What type of labor and tools are used in cost segregation the most?

Cost segregation firms are using various types of tools and labor to complete studies. Our survey reveals how firms are getting cost segregation studies done and what you can do to improve your process.

CPAs are doing cost segregation studies in different ways. Our recent survey reveals exactly how most firms are doing cost segregation work, including the tools they use and the people they hire. In this article, we’ll dive into our survey results and what they show about how CPA firms can do cost segregation better.

cost segregation

Tools firms are using in cost segregation studies

First, let’s examine the tools that firms are using to do cost segregation. Most of the cost segregation work reported to us is still done manually, with either Excel-based tools, homegrown software systems, or a patchwork of both. 

Excel: 47.1% of CPAs are setting up Excel templates where they can collect and/or plug client information into, then (ideally) using pre-built formulas to crunch the numbers for cost segregation studies. These will need to be thoroughly double-checked for errors and accuracy, as this method is highly prone to mistakes. 

Software: Only 11.8% of firms are using either homegrown or vendor-purchased custom software to aid in the completion of cost segregation studies. Ideally, a good software program will automate much of the number crunching and help CPAs collect the client information they need through easy-to-use and shareable forms. 

Both: 41.2% of firms are patchworking a combination of software and Excel. This could look like using a custom-built form software to collect information from clients, and then importing that information into an Excel spreadsheet to run the calculations. This might be better than just using Excel but isn’t as efficient as doing it all in one system. 

Our take: Giving highly-skilled employees such as CPAs and engineers only basic tools to work with can hamper their work. They will be slowed down by doing basic data entry work in Excel when using a better system could speed up the process and allow them to get more done in less time.

cost segregation studies

The labor firms are using complete cost segregation studies

When considering labor, we think about whether or not firms use in-house employees or contractors if they’re outsourcing their work or taking in outsourced work from other firms, and what types of people they’re hiring to do cost segregation work. 

Full-time employees vs contractors: Almost all of the firms we surveyed do their cost segregation studies with in-house employees and don’t hire temporary contractors. It seems more commonplace to just outsource work to other firms rather than hire temps. That’s likely because of the highly skilled nature of cost segregation work. 

The firms we surveyed averaged seven employees dedicated to doing cost segregation work full-time. Some had no employees working on it full time, while others had as many as 45 full-time cost segregation employees. The median average was three. 

Accepting outsourced studies from other firms: 48% of the firms we surveyed completed cost segregation studies that other firms outsourced to them. This can be a good revenue source for firms that have either the labor or streamlined tools—like automated software—to help them complete more studies in less time

Preferred backgrounds for cost segregation employees: Having a construction background was the most preferred type of cost segregation employee, followed by mechanical and civil engineering. Less firms preferred architecture or appraisal backgrounds. This is likely because the nature of cost segregation work requires lots of knowledge of building materials, measurements, and reasonable estimates—which are all best learned on the job.

cost segregation real estate

How digital transformation can push cost segregation forward

Most of the issues with cost segregation stem from inefficient tools and processes. The labor isn’t necessarily the issue, it’s the fact that employees can’t complete studies with the poor tools and processes. Firms are investing in more labor, but the tools are what’s broken. 

Cost segregation is ripe for digital transformation. By using a tool like SegStream, you could reduce the time it takes to complete a study from weeks to a couple of days. Once you have your client’s information, it only takes a few hours to complete an automated study that matches or exceeds the quality you would get from doing it in Excel. 

Digital transformation—i.e. automating the slow and manual parts of the process—opens up the door to complete more studies, take on more clients, and significantly grow your business.

Interested in seeing SegStream in action? Schedule a free live demo and see how it works.

The top cost segregation challenges and how to overcome them

CPA firms that do cost segregation share many of the same challenges, but they don’t communicate with or learn from each other. Learn from our cost segregation survey what the top challenges are and how to overcome them.

Many CPAs are facing the same challenges around cost segregation, but they wouldn’t know it because firms don’t communicate with each other. There is an opportunity for CPAs to learn and grow from learning about the challenges others face, and how they overcome them.

Our cost segregation survey revealed insights into the top challenges in the cost segregation industry and what firms are doing to overcome them.

cost seg study

The top four challenges in the cost segregation industry

According to our survey of dozens of CPA firms that complete cost segregation studies, the following four challenges were repeated the most. 

  1. Getting information from clients

Cost segregation studies require a wealth of information to complete accurately. CPAs face the challenge of both knowing exactly what information to gather down the last detail, but also getting that information from clients. Once this information is gathered, it’s all downhill from there, but this is often the hard part. 

  1. Finding new clients

There’s a large market for cost segregation, although breaking into it can be hard. Networking and referrals and often the top way that CPAs get new clients, but referrals aren’t always a reliable way to gain new clients. Other marketing strategies should be explored. 

