COST SEGREGATION FOR LUXURY RENTAL VILLAS
Cost Segregation holds great interest for me. I am a "tried and true" entrepreneur who has been involved in well over 100 businesses over my 40 year career. I stumbled upon cost segregation years ago, 2005, quite by accident. I was being interviewed by a magazine publisher in Scottsdale, Arizona, where I used to live and the Publisher's husband, a civil engineer who designed and built restaurants, was in the same office. I noticed how busy he seemed to be and the Publisher said that her husband was very active in preparing cost segregation studies and was one of only 100 engineers in the whole country that specialized in this niche.
She went on to tell me that his phone never stopped ringing and that he could not keep up with the demand. That piqued my interest, so I corralled her husband and learned enough to do deep research on the Net about cost segregation studies and spoke with others in the commercial real estate field about the subject over the next couple of days. I soon realized what an untapped gold mine preparing cost segregation studies could be..both for the engineer preparing the studies and the person that brought in the clients...soon to be yours truly!
At the time, I was teaching entrepreneurship at the Barrett Honors College at ASU in Tempe, Arizona as a pro bono Adjunct. I tasked a bright student to do the research and develop the business plan on creating a marketing company for cost segregation studies and based upon that effort, I secured fee sharing agreements from 6 well respected cost segregation engineers that I had vetted. Amazingly, I proceeded to make over $180,000 in net profits during the first three months in this brand new business.
I was hooked. I had big plans for expansion but the student who prepared the business plan in my class bailed on me to go to law school and I put my cost segregation business to the side while I focused on other projects...of which there were always many. I did revisit the business of cost segregation studies doing an occasional study for a commercial property owning friend but I was not active in the business.
I was, however, fascinated with some of the derivations of the benefits of the amazing (and virtually unknown) cost segregation process. So with one of my really smart IP lawyers, I was able to actually file sweeping Provisional Patent Pending filings on several unique uses of this invaluable tool. These Patent Pending filings are located on the Information Tab of the site below:
In the world of entrepreneurship, the blending of old ideas with new uses often manifests in powerful results. That appears to be the case in using cost segregation studies for luxury vacation rental villas. The same techniques that the engineer uses to realize significant tax savings for the traditional commercial building by performing a cost segregation study also works for the vacation villa. In reaching out to a local cost segregation provider only yesterday, I learned of his performing such a study on an $8 million rental villa which resulted in an astounding $625,000 tax benefit to the owner.
Realizing that I was really on to something, I am now setting up meetings with several cost segregation study providers so that I may offer this unique service to our own villa clients as a "value added" service. Over 11 years ago I "stumbled" upon this unique engineering application and this time I am taking what I learned then and applying it now to my new business...a unique blending of unrelated businesses for mutual profits.