate attorney estimated that up to a hundred and sixty-five million dollars of recovery funds were never claimed because of title issues.

Heirs are rarely aware of the tenuous nature of their ownership. Even when they are, clearing a title is often an unaffordable and complex process, which requires tracking down every living heir, and there are few lawyers who specialize in the field. Nonprofits often pick up the slack. The Center for Heirs’ Property Preservation, in South Carolina, has cleared more than two hundred titles in the past decade, almost all of them for African-American families, protecting land valued at nearly fourteen million dollars. Josh Walden, the center’s chief operating officer, told me that it had mapped out a hundred thousand acres of heirs’ property in South Carolina. He said that investors hoping to build golf courses or hotels can target these plots. “We had to be really mindful that we didn’t share those maps with anyone, because otherwise they’d be a shopping catalogue,” he told me. “And it’s not as if it dries up. New heirs’ property is being created every day.”

Through interviews and courthouse records, I analyzed more than three dozen cases from recent years in which heirs’-property owners lost land—land that, for many of them, was not only their sole asset but also a critical part of their heritage and their sense of home. The problem has been especially acute in Carteret County. Beaufort, the county seat, was once the site of a major refugee camp for freed people. Black families eventually built homes near where the tents had stood. But in the nineteen-seventies the town became a tourist destination, with upscale restaurants, boutiques, and docks for yachts. Real-estate values surged, and out-of-town speculators flooded the county. David Cecelski, a historian of the North Carolina coast, told me, “You can’t talk to an African-American family who owned land in those counties and not find a story where they feel like land was taken from them against their will, through legal trickery.”

Beaufort is a quaint town, lined with coastal cottages and Colonial homes. When I arrived, last fall, I drove twenty miles to Silver Dollar Road, where Melvin and Licurtis’s family lives in dozens of trailers and wood-panelled houses, scattered under pine and gum trees.

Melvin and Licurtis’s mother, Gertrude, greeted me at her house and led me into her living room, where porcelain angels lined one wall. Gertrude is tough and quiet, her high voice muffled by tobacco that she packs into her cheek. People call her Mrs. Big Shit. “It’s because I didn’t pay them no mind,” she told me. The last of Mitchell Reels’s children to remain on the property, she is the family matriarch. Grandchildren, nieces, and nephews let themselves into her house to pick up mail or take out her trash. Around dinnertime on the day I was there, the trickle of visitors turned into a crowd. Gertrude went into the kitchen, coated fish fillets with cornmeal, and fried them for everyone.

Her daughter Mamie told me that Melvin and Licurtis had revelled in the land as kids, playing among the inky eels and conch shells. In the evenings, the brothers would sit on the porch with their cousins, a rag burning to keep the mosquitoes away. On weekends, a pastor strode down the dirt street, robed in white, his congregants singing “Wade in the Water.” Licurtis was a shy, humble kid who liked working in the cornfields. Melvin was his opposite. “When the school bus showed up, when he come home, the crowd would come with him and stay all night,” Gertrude said. When Melvin was nine, he built a boat from pine planks and began tugging it along the shore. A neighbor offered to teach him how to shrimp, and, in the summer, Melvin dropped nets off the man’s trawler. He left school in the tenth grade; his catch was bringing in around a thousand dollars a week. He developed a taste for sleek cars, big jewelry, and women, and started buying his siblings Chuck Taylors and Timberlands.

Gertrude was the administrator of the estate. She’d left school in the eighth grade and wasn’t accustomed to navigating the judicial system, but after Mitchell’s death she secured a court ruling declaring that the land belonged to his heirs. The judgment read, “The surviving eleven (11) children or descendants of children of Mitchell Reels are the owners of the lands exclusive of any other claim of any one.”

In 1978, Gertrude’s uncle Shedrick Reels tried to carve out for himself the most valuable slice of land, on the river. He used a legal doctrine called adverse possession, which required him to prove that he had occupied the waterfront for years, continuously and publicly, against the owners’ wishes. Shedrick, who went by Shade and worked as a tire salesman in New Jersey, hadn’t lived on Silver Dollar Road in twenty-seven years. But he claimed that “tenants” had stood in for him—he had built a house on the waterfront in 1950, and relatives had rented it or run it as a club at various times since. Some figured that it was Shade’s land. He also produced a deed that his father, Elijah, had given him in 1950, even though Mitchell, another of Elijah’s sons, had owned the land at the time.