  1. Not enough labor 

Once they do find enough clients, firms often struggle with finding qualified engineers and CPAs to complete the studies. This is largely because they’re using manual and time-consuming methods to complete the work, which automated solutions can help with. 

  1. Setting the price

There’s a lack of transparency around cost segregation pricing, as firms don’t know what their competition is charging. To help shed some light on this, we also surveyed CPAs on how much they’re charging to give firms an idea of what the right price might be.

cost seg

How these challenges are hurting CPA firms

These challenges hurt CPA firms in many ways, all of which result in lost profits. The ways they’re getting hit the hardest include:

Cost segregation studies take too long: Not getting information and lacking labor to get studies done quickly is dragging out the process, which hurts profits.

They are losing business to competitors: Lack of price transparency or simply not having the staff to take on more projects leads to competitors sweeping in to pick up the slack. 

They aren’t able to grow beyond their current capacity: Again, lack of labor limits the ability for cost segregation firms to grow, which is why they should look into automating some of that work. 

They’re working longer hours: Another symptom of not having enough labor and using inefficient processes is longer hours during an already busy tax season. 

Sometimes they aren’t getting paid: When studies don’t get completed, CPAs don’t get paid. For example, if a firm was planning to complete a study before the end of the tax season, but isn’t able to because of lack of information and labor needed to complete it, they probably won’t get paid for the work they put in.

cost segregation for dummies

What’s working well? How firms are overcoming these challenges

It’s not all bad news, certain tools and processes are helping CPA firms overcome the common challenges of cost segregation—and coming out the other side with higher profits and happier clients and employees. 

Standardized processes: Creating a single method that works and sticking to it is helping firms get more studies done faster. When there are opaque or no standard operating procedures, it slows down the process. 

Templates and software: Having a template or software in place can greatly reduce the time it takes to gather information from clients and complete the accounting side of the work. This is much better than forcing yourself or employees to “figure it out” anew for each study. 

Streamlining and automation: The cost segregation process is ripe for automation. No longer do CPAs need to hire engineers to gather every detail and spend countless hours crunching numbers. Tools like SegStream can aid in the information-gathering process and crunch the numbers for you, without sacrificing quality. This can help firms do more studies in less time, which further increases profits. 

real estate cost segregation

It’s not about headcount, but the tools you use to get studies done

There’s no doubt that more headcount will help you complete more studies, but you should equip employees with the tools to do cost segregation faster and more efficiently. By automating the work normally done in Access or Excel, SegStream can increase your cost segregation efficiency while reducing the need to hire more staff. It’s a surefire model to grow your business and streamline productivity.

Interested in seeing SegStream in action? Schedule a free live demo and see how it works.

Is your firm charging enough for cost segregation studies?

CPAs doing cost segregation don’t often share information, which creates a lack of transparency in the industry. Learn from our survey how much other firms are charging for cost segregation studies and if you’re charging enough.

Many CPA firms work on cost segregation, but there isn’t much transparency between firms that compete for clients. There are knowledge gaps on pricing, processes, and how much cost segregation work other firms can take on. 

A recent survey we conducted on the state of cost segregation and future trends can shed light on some of these knowledge gaps. In it, we found out how much CPA firms charge for cost segregation, on average, and other useful insights that all CPA firms should know.

cost segregation

How much are firms charging for cost segregation? 

This is a question that all CPAs want to know the answer to, and we’ve got it. The average fee charged per cost segregation study is $9,000. However, that is the average of a wide range. Cost segregation fees vary from $2,500 to $30,000, depending on the size and complexity of the property. 

Now, if you’re at the bottom end of that sliding scale, it could leave you wondering why others are getting away with charging so much more than you. While we don’t have a direct answer to that, the lack of transparency in this industry has likely created some wide price gaps. 

Something else CPAs might wonder about is how many cost segregation studies other firms can complete.

cost segregation services

How many cost segregation studies are firms able to complete? 

Volume is a key part of a cost segregation business. The more studies you can complete, the more you will earn. However, some firms are limited in their ability to take on studies due to the high demand for labor and expertise to get studies done. 

According to our survey, the average firm completes 310 cost segregation studies per year. That number ranges from as little as 2 to as many as 3,000. So again, huge variability and many dependent variables are in play, but you can get a sense of what your average competitor might be getting done. 

Firms are also completing cost segregation studies on certain property types more than others. Here are the percentages out of all studies for each property type:

  • 36.8% Residential and multi-family
  • 31.6% Retail
  • 18.4% Office
  • 7.9% Industrial
  • 5.3% Hotels
cost segregation real estate

Another issue with volume is that many firms are outsourcing cost segregation to other firms simply because they can’t handle the amount of work. This again is the result of not having enough labor to complete studies, or perhaps using inefficient processes that don’t fully take advantage of the software and processes available today. 

66.7% of those surveyed completed all their cost segregation studies in-house, 16.7% outsourced all their studies, and 16.7% did both.

