RSMeans and Cost Segregation: How SegStream offers the most accurate estimates

RSMeans is the most accurate database for construction cost estimating, and works great for cost segregation studies. Learn how to integrate the RSMeans database into your cost segregation workflow with SegStream.

SegStream is the only purpose-built cost segregation software that’s integrated with RSMeans.

In cost segregation, accuracy is key. However, you’ll also be making countless estimates when doing a cost segregation study. To make sure those estimates are accurate, you’ll need to use the best construction estimating tools available.

For cost segregation, RSMeans is the best estimation tool available. In this article, we’ll discuss why we integrated RSMeans with SegStream software and how you can use it to save time and make accurate estimates. 

Cost Segregation

What is RSMeans? 

RSMeans is an annually updated database for construction cost estimating from a company called Gordian. It holds estimates for every aspect of construction, including the cost of components within a residential or commercial building that you’ll identify in a cost segregation study. 

It’s known as the gold standard for accuracy in construction estimating, as engineers spend over 30,000 hours researching and confirming costs. The database holds over 92,000 estimates. 

In terms of accurate construction estimate databases, there is no viable alternative to RSMeans. It has more details and accuracy than any other database could provide, and the people who manage it put in a great deal of effort to keep it accurate and up to date.

Cost Segregation Study Software

Why is RSMeans important for accurate cost seg studies? 

When doing a cost segregation study, you’re creating a tax basis allocation for all of your client’s property components, broken down by type and depreciation period. Due to the nature of this work, you’re going to need to make a lot of estimates. If you want your cost segregation study to be IRS-compliant, those estimates need to be reasonable and accurate.

Because RSMeans is the most accurate and up-to-date cost estimation database, you should feel more comfortable when using it to estimate costs on cost segregation studies than other methods. It is considered a reliable tool for making reasonable estimations by the IRS. Using it sets you up with the most defensible estimates should your client get audited after taking cost segregation.

Cost Segregation Study Software

How is RSMeans connected to SegStream? 

RSMeans is connected to SegStream’s cost segregation software through a seamless integration. When you answer questions about your client’s property in SegStream while completing your study, it will automatically use the RSMeans database to create estimates based on what you entered. 

For example, if you put in “6,000 sq. feet of vinyl flooring” for an office building, SegStream will automatically look up the cost for that in RSMeans and provide an estimate in the software. As you complete your study, SegStream will add the total of all RSMeans estimates into different buckets based on the depreciation periods of 5, 7, 15, 27, or 39.5 years. These will add up to the depreciable tax basis for your cost segregation study.

Cost Segregation Study Software

RSMeans is the best choice for your cost seg workflow

To produce cost segregation studies at scale, you need fast and reasonable estimates. Using SegStream plugs the RSMeans database directly into your cost segregation workflow. You provide the information on your client’s property, and SegStream automatically connects with RSMeans for the best estimate possible. If you want to take on more clients or just do more cost segregation studies in less time, this is the best workflow available. 

Interested in completing more cost segregation studies faster with SegStream? Schedule a live demo to see how it works—and see how it’s connected to RSMeans. 

What’s The Difference: Excel vs. SegStream for Cost Segregation Studies

Using Excel for cost segregation studies? Learn what’s different about using SegStream Pro vs Excel and how you can save significant time per study.

There is no right or wrong way to do cost segregation studies. We’ve seen many people run their cost segregation business in Excel. However, there are some fundamental differences when using Excel vs. a program like SegStream Pro.

The main difference is the time it takes to complete a study, but there are several contributing factors. In this article, we’ll dive into the differences between using Excel vs. SegStream pro for cost seg studies, and why it’s faster and easier in SegStream.

Excel requires writing down a lot more quantities 

When using Excel to do a cost seg study, you’ll need to write down specific quantities for each component of the property. This includes specific numbers for plumbing, electrical systems, panels, tiles, etc. 

When you use SegStream, it will only ask for a few quantities, such as the surface area of a building. Then, we’ll simply ask you for percentages and the software will calculate specific quantities in the background based on greater metrics like the size of the property. 

For components like room types and finish types, we’ll ask for percentages rather than specific quantities. Then we’ll crunch the numbers in the background based off of pre-determined calculations set in the software.

This saves you tons of time because you don’t have to measure everything to the exact inch, but instead provide a reasonable estimate of the percentage. 

Excel requires you to do more calculations

After carefully counting and writing down all of your quantities into your Excel spreadsheet, you’ll then have to do a whole slew of calculations. 

For example, let’s say you own a building with 64 1-bed, 1-bath, 750-square-foot units. If you have an electrical panel in each 1 bed and bath unit, you’ll need to count everything that is qualified for accelerated deprecation within each panel. That means you’ll need to determine which components count as personal property (5-year depreciation) and which are not qualified and only count for standard depreciation for all 64 units. 

The same would hold true for the floor finishes of each unit. Let’s say you have 85 square feet of tile and the rest is all sheet carpet. You would need to then add up all the square footage of tile and sheet carpet within all the units, then calculate how much of those components qualify for accelerated depreciation and for what accelerated time period. 

These are pretty simple examples, in reality, it would be much more complicated since your units would probably not all be exactly the same. 

If you were using SegStream, you could simply ‘multiply’ each identical unit, and you would only need to put in percentages rather than do the calculations yourself. For the floor finishes, all you would need to do is put in the square footage for one unit, then say what percentage is tile and what percentage is carpet. The calculations, including accelerated depreciation periods, is then automatically done for you. 