Shade made his argument through an obscure law called the Torrens Act. Under Torrens, Shade didn’t have to abide by the formal rules of a court. Instead, he could simply prove adverse possession to a lawyer, whom the court appointed, and whom he paid. The Torrens Act has long had a bad reputation, especially in Carteret. “It’s a legal way to steal land,” Theodore Barnes, a land broker there, told me. The law was intended to help clear up muddled titles, but, in 1932, a law professor at the University of North Carolina found that it had been co-opted by big business. One lawyer said that people saw it as a scheme “whereby rich men could seize the lands of the poor.” Even Shade’s lawyer, Nelson Taylor, acknowledged that it was abused; he told me that his own grandfather had lost a fifty-acre plot to Torrens. “First time he knew anything about it was when somebody told him that he didn’t own it anymore,” Taylor said. “That was happening more often than it ever should have.”

Mitchell’s kids and grandkids were puzzled that Shade’s maneuver was legal—they had Mitchell’s deed and a court order declaring that the land was theirs. And they had all grown up on that waterfront. “How can they take this land from us and we on it?” Melvin said. “We been there all our days.” Gertrude’s brother Calvin, who handled legal matters for the family, hired Claud Wheatly III, the son of one of the most powerful lawyers in town, to represent the siblings at a Torrens hearing about the claim. Gertrude, Melvin, and his cousin Ralphele Reels, the only surviving heirs who attended the hearing, said that they left confident that the waterfront hadn’t gone to Shade. “No one in the family thought at the end of the day that it was his land and we were going to walk away from it forever,” Ralphele told me.

Wheatly told me a different story. In his memory, the Torrens hearing was chaotic, but the heirs agreed to give Shade, who has since died, the waterfront. When I pressed Wheatly, he conceded that not all the heirs liked the outcome, but he said that Calvin had consented. “I would have been upset if Calvin had not notified them, because I generally don’t get involved in those things without having a family representative in charge,” he told me. He said that he never had a written agreement with Calvin—just a conversation. (Calvin died shortly after the hearing.) The lawyer examining Shade’s case granted him the waterfront, and Wheatly signed off on the decision. The Reels family, though it didn’t yet know it, had lost the rights to the land on the shoreline.

Licurtis had set up a trailer near the river a couple of years earlier, in 1977. He was working as a brick mason and often hosted men from the neighborhood for Budweiser and beans in the evenings. Melvin had become the center of a local economy on the shore. He taught the men how to work the water, and he paid the women to prepare his catch, pressing the soft crevice above the shrimps’ eyes and popping off their heads. He had a son, Little Melvin, and in the summers his nephews and cousins came to the beach, too. One morning, he took eight of them out on the water and then announced that he’d made a mistake: only four were allowed on the boat. He threw them overboard one by one. “We’re thinking, We’re gonna drown,” one cousin told me. “And he jumps off the boat with us and teaches us how to swim.”

In 1982, Melvin and Gertrude received a trespassing notice from Shade. They took it to a lawyer, who informed them that Shade now legally owned a little more than thirteen acres of the sixty-five-acre plot. The family was stunned, and suspicious of the claim’s validity. Many of the tenants listed to prove Shade’s continuous possession were vague or unrecognizable, like “Mitchell Reels’ boy,” or “Julian Leonard,” whom Gertrude had never heard of. (She had a sister named Julia and a brother named Leonard but no memory of either one living on the waterfront.) The lawyer who granted the land to Shade had also never reported the original court ruling that Gertrude had won, as he should have done.

Shade’s ownership would be almost impossible to overturn. There’s a one-year window to appeal a Torrens decision in North Carolina, and the family had missed it by two years. Soon afterward, Shade sold the land to developers.

The Reelses knew that if condos or a marina were built on the waterfront the remaining fifty acres of Silver Dollar Road could be taxed not as small homes on swampy fields but as a high-end resort. If they fell behind on the higher taxes, the county could auction off their property. “It would break our family right up,” Melvin told me. “You leave here, you got no more freedom.”