How should you price your cost segregation services?

Now that you know more about what others are charging, you can take a balanced approach to match supply and demand. If you can’t take on that many studies, you’ll need to charge more for all that high-detailed work. However, if you can take on more studies using automation to make the process faster and easier, you can meet a greater portion of the demand curve.

If you can automate much of the work, you might charge a bit less to attract more customers (but not too much less). Then, you’ll maximize profits for your cost segregation business because you can complete more studies in less time. This is a more efficient way to scale than hiring more staff and continuing to charge higher prices.

cost segregation studies

How SegStream can help you maximize cost segregation profits

SegStream allows you to increase your cost segregation revenue without hiring any additional staff. Instead, you invest in making the process faster and more efficient through automation. SegStream enables this by removing much of the engineering and cost-calculating work. Instead, you enter your client’s property information into a detailed questionnaire, and the study is produced for you. 

Interested in seeing SegStream in action? Schedule a free live demo and see how it works.

Why should CPAs offer cost segregation services to clients? 

Many CPAs hesitate to offer cost segregation because they think it’s complicated and expensive, but new tools are changing the game. Learn why your CPA firm should start offering cost segregation.

Many CPAs either don’t want to deal with cost segregation or think they can’t, and that’s understandable given how things were done in the past. However, offering cost segregation services doesn’t have to be overly complicated and new tools make it accessible to more CPAs.

In this article, we’ll get into the benefits of offering cost segregation to your clients and how to do more cost segregation studies with less complexity and time commitment.

what is cost segregation

More income

The first reason for offering cost segregation studies is obvious: more income for your CPA firm. Cost segregation is an additional revenue stream on top of typical accounting services. According to a recent survey of CPAs that we conducted, the average firm was doing 28.5 cost segregation studies per year, at an average of $7,000 per study. 

That’s about $200,000 per year in additional revenue. However, most of these firms are doing cost segregation studies in the traditional, labor-intensive way. If you take advantage of modern cost segregation software, you could easily scale beyond that.

what is a cost segregation study

Happier clients

Your clients come to you because they want to save money on their taxes. For investment property owners, one of the most powerful tax savings strategies is cost segregation. With it, they can claim depreciation expenses over a much shorter period, helping them push more tax savings earlier into the life of their property. 

If you can do that for clients, you are sure to have higher client satisfaction, better retention, and maybe even more referrals.

cost seg study

More referrals from high-quality clients

Most investment property owners are going to be the types of clients you want. They’re well off, have lots of assets, and have a complicated enough tax situation that they will consistently need your help. It’s also likely that they’re connected with other investment property owners. If you can offer a premium service like cost segregation, not only will they be happy, but they are likely to refer you to their friends and colleagues. 

If you can take on a higher volume of cost segregation studies and get them done quickly, you can become the “go-to” CPA for cost segregation studies in your area. Many small CPA firms rely heavily on referrals to drive new business, and this is a great strategy for getting high-quality referrals.

real estate cost segregation

CPAs can leverage technology to do more than ever before

Despite the misconception, CPAs can conduct cost segregation studies for their clients without hiring engineers. Before technology made cost segregation more accessible, CPAs needed to team up with engineers to measure the entirety of a property and figure out what materials everything was made out of. They would then use that information to estimate costs for each of the property’s components, which the CPA would use to create the depreciable cost basis for the cost segregation study.

SegStream automates the majority of this process. All the CPA needs now is reasonable estimates for the building’s measurements and materials. They can enter that information into SegStream and it will automatically use RSMeans to look up cost estimates. Then, the software automatically buckets each of the property’s components into the proper depreciation period and calculates the depreciable tax basis. 

What once took weeks to do can now be done in hours to days, depending on how long it takes you to come up with reasonable measurement and materials estimates for your client’s property.

cost segregation study real estate

Take on more clients and increase profit margins with Segstream

Based on our survey, the average profit margins on cost segregation studies for small to midsize CPA firms is 15-30% (not highly compelling). This is because of the high cost of working with engineers and spending endless hours doing manual calculations.

When CPAs switch to SegStream, the typical profit margin for cost segregation increases to around 85%. Without even taking on more studies, firms can significantly increase how much they’re making on cost segregation. However, because of how quickly studies can get done with SegStream, CPA firms can take on more cost-segregation clients. So not only are they increasing profit margins for studies, but they’re also able to take on more of them. 

Once you start getting referrals from your network of investment property owners to do more cost segregation studies, you create a flywheel effect that kicks your firm into higher gear. You’ll have a new income stream that helps you grow and expand to many more clients.

Interested in cost segregation services to your clients? Schedule a free live demo and see how SegStream works.

Why you don’t need to hire engineers for cost segregation studies 

Hiring expensive engineers for cost segregation studies is the old way of doing things. Tools like SegStream automate much of the process. Learn how you can complete more studies in less time without engineers.

