#cost segregation real estate calculator

[expertcostseg-us]

These Detailed Cost Segregation Reports can be used by you and / or your CPA to reduce your Federal income Tax liability. Depending on in service dates and prevailing federal law, this can either be as Bonus Depreciation or as multi-year accelerated depreciation. https://www.diycostsegregation.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/

[oconnorassociate]

Three factors affect the year one payment ratio

Your marginal tax rate

The amount of taxable income you can offset, and

Whether you can use bonus depreciation (Tax Cuts and Jobs Act of 2017) To know more visit https://www.costsegregationcre.com/   

[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/

[oconnorassociate]

There are no costs or obligations today, favor yourself and obtain a detailed preliminary analysis? To know more visit https://www.costsegregationcre.com/

[expertcostseg-us]

These Detailed Cost Segregation Reports can be used by you and / or your CPA to reduce your Federal income Tax liability. Depending on in service dates and prevailing federal law, this can either be as Bonus Depreciation or as multi-year accelerated depreciation. https://www.diycostsegregation.com/

[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