This kind of tax sale has a long history in the dispossession of heirs’-property owners. In 1992, the N.A.A.C.P. accused local officials of intentionally inflating taxes to push out black families on Daufuskie, a South Carolina sea island that has become one of the hottest real-estate markets on the Atlantic coast. Property taxes had gone up as much as seven hundred per cent in a single decade. “It is clear that the county has pursued a pattern of conduct that disproportionately displaces or evicts African-Americans from Daufuskie, thereby segregating the island and the county as a whole,” the N.A.A.C.P. wrote to county officials. Nearby Hilton Head, which as recently as two decades ago comprised several thousand acres of heirs’ property, now, by one estimate, has a mere two hundred such acres left. Investors fly into the county each October to bid on tax-delinquent properties in a local gymnasium.

In the upscale town of Summerville, South Carolina, I met Wendy Reed, who, in 2012, was late paying $83.81 in taxes on the lot she had lived on for nearly four decades. A former state politician named Thomas Limehouse, who owned a luxury hotel nearby, bought Reed’s property at a tax sale for two thousand dollars, about an eighth of its value. Reed had a year to redeem her property, but, when she tried to pay her debt, officials told her that she couldn’t get the land back, because she wasn’t officially listed as her grandmother’s heir; she’d have to go through probate court. Here she faced another obstacle: heirs in South Carolina have ten years to probate an estate after the death of the owner, and Reed’s grandmother had died thirty years before. Tax clerks in the county estimate that each year they send about a quarter of the people who try to redeem delinquent property to probate court because they aren’t listed on the deed or named by the court as an heir. Limehouse told me, “To not probate the estate and not pay the taxes shouldn’t be a reason for special dispensation. When you let things go, you can’t blame the county.” Reed has been fighting the case in court since 2014. “I’m still not leaving,” she told me. “You’ll have to pack my stuff and put me off.”

For years, the conflict on Silver Dollar Road was dormant, and Melvin continued expanding his businesses. Each week, Gertrude packed two-pound bags of shrimp to sell at the farmers’ market, along with petunias and gardenias from her yard. Melvin was also remodelling a night club, Fantasy Island, on the shore. He’d decked it out with disco lights and painted it white, he said, so that “on the water it would shine like gold.”

The majority of the property remained in the family, including the land on which Gertrude’s house stood. But Licurtis had been building a home in place of his trailer on the contested waterfront. “It was the most pretty spot,” he told me. “I’d walk to the water, and look at my yard, and see how beautiful it was.” He’d collected the signatures of other heirs to prove that he had permission, and registered a deed.

When real-estate agents or speculators came to the shore, Melvin tried to scare them away. A developer told me that once, when he showed the property to potential buyers, “Melvin had a roof rack behind his pickup, jumped out, snatched a gun out.” It wasn’t the only time that Melvin took out his rifle. “You show people that you got to protect yourself,” he told me. “Any fool who wouldn’t do that would be crazy.” His instinct had always been to confront a crisis head on. When hurricanes came through and most people sought higher ground, he’d go out to his trawler and steer it into the storm.

The Reels family began to believe that there was a conspiracy against them. They watched Jet Skis crawl slowly past in the river and shiny S.U.V.s drive down Silver Dollar Road; they suspected that people were scouting the property. Melvin said that he received phone calls from mysterious men issuing threats. “I thought people were out to get me,” he said. Gertrude remembers that, one day at the farmers’ market, a white customer sneered that she was the only thing standing in the way of development.

In 1986, Billie Dean Brown, a partner at a real-estate investment company called Adams Creek Associates, had bought Shade’s waterfront plot sight unseen to divide and sell. Brown was attracted to the strength of the Torrens title, which he knew was effectively incontrovertible. When he discovered that Melvin and Licurtis lived on the property, he wasn’t troubled. Brown was known among colleagues as Little Caesar—a small man who finished any job he started. In the early two-thousands, he hired a lawyer: Claud Wheatly III. The man once tasked with protecting the Reels family’s land was now being paid to evict them from it. Melvin and Licurtis saw Wheatly’s involvement as a clear conflict of interest. Their lawyers tried to disqualify Wheatly, arguing that he was breaching confidentiality and switching sides, but the judge denied the motions.