The typical thought around cost segregation is that it’s complicated, expensive, and requires teaming up with qualified engineers to do. This holds many CPA firms back from taking on more cost-segregation clients, but it’s not always true. 

When you use a tool like SegStream, you can replace the work these engineers previously did with an automated tool, as long as you have reasonable estimates for your client’s property measurements and materials.

Here’s why you don’t need to hire engineers for cost segregation studies, and how you complete more studies in less time without them.

cost segregation

The biggest misconception in cost segregation: the need to hire engineers

It’s a decades-old misconception that you need certain engineering credentials to take measurements and calculate costs for a cost segregation study. Yes, you need to know the measurements of your building and the materials for different components such as the floors, roof, doors, etc., but you don’t need to be an engineer to come up with this information. In terms of coming up with costs, automated programs like SegStream can help with that. 

In the past, people were concerned that doing a study without an engineer would create quality and compliance issues. Back then, there wasn’t technology like SegStream that could help with this process, so it was helpful to get an engineer involved. It’s also true that on very large and complex buildings, it still might be helpful to use an engineer. However, for most properties, you can now get high-quality and IRS-compliant studies in much less time—without using an engineer.

cost segregation study

The new way of completing cost segregation studies

Online tools and SegStream take care of work that engineers previously did on cost segregation studies. The new way of doing cost segregation studies comes down to these two key factors.

  1. Reasonable estimates for measurements and materials: While you need accurate measurements, you don’t need them down the exact inch. You can come up with reasonable estimations using tools like ReGrid, Google Earth, and LoopNet. You can also use your own photos to come up with reasonable estimations for measurements and materials.

Using both photos and online tools together will easily give you a complete enough picture to complete a cost segregation study in SegStream Pro, and you’ll get it done much faster than if you hired an engineer. 

  1. Automated cost estimates: The other thing an engineer might do for you is help you estimate the replacement costs of your building materials. They may have used the RSMeans database to look up information for each piece of your client’s building one by one. 

SegStream automates that work away. Because it’s integrated with the RSMeans database, SegStream will automatically calculate costs for each of your building’s components as you answer the questionnaire to complete your study. It will then automatically put each of these costs into different buckets for depreciation periods (5, 7,15, 27, or 39.5 years) to come up with the depreciable tax basis. This is how it allows you to complete studies in hours to days, rather than weeks to months.

cost segregation studies

Cost segregation is ripe for disruption and significantly higher ROI

According to our recent survey of CPA firms, The average firm takes on 28.5 studies at $7,000 per study and the average profit margins for small to midsize CPA firms is only 15-30%. When they switch to using SegStream, we’ve seen firms increase their profit margin to 85%. 

So, even if they don’t take on more studies, the average CPA firm can increase cost segregation profits by around $125,000 just by switching to SegStream and eliminating the need for engineers. 

On top of that, firms will be able to take on much more studies in less time, which will further increase profits. We’ve heard from many firms that they either turn down cost segregation work or outsource it to other firms. It can make a huge difference to profits and the ability to take on new business by automating this process with SegStream.

Interested in seeing how you can automate and streamline your cost segregation studies? Schedule a free live demo and see how it works.

Reconciling to the tax basis in cost segregation, aka “the squeeze”: What it is and how to do it

At the end of a cost seg study, you must perform reconciliation so that you match estimated costs to the depreciable tax basis. Learn what reconciliation in cost segregation is and how to do it well.

Coming up with the estimated value of every component of your client’s property and dropping them into different depreciation periods is not the end of your cost segregation study. You will need to update those numbers in what is called ‘reconciliation’.

In this article, we’ll explain what reconciliation means for cost segregation studies in particular, how it works, and how you can complete it in less time.

cost segregation

What is reconciling the tax basis in a cost segregation study?

When doing a cost segregation study, you calculate the value of all components within your property using RS means estimates, then drop each of those components into different buckets for depreciation periods. Those buckets will be depreciation periods of 5, 7, 15, 27, or 39.5 years, depending on several factors. 

However, the value of those components that you get from RS means is not the final value you will use in your cost segregation study. You will need to reconcile those values up to the depreciable tax basis. So, when referring to ‘reconciliation’ in a cost segregation study, we mean calculating the difference between the RSMeans cost estimates for your property’s components and the true depreciable tax basis.

cost segregation studies

What is the true depreciable tax basis?

In a cost segregation study, the depreciable tax basis of your property is the improvement value divided by the total value. For example, if there are $14M in improvements on a $21 million dollar property, then the depreciable tax basis would be 0.67. 

To come up with the improvement value and the total value, you can use tax-assessed records from online tools like ReGrid, or you can get an appraisal done for the most accurate cost. Reasonable estimates are okay for cost segregation studies, which is why it’s sometimes okay to use tools like ReGrid, but an appraisal is foolproof.

cost segregation real estate

When and why you need to reconcile to the tax basis

Reconciling to the tax basis is necessary for a Purchase Price Allocation (aka “PPA study”) type study (as opposed to new construction studies). In cost segregation, you’re re-estimating the total cost to rebuild the property in its current state using acceptable assumptions and a reliable cost database (the gold standard is RS Means). Because it is re-estimating how much it would cost to rebuild the property, the re-estimated total is not going to be equal to the tax basis of the property.

There are multiple reasons that the re-estimation won’t be equal to the tax basis of the property:

  • Estimating is just estimating, and not intended to be exact costs.
  • Even if we could get exact estimations, that doesn’t account for market forces that can cause purchase prices to fluctuate above or below the re-estimated amount.
what is a cost segregation study

How do you perform reconciliation in a cost segregation study? 

Reconciliation is typically performed at the end of your cost segregation study after you’ve collected all of the costs of the various components of your property and distributed them into different categories for accelerated (or non-accelerated) depreciation. At this point, you have the cost estimates done using RSMeans estimates (if you’re using SegStream) and you should have the true depreciable tax basis.

If your total costs from RSMeans is $5.5M and the true depreciable tax basis of your property is $8M, then you would calculate $8M / $5.5M, which is about 1.45. That 1.45 number is the factor that you will then apply to all costs of the property components you identified. Basically, you break out every cost that added up to the $5.5M, then multiply them individually by 1.45. Then, your final number will equal $8M, which is the same as your true depreciable tax basis.

In this example, all of the cost estimates grow by 45% to match the true depreciable tax basis of $8M.

cost segregation depreciation

How do you perform reconciliation in SegStream Pro?

In SegStream Pro, reconciliation is as easy as pushing a button. Since all the numbers are already there, you don’t have to do any manual calculations to complete this step. In cost seg, this process is called “the squeeze”. So, in SegStream Pro, you simply hit the “squeeze” button and everything is squeezed up to the depreciable tax basis. However, the percentages of your components within the different depreciation period buckets (5,7,15, 27.5, or 39 years) will grow in proportion to the growth factor that we calculated above. 

So rather than doing these calculations in a spreadsheet and potentially making a mistake, you can do them with the click of a button after you’ve entered the information you need for your study. This is a much faster and more secure way to do this calculation, and you can be sure the estimates are reasonable since SegStream is connected to the RS means database. 

This is one of the many ways that SegStream makes cost segregation studies faster and easier. In turn, this gives you the ability to take on more clients since you don’t spend so much time manually doing calculations like these.

Interested in seeing SegStream in action? Schedule a free live demo and see how it works.

Free Tools to Increase the Efficiency and Quality of Your Cost Segregation Studies – Part 4: Redfin and Google Forms

In the final installment of our blog post series on free tools to improve the efficiency and quality of your cost segregation studies, we delve into two valuable resources: Redfin and Google Forms. These tools, along with the others featured in our blog post series, are designed to accelerate the cost segregation process while maintaining quality. To learn more about how they seamlessly integrate with SegStream Pro, request a free live demo.

To round out our series on free tools for cost segregation, I’m going to focus on two more info-gathering tools. The first is Redfin, another great database for gathering the info you need for your client’s properties. The second is Google Forms, which gives you an easy and standardized way to gather information from your clients. 

Like most cost segregation tools, these are all about getting the information you need faster and easier. Once you have this information, you can easily plug it into SegStream Pro for an automated cost segregation study. The trick is simply getting the information. Let’s start with RedFin

Redfin: The best free tool for residential cost segregation studies

Redfin is my favorite lookup tool for residential properties. There are other tools like Zillow, but I only use them as a backup. That’s because the information in Redfin is laid out in the most efficient way for collecting cost segregation study data. 

All of these sites give you the information you need on beds, baths, square footage, etc., but Redfin gives you a lot more in a nicely laid-out format. My favorite section is the ‘property details’ section. This is where they lay out everything they have on the property, and they tend to have deeper information than other sites here. 

You’ll notice in the screenshot that Redfin has a treasure trove of information you can use to find components that you can separate out for cost segregation. Beyond the lot size, they’ll list items such as sprinkler systems, roof types, appliances, fireplaces, types of floors, and exterior features—all of which you need to know for cost segregation studies.

Keep in mind that Redfin can get stuff wrong sometimes, so if you’re unsure of something verify it with your client. That brings us to our next tool which helps you get the information you need from your clients.

Google Forms: Create a standardized way to get the client info you need

Getting the information you need for a cost segregation study doesn’t have to be a burden. It also doesn’t have to be difficult to get that information into a usable format, because Google Forms helps solve both of those problems. 

Google Forms is the ideal free tool for creating client intake forms. You simply create a new form and add questions for a new client to fill out. This can include client name, entity name, property address, property type, etc. 