Earlier this year, I met Wheatly in his office, a few blocks from the county courthouse. Tall and imposing, he has a ruddy face and a teal-blue stare. We sat under the head of a stuffed warthog, and he chewed tobacco as we spoke. He told me that he had no confidential information about the Reelses, and that he’d never represented Melvin and Licurtis; he’d represented their mother and her siblings. “Melvin won’t own one square inch until his mother dies,” he said.

In 2004, Wheatly got a court order prohibiting the brothers from going on the waterfront property. The Reels family began a series of appeals and filings asking for the decree to be set aside, but judge after judge ruled that the family had waited too long to contest the Torrens decision.

Licurtis didn’t talk about the case, and tried to hide his stress. But, Mamie told me, “you could see him wearing it.” Occasionally, she would catch a glimpse of him pacing the road early in the morning. When he first understood that he could face time in jail for remaining in his house, he tried removing the supports underneath it, thinking that he could hire someone to wrench the foundation from the mud and move it elsewhere. Gertrude wouldn’t allow him to go through with it. “You’re not going with the house nowhere,” she told him. “That’s yours.”

At 4 a.m. on a spring day in 2007, Melvin was asleep in his apartment above the club when he heard a boom, like a crash of thunder. He went to the shore and found that his trawler, named Nancy J., was sinking. Yellow plastic gloves, canned beans, and wooden crab boxes floated in the water. There was a large hole in the hull, and Melvin realized that the boom had been an explosion. He filed a report with the sheriff’s office, but it never confirmed whether an explosive was used or whether it was an accident, and no charges were filed. Melvin began to wake with a start at night, pull out his flashlight, and scan the fields for intruders.

By the time of the brothers’ hearing in 2011, Melvin had lost so much weight that Licurtis joked that he could store water in the caverns by his collarbones. The family had come to accept that the dispute wasn’t going away. If the brothers had to go to jail, they would. Even after the judge in the hearing found them guilty of civil contempt, Melvin said, “I ain’t backing down.” Licurtis called home later that day. “It’ll be all right,” he told Gertrude. “We’ll be home soon.”

One of the most pernicious legal mechanisms used to dispossess heirs’-property owners is called a partition action. In the course of generations, heirs tend to disperse and lose any connection to the land. Speculators can buy off the interest of a single heir, and just one heir or speculator, no matter how minute his share, can force the sale of an entire plot through the courts. Andrew Kahrl, an associate professor of history and African-American studies at the University of Virginia, told me that even small financial incentives can have the effect of turning relatives against one another, and developers exploit these divisions. “You need to have some willing participation from black families—driven by the desire to profit off their land holdings,” Kahrl said. “But it does boil down to greed and abuse of power and the way in which Americans’ history of racial inequality can be used to the advantage of developers.” As the Reels family grew over time, the threat of a partition sale mounted; if one heir decided to sell, the whole property would likely go to auction at a price that none of them could pay.

When courts originally gained the authority to order a partition sale, around the time of the Civil War, the Wisconsin Supreme Court called it “an extraordinary and dangerous power” that should be used sparingly. In the past several decades, many courts have favored such sales, arguing that the value of a property in its entirety is greater than the value of it in pieces. But the sales are often speedy and poorly advertised, and tend to fetch below-market prices.

On the coast of North Carolina, I met Billy Freeman, who grew up working in the parking lot of his uncle’s beachside dance hall, Monte Carlo by the Sea. His family, which once owned thousands of acres, ran the largest black beach in the state, with juke joints and crab shacks, an amusement park, and a three-story hotel. But, over the decades, developers acquired interests from other heirs, and, in 2008, one firm petitioned the court for a sale of the whole property. Freeman attempted to fight the partition for years. “I didn’t want to lose the land, but I felt like everybody else had sold,” he told me. In 2016, the beach, which covered a hundred and seventy acres, was sold to the development firm for $1.4 million. On neighboring beaches, that sum could buy a tiny fraction of a parcel so large. Freeman got only thirty thousand dollars.