For a field such as ‘property type’, you can give your clients options to pick from rather than have them type it out. This helps standardize your form and avoids people saying the same thing in two different ways (e.g. hotel/motel or assisted living/hospice).

You can also choose to make fields required so you’re guaranteed to get the info you need. The example below shows how to set up a ‘property type’ field. Note that it’s in alphabetical order so it’s easy for clients to find their property type.

Once you gather the information from your form, you can easily export it to a usable spreadsheet. From that spreadsheet, you have all the data you need ready to be copied and pasted into other tools, such as SegStream Pro. So not only does it solve the data collection problem, but also the data formatting. For example, if you had clients fill out a paper form you’d be stuck typing the info from the form into a spreadsheet or SegStream Pro. This bypasses that. 

What’s great is that you can use this form over and over for each new client. You can tweak the form over time to add new fields that you need to collect or subtract fields you don’t need. You can also see reports based on your responses. For example, you could see a pie chart of the different property types your clients selected from the image above. 

Google Forms has tons of flexibility. Not only can you generate a spreadsheet, but you can also use integration tools like Zapier to connect it to your customer relationship management (CRM) system or other systems.

Faster cost segregation studies: What these free tools are all about

All of the free tools we’ve laid out in this blog post series, not just Redfin and Google Forms, are all about the same thing: getting you all of the info you need to do cost segregation studies faster and more efficiently. 

The reason I’m showing these particular tools is that they are all organized in a way that makes it easy to punch in the data to SegStream Pro. They all fit hand and glove with our software so you can quickly get the information you need, copy and paste it in, and have your cost segregation study done in hours instead of weeks—without sacrificing quality. 

Interested in learning more about SegStream Pro? Request a free live demo and we’ll show you how you can use it to grow your business.

Free Tools to Increase the Efficiency and Quality of Your Cost Segregation Studies – Part 3: ReGrid

In the world of cost segregation studies, efficiency is the key to your success. Say goodbye to the hassle of repeatedly asking clients for essential information and embrace the game-changing tool, ReGrid. In this blog post, we dive into how ReGrid can be your trusted ally with filling in the gaps for free.

Cost segregation studies can be done much faster when you don’t need to repeatedly ask your clients for tidbits of information, and tools like ReGrid help you avoid just that. When I need to look up some information on a client’s parcel for a cost segregation study, ReGrid just about always has what I need to know. 

In this blog post, I’ll teach you how to use ReGrid to fill in the gaps for free. 

ReGrid for parcel outlines

One of the nicest things about ReGrid is that it provides an exact outline of 99.9% of all properties in the US that you can rely on. The company has collected and standardized data from government records and other authoritative sources and then combined it all into one easy-to-use database with over 156 million land parcel records. It provides you with up-to-date information on each parcel for free, but you can pay more for premium data. 

One question that often brings me to ReGrid is, “Where does my client’s parcel begin and end?”. This is often hard to tell based on just the address alone, especially when a property comprises multiple structures.

For free, ReGrid gives you an exact and reliable outline of where your client’s parcel begins and ends. Using this outline, you can draw lines using the ruler and polygon tools in Google Earth to get area and perimeter information for separate property components. 

Here, you can see our example property in Santa Monica, CA, with the exact parcel outline provided in ReGrid. I recommend using the map view rather than the satellite view for this, as the satellite view sometimes gives imperfect edges. However, you can easily adjust for that in Google Earth when you draw your lines.

Uncovering helpful property info (for free)

Another benefit to ReGrid is that it gives you abundant information on the property, even in the free version. Some of this information that’s useful for cost segregation studies includes the last sale price and date, parcel value, improvement value, and land value. 

You can see this info for our Santa Monica property. With the data given, you can find out how much you can depreciate based on the ‘improvement value’. For this property, the improvement value/total value is actually pretty low, about 2%, so it’s not a great candidate. However,  this is valuable information to know and is easy to fetch from ReGrid.

You can also see the ReGrid calculations for square feet and parcel sizes and a legal description of the parcel. This may even save you a trip to Google Earth Pro, or at least provide you something to compare your own measurement against for accuracy.

Additional info that can be useful

ReGrid goes on and on with data that may or may not be useful for cost segregation studies, but it’s worth a look. Anything that can save you time will also save you on labor costs. It can also answer potential questions that you’d need to ask your client about directly. They probably won’t enjoy thumbing through their records, so it’s nice to have this info directly from ReGrid.

Below, you can see some potentially useful information about the property in Santa Monica. This includes square footage for different areas within the property, when each building was built or changed, and various building codes that may or may not be applicable or useful. This is just a sampling of all the info that ReGrid provides. 

ReGrid Pro: Worth it for cost segregation?

While much of the information you need for cost segregation studies is available for free, signing up for ReGrid Pro could save you some time and eliminate the need for using multiple free tools. 

For $10/month or $100/year, ReGrid Pro enables a full suite of mapping tools and map layers that would eliminate the need to use Google Earth Pro. Some of the most useful layers are parcel dimensions and building footprints, so you wouldn’t need to gather that data from other tools. While it’s not necessary, it is cheap, so perhaps it’s worth the small fee to save your time.

However, this blog post series is focused on free tools. There are a couple more free tools that we’ll dive into next. One is another property lookup tool that can fill in the final gaps and save you more time. The other makes it easier for you to gather information from your clients.

Complete Your Cost Segregation Studies Today

SegStream is a simple and easy-to-use software solution that helps CPAs, specialty tax firms and tax experts grow their businesses by completing more cost segregation studies in less time.

Schedule a demo today and learn how SegStream can help you grow your business.

Free Tools to Increase the Efficiency and Quality of Your Cost Segregation Studies – Part 2: LoopNet

A critical component to increasing the efficiency and quality of your cost segregation studies lies in gathering data, and LoopNet is your secret weapon. In this blog post, we unveil the incredible potential of LoopNet, a platform primarily known for listing commercial properties and businesses. Discover why it should be a go-to resource for your cost segregation studies.

LoopNet: A lot of the info you need for cost segregation studies

LoopNet is a site to browse commercial properties and businesses for lease or for sale. If a property is listed on LoopNet, it will include all kinds of useful information, including square feet, assessed value, pictures, and more. 

Just about any commercial property that’s listed for sale or lease will make its way onto LoopNet. After a sale or lease has taken place, the website will ‘archive’ the information from that property and leave it up on the site. So, even if the property is not currently for lease or sale, you can still use this site to look up much of the information you need to start a cost segregation study. 

Free LoopNet photos to get you started

One of the greatest benefits of LoopNet is all the photos that are left up on the site. You may not have every photo you need to identify every available component for your study, but you might be able to get pretty far.

LoopNet often has solid pictures of the exterior, building features, and interior of your building. If you either don’t have time or are unable to do a site visit, you can use these photos to identify what elements you can separate out for individual depreciation for your cost segregation study. Or, you can use them as a guide to finding components you need more information or better photos for, and then have your client take the photos for you if you can’t make it on-site. 

Nothing can replace using your own photos in a cost segregation study, but LoopNet is definitely second best. As an example, there are numerous photos of this property at 700 Colorado Ave in Santa Monica, CA. You could reasonably use these to conduct the majority of your cost segregation study, as you can easily identify individual elements and structures within them.  

Check out just a few of them below. 

A treasure trove of free cost segregation data

If your property was ever listed on LoopNet, you can use the site as the starting point for gathering all of the information you’re going to need. If you’re using SegStream Pro to do an automated cost segregation study, you can simply take the information from LoopNet and plug it into our system. It may not have all the information you’ll need, but it’s a great way to get started and can save you hours compared to gathering this manually. 

Below is an image on LoopNet from the same property in Santa Monica. Notice how it has useful information regarding the property type, square footage, tenancy, parking, year built, and number of drive-in doors.

PDF brochures to help you do a deeper dive

Many properties will also have downloadable PDF brochures that contain more useful information on the property. While these are designed to help sell the property, they contain data you’ll need to plug into your cost segregation study. 

The screenshot below is taken directly from the downloadable brochure from the same Santa Monica property. Note how it shows how much of the property has been improved, including a breakdown of square footage for concrete and masonry improvements. It also shows how much parking is available. Lastly, it shows how much frontage there is along each street, which is useful for breaking down curb space as a cost-segregation component.

Save time and start with LoopNet

Without fail, I always start my cost segregation studies with a quick search on LoopNet for my property. Much of the time, I hit the jackpot and get much of the information I need to get started and save hours on tedious info-gathering tasks. This isn’t a guarantee, but it is well worth it. 

In our next article, I’ll teach you how to use another info-gathering tool that can supplement LoopNet and Google Earth Pro to piece together missing data for your cost segregation studies (and it’s also free!).

Complete Your Cost Segregation Studies Today

SegStream is a simple and easy-to-use software solution that helps CPAs, specialty tax firms and tax experts grow their businesses by completing more cost segregation studies in less time.

Schedule a demo today and learn how SegStream can help you grow your business.

Free Tools to Increase the Efficiency and Quality of Your Cost Segregation Studies – Part 1: Google Earth

When creating cost segregation studies, efficiency and accuracy are paramount to your success. An invaluable free tool that can significantly enhance and improve your cost segregation workflow is Google Earth Pro. In this blog post, we’ll guide you through the process of setting up and utilizing Google Earth Pro for accurate and hassle-free property measurements, ultimately helping you save both time and costs when creating cost segregation studies.

Much of your cost segregation study process is simply gathering information. You can do this the old-fashioned way, with site visits and a measuring wheel, or you can use free online tools to save yourself the hassle. 