The lost property isn’t just money; it’s also identity. In one case that I examined, the mining company PCS Phosphate forced the sale of a forty-acre plot, which contained a family cemetery, against the wishes of several heirs, whose ancestors had been enslaved on the property. (A spokesperson for the company told me that it is a “law-abiding corporate citizen.”)

Some speculators use questionable tactics to acquire property. When Jessica Wiggins’s uncle called her to say that a man was trying to buy his interest in their family’s land, she didn’t believe him; he had dementia. Then, in 2015, she learned that a company called Aldonia Farms had purchased the interests of four heirs, including her uncle, and had filed a partition action. “What got me was we had no knowledge of this person,” Wiggins told me, of the man who ran Aldonia. (Jonathan S. Phillips, who now runs Aldonia Farms, told me that he wasn’t with the company at the time of the purchase, and that he’s confident no one would have taken advantage of the uncle’s dementia.) Wiggins was devastated; the eighteen acres of woods and farmland that held her great-grandmother’s house was the place that she had felt safest as a child. The remaining heirs still owned sixty-one per cent of the property, but there was little that they could do to prevent a sale. When I visited the land with Wiggins, her great-grandmother’s house had been cleared, and Aldonia Farms had erected a gate. Phillips told me, “Our intention was not to keep them out but to be good stewards of the property and keep it from being littered on and vandalized.”

Last fall, Wiggins and her relatives gathered for the auction of the property on the courthouse steps in the town of Windsor. A bronze statue of a Confederate soldier stood behind them. Wiggins’s cousin Danita Pugh walked up to Aldonia Farms’ lawyer and pulled her deed out of an envelope. “You’re telling me that they’re going to auction it off after showing you a deed?” she said. “I’m going to come out and say it. The white man takes the land from the black.”

Hundreds of partition actions are filed in North Carolina every year. Carteret County, which has a population of seventy thousand, has one of the highest per-capita rates in the state. I read through every Carteret partition case concerning heirs’ property from the past decade, and found that forty-two per cent of the cases involved black families, despite the fact that only six per cent of Carteret’s population is black. Heirs not only regularly lose their land; they are also required to pay the legal fees of those who bring the partition cases. In 2008, Janice Dyer, a research associate at Auburn University, published a study of these actions in Macon County, Alabama. She told me that the lack of secure ownership locks black families out of the wealth in their property. “The Southeast has these amazing natural resources: timber, land, great fishing,” she said. “If somebody could snap their fingers and clear up all these titles, how much richer would the region be?”

Thomas W. Mitchell, a property-law professor at Texas A. & M. University School of Law, has drafted legislation aimed at reforming this system, which has now passed in fourteen states. He told me that heirs’-property owners, particularly those who are African-American, tend to be “land rich and cash poor,” making it difficult for them to keep the land in a sale. “They don’t have the resources to make competitive bids, and they can’t even use their heirs’ property as collateral to get a loan to participate in the bidding more effectively,” he said. His law, the Uniform Partition of Heirs Property Act, gives family members the first option to buy, sends most sales to the open market, and mandates that courts, in their decisions to order sales, weigh non-economic factors, such as the consequences of eviction and whether the property has historic value. North Carolina is one of eight states in the South that has held out against these reforms. The state also hasn’t repealed the Torrens Act. It is one of fewer than a dozen states where the law is still on the books.

Last year, Congress passed the Agricultural Improvement Act, which, among other things, allows heirs’-property owners to apply for Department of Agriculture programs using nontraditional paperwork, such as a written agreement between heirs. “The alternative documentation is really, really important as a precedent,” Lorette Picciano, the executive director of Rural Coalition, a group that advocated for the reform, told me. “The next thing we need to do is make sure this happens with fema, and flood insurance, and housing programs.” The bill also includes a lending program for heirs’-property owners, which will make it easier for them to clear titles and develop succession plans. But no federal funding has been allocated for these loans.

The first time I met Melvin and Licurtis in the Carteret jail, Melvin filled the entire frame of the visiting-room window. He is a forceful presence, and prone to exaggeration. His hair, neatly combed, was streaked with silver. He didn’t blink as he spoke. Licurtis had been given a diagnosis of diabetes, and leaned against a stool for support. He still acted like a younger brother, never interrupting Melvin or challenging his memory. He told me that, at night, he dreamed of the shore, of storms blowing through his house. “The water rising,” Licurtis said. “And I couldn’t do nothing about it.” He was worried about his mother. “If they took this land from my mama at her age, and she’d been farming it all her life, you know that would kill her,” he told me.