One of the most useful tools for cost segregation studies is Google Earth Pro. In this blog post, I’ll teach you how to set up and use Google Earth Pro to take care of all the measurements you need to conduct cost segregation studies. This will save significant time and costs compared to taking these measurements yourself. 

Let’s start with setting the tool up. 

Tips and tricks: Setting up Google Earth Pro for Cost Segregation

Google Earth Pro for desktop is free to download and use for both Windows and Mac. You’ll want the desktop version so you can save data and easily share Google Earth files, but you can also try out the mobile and online versions for fun. 

Once you download the program and get it installed, you’ll want to make a few quick changes to make sure it’s properly set up for cost segregation study measurements:

  1. Go to ‘Options → Navigation → Slide Tool Speed’, and set it as fast as it goes. The slide tool defaults at a frustratingly slow speed, so you’ll want to change this before you get started with anything else. You’ll also want to update the ‘Mouse Wheel Speed’ to the fastest setting, as the same issue applies. 
  2. Turn off the ‘Automatically tilt and enter ground level view’ setting. This is great for looking at architecture, but it won’t help with measurements that need to be taken from directly above. 
  3. Check off unnecessary layers such as ‘roads’, which displays data from Google Maps traffic. You won’t need these layers for cost segregation purposes, and they just get in the way. Pretty much all layers can be turned off. 
  4. Make the ‘Places’ sidebar bigger, this will be important and you’ll need to see the data displayed here. 

Once you’ve changed these settings, you can start looking up properties you need to take cost segregation study measurements for. First, look up the property address in the search bar. When it comes up, right-click on the property and save it to ‘My Places’.  

Now, zoom into the property from a nice height where you can easily measure it, and ensure you’re looking at it from directly above (which is the 2D setting). Then, you can use the compass tool to square up the property with as close to straight lines and 90-degree angles as you can get. This makes it easier to measure using the ruler tool.

When you have this nice, map-like view of the property, right-click on the property and hit ‘snapshot view’. Now, whenever you double-click on the property from your places bar, you’ll come back to this nice, measurable view. 

The last thing we’ll do before taking measurements is to right-click, add a folder, and name the folder something related to the property, such as the address, client name, or however you want to identify it. You’ll save all the measurement data and markups here. 

Essential Google Earth Pro Tool #1: Ruler

Now, it’s time to start measuring. With the Ruler tool, you just need to click on a point to start a new measurement. As you click on more points, the ruler will automatically draw lines between points until your measurement is complete. If you make a mistake, then you can right-click and it will send you one point back so you can re-do your point measurement. 

After you’ve drawn a complete shape, you will get the area in square feet and the perimeter in linear feet. Once you have your complete property measured, save it as ‘site footprint’ in the folder you created for this property. Now, you have your site’s area and perimeter, plus you can show how you measured it in Google Earth if the question comes up in an audit. 

Essential Google Earth Pro Tool #2: Polygon

Now that you have your site footprint mapped out, you’ll want to measure elements within your property using the ‘Polygon’ tool. This tool is essentially an extension of the ruler but measures shapes within your footprint. You’ll use this to measure components like parking lots, curbs, skylights, grassy lawns, and anything else you’d want to separate as a component for your cost segregation studies. 

Let’s say you want to measure your parking lot. Using the Polygon tool, you can draw points to measure your parking lot within your site footprint. Then, you can save that shape as ‘parking lot’. Do this for all of the components you need to measure within your building’s footprint. 

Saving Google Earth Pro data for reference and sharing

Now that you’ve measured your entire footprint and each component within it, you should see the area and perimeter for each in the property folder. When saving these, it’s helpful to use abbreviations so you don’t take up too much text space with titles. That way it’s easier to see the area and perimeter data that you need for your study. 

At a glance, you can see the area and perimeter for all components of your property in your folder. When entering your property into SegStream Pro to conduct an automated cost segregation study, you can simply copy and paste the data from Google Earth into SegStream Pro. 

You can also share the property data with others who use Google Earth. If you want to share this information with your client, for example, you can download the folder by clicking ‘Save place as’, which saves the folder as a .knz file. If your client has Google Earth installed, they can open this file and automatically see the markups you made for the footprint and each component of the property, as well as the area and perimeter. All the shapes and measurements are there so that they can easily double-check it for accuracy. 

And that’s it! Google Earth Pro is a powerful free tool for making measurements for any property, anywhere, at any time. Not just for the site footprint, but for individual components too.

Next, we’ll talk about another popular tool that can save you time with photos and building information. 

Complete Your Cost Segregation Studies Today

SegStream is a simple and easy-to-use software solution that helps CPAs, specialty tax firms and tax experts grow their businesses by completing more cost segregation studies in less time.

Schedule a demo today and learn how SegStream can help you grow your business.