The brothers were seen as local heroes for resisting the court order. “They want to break your spirits,” their niece Kim Duhon wrote to them. “God had you both picked out for this.” Even strangers wrote. “When I was a kid, it used to sadden me that white folks had Radio Island, Atlantic Beach, Sea Gate and other places to swim, but we didn’t!” one letter from a local woman read. She wrote that, when she was finally taken to Silver Dollar Road, “I remember seeing nothing but my own kind (Blk Folks!).”

In North Carolina, civil contempt is most commonly used to force defendants to pay child support. When the ruling requires a defendant to pay money other than child support, a new hearing is held every ninety days. After the first ninety days had passed, Melvin asked a friend in jail to write a letter on his behalf. (Melvin couldn’t read well, and he needed help writing.) “I’ve spent 91 days on a 90 day sentence and I don’t understand why,” the letter read. “Please explain this to me! So I can go home, back to work. Sincerely, Melvin Davis.” The brothers learned that although Billie Dean Brown’s lawyer had asked for ninety days, the court had decided that there would be no time restriction on their case, and that they could be jailed until they presented evidence that they had removed their homes. They continued to hold out. Brown wasn’t demolishing their buildings while they were incarcerated, and so they believed that they still had a shot at convincing the courts that the land was theirs. That fall, Brown told the Charlotte Observer, “I made up my mind, I will die and burn in hell before I walk away from this thing.” When I reached Brown recently, he told me that he was in an impossible position. “We’ve had several offers from buyers, but once they learned of the situation they withdrew,” he said.

Three months turned into six, and a year turned into several. Jail began to take a toll on the brothers. The facility was designed for short stays, with no time outside, and nowhere to exercise. They couldn’t be transferred to a prison, because they hadn’t been convicted of a crime. Early on, Melvin mediated fights between inmates and persuaded them to sneak in hair ties for him. But over time he stopped taking care of his appearance and became withdrawn. He ranted about the stolen land, though he couldn’t quite nail down who the enemy was: Shade or Wheatly or Brown, the sheriffs or the courts or the county. The brothers slept head to head in neighboring beds. “Melvin would say crazy things,” Licurtis told me. “Lay on down and go to sleep, wake up, and say the same thing again. It wore me down.” Melvin is proud and guarded, but he told me that the case had broken him. “I’m not ashamed to own it,” he said. “This has messed my mind up.”

Without the brothers, Silver Dollar Road lost its pulse. Mamie kept her blinds down; she couldn’t stand to see the deserted waterfront. At night, she studied her brothers’ case, thumbing through the court files and printing out the definitions of words that she didn’t understand, like “rescind�� and “contempt.” She filled a binder with relatives’ obituaries, so that once her brothers got out they would have a record of who had passed away. When Claud Wheatly’s father died, she added his obituary. “I kept him for history,” she told me.

Gertrude didn’t have the spirit to farm. Most days, she sat in a tangerine armchair by her window, cracking peanuts or watching the shore like a guard. This winter, we looked out in silence as Brown’s caretaker drove through the property. Melvin and Licurtis wouldn’t allow Gertrude to visit them in jail. Licurtis said that “it hurt so bad” to see her leave.

Other members of the family—Melvin and Licurtis’s brother Billy, their nephew Roderick, and their cousin Shawn—kept trying to shrimp, but the river suddenly seemed barren. “It might sound crazy, but it was like the good Lord put a curse on this little creek, where ain’t nobody gonna catch no shrimp until they’re released,” Roderick told me. Billy added, “It didn’t feel right no more with Melvin and them not there, because we all looked out for one another. Some mornings, you didn’t even want to go.”

Sheriff’s deputies came to the property a few times a week, and they wouldn’t allow the men to dock their boats on the pier. One by one, the men lost hope and sold their trawlers. Shawn took a job at Best Buy, cleaning the store for eleven dollars and fifty cents an hour, and eventually moved to Newport, thirty miles southwest, where it was easier to make rent. Billy got paid to fix roofs but soon defaulted on the mortgage for his house on Silver Dollar Road. “One day you good, and the next day you can’t believe it,” he told me.

Roderick kept being charged with trespassing, for walking on the waterfront, and he was racking up thousands of dollars in legal fees. He’d recently renovated his boat—putting in an aluminum gas tank, large spotlights, and West Marine speakers—but, without a place to dock, he saw no way to hold on to it. He found work cutting grass and posted his boat on Craigslist. A white man responded. They met at the shore, and, as the man paid, Roderick began to cry. He walked up Silver Dollar Road with his back to the river. He told me, “I just didn’t want to see my boat leave.”

The Reels brothers were locked in a hopeless clash with the law. One judge who heard their case likened them to the Black Knight in “Monty Python and the Holy Grail,” who attempts to guard his forest against King Arthur. “Even after King Arthur has cut off both of the Black Knight’s arms and legs, he still insists that he will continue to fight and that no one may pass—although he cannot do anything,” the judge wrote, in an appeals-court dissent.

In February, nearly eight years after Melvin and Licurtis went to jail, they stood before a judge in Carteret to request their release. They were now seventy-two and sixty-one, but they remained defiant. Licurtis said that he would go back on the property “just as soon as I walk out of here.” Melvin said, “I believe that land is mine.” They had hired a new lawyer, who argued that it would cost almost fifty thousand dollars to tear down the brothers’ homes. Melvin had less than four thousand in the bank; Licurtis had nothing. The judge announced that he was releasing them. He warned them, however, that if they returned to their homes they’d “be right back in jail.” He told them, “The jailhouse keys are in your pockets.”

An hour later, the brothers emerged from the sheriff’s department. Melvin surveyed the parking lot, which was crowded with friends and relatives. “About time!” he said, laughing and exchanging hugs. “You stuck with me.” When he spotted Little Melvin, who was now thirty-nine, he extended his arm for a handshake. Little Melvin pulled it closer and buried his face in his father’s shoulder, sobbing.

When Licurtis came out, he folded over, as if his breath had been pulled out of him. Mamie wrapped her arms around his neck, led him to her car, and drove him home. When they reached Silver Dollar Road, she honked the horn all the way down the street. “Back on Silver Dollar Road,” Licurtis said, pines flickering by his window. “Mm-mm-mm-mm-mm.”

Melvin spent his first afternoon shopping for silk shirts and brown leather shoes and a cell phone that talked to him. Old acquaintances stopped him—a man who thanked him for his advice about hauling dirt, a d.j. who used to spin at Fantasy Island. While in jail, Melvin had been keeping up with his girlfriends, and eleven women called looking for him.

Melvin told me that he’d held on for his family, and for himself, too. But away from the others his weariness showed. He acknowledged that he was worried about what would happen, his voice almost a whisper. “They can’t keep on doing this. There’s got to be an ending somewhere,” he said.

A few days later, Gertrude threw her sons a party, and generations of relatives came. The family squeezed together on her armchairs, eating chili and biscuits and lemon pie. Mamie gave a speech. “We gotta get this water back,” she said, stretching her arms wide. “We gotta unite. A chain’s only as strong as the links in it.” The room answered, “That’s right.” The brothers, who were staying with their mother, kept saying, “Once we get this land stuff sorted out . . .” Relatives who had left talked about coming back, buying boats and go-karts for their kids. It was less a plan than a fantasy—an illusion that their sense of justice could overturn the decision of the law.

The brothers hadn’t stepped onto the waterfront since they’d been back. The tract was a hundred feet away but out of reach. Fantasy Island was a shell, the plot around it overgrown. Still, Melvin seemed convinced that he would restore it. “Put me some palm trees in the sand and build some picnic tables,” he said.

After the party wound down, I sat with Licurtis on his mother’s porch as he gazed at his house, which was moldy and gutted, its frame just visible in the purple dusk. He reminisced about the house’s wood-burning heater, the radio that he’d always left playing. He said that he planned to build a second story and raise the house to protect it from floods. He wanted a wraparound deck and big windows. “I’ll pour them walls solid all the way around,” he said. “We’ll bloom again. Ain’t going to be long.” ♦