It’s easier to make mistakes in Excel

Going back to the apartment building example, if you were using Excel you would have to be careful to make sure that all of the square footage in the units matches the total square footage for the building. If you were to end up putting more square footage of floor finishes than the actual square footage of the apartment, then multiply that mistake by 64 for each unit, the IRS might take issue. 

You could easily end up with thousands more square feet of floor finish than you should have, which would be a major mistake. These kinds of mistakes are easy to make when doing this manually. 

With SegStream, you put in percentages, so it’s impossible to make that mistake as you can never go beyond your building’s total square footage or footprint. 

Excel requires you to think much harder

All of the questions you need to be answered to complete a cost segregation study are inside of SegStream and prompted to you as you go through the study process. Excel, on the other hand, requires you to start from scratch, or at least copy/paste your last similar project. You may have Excel templates for different property types as well, which can help. 

The issue with this is that no two properties are the same, and using a template based on one property might not collect all of the information you need for another. You end up needing to think very hard and carefully to make sure you’ve turned over every last detail and asked every question. 

SegStream takes care of that thinking for you. Instead of worrying about the details, you go through the questionnaire process and can be ensured that the program will prompt you for every detail you need. 

While there are many ways to successfully do cost segregation studies, we believe the process we’ve created with SegStream to be much faster and easier. The goal is to enable you to do more studies in less time, allowing you to take on more clients and drive greater profits for your firm. 

Interested in seeing how SegStream works? 

Schedule a free demo and we’ll show you how. 


All the documents you need for cost segregation studies

Gathering the documents for cost segregation can be confusing. This guide will show you exactly what documents you need for different types of cost seg studies.

Getting started with a new cost segregation client is the best part. You get to have a nice conversation and get some basic information such as the property address and the scope of recent work done to the property. Then, the information gathering begins. 

For many, the most challenging part of cost segregation is gathering the volumes of information needed to complete a study. This article lists all of the documents you’ll need for cost segregation studies. You can bookmark it and come back to it often as you get started with new clients (maybe you’ll even memorize it at some point). 

Documents needed for all cost segregation studies (acquisitions and new builds)

To start, we’ll go over documentation that applies to both acquisitions and new construction/improvements.

Photographs


You will want well-taken photos from all over your client’s property as if you were giving yourself a tour where you don’t want to forget any details. If you’re visiting the property in person, these photos will remind you of what’s there later on.

You will need to take photos from a 360-degree angle for the interior, exterior, and every side of the building. Basically, every few steps you will want to stop and take a photo to the left, right, front, and back.

For the interior, photograph the door before you go through it so you remember what room the photos were for. It makes it easier when looking back to use the doors to separate the photos between rooms. Make sure you get every room from floor to ceiling, including mechanical and electrical rooms.

Breakdown of tenants


Most properties, unless your client is running their own business out of it, will have tenants. For your cost segregation study, you’ll want a specific breakdown of every tenant they have. For apartment buildings or commercial properties, this will be a rent roll. For hotels, it will be a manifest of the hotel rooms since the tenants are short-term.

Building plans


If you can get them, it will help you later on to have building plans in PDF or some other digital format you can easily refer to (digital is easier than paper). 

These plans include:

  • Site plans that show utilities, sidewalks, landscaping, and other site properties.
  • Architectural plans.that include floors, finishes, elevations, and other details. 
  • Electrical plans that show power, lighting, distribution, and panel schedules.
  • Mechanical plans that show equipment schedules.
  • Plumbing plans that also show equipment schedules. 
  • Floor plans that provide measurements for each section of the property.

Documents needed for acquisitions

For acquisitions, the only separate document type you’ll need is the appraisal of the property made during the real estate transaction.

Appraisals

This appraisal will have a vast amount of detail that covers just about everything you need outside of thorough photographs. Ideally, you’re doing a cost segregation study recently after the purchase is made so there haven’t been major changes since the appraisal. 

Documents needed for new construction and improvements

New construction and improvements will have more available documents than an acquisition property, but it is not as cut and dry. With acquisitions, the appraisal is the central document you can work from. With new construction, it’s more of a smorgasbord of different documents

Final AIA Documents

Large contracting jobs will use AIA (American Institute of Architecture) documents to log their work and receive payment. For larger builds, these documents become the gold standard for cost segregation studies. It tells you everything they’ve built or fixed and for what amount, so you easily can tally up improvements to the property. 

However, you will need to make sure you have the final version of this document, as it will change often. If you have version 19 but your client has version 23, you’ll likely be missing some key information. 

For a minor cost analysis, you won’t need this document as it’s more for a full cost analysis. 

Project Budget

The contractor’s project budget summarizes all hard (direct) and soft (indirect) costs associated with the property. Some of these costs, especially the indirect costs, are not included in the AIA document, so you can use the budget document to compare against that. 

This also isn’t relevant for minor cost analysis projects. 

Concise cost ledger (for minor cost analysis)

When doing cost segregation for upgrades made over the years, you will need to do a minor cost analysis rather than a full cost analysis. The best document for this is a concise cost ledger for each year. 

These documents should track all costs associated with low-end renovations for things like painting, landscaping, minor remodeling, new appliances, and updated lighting—these mini-breakdowns help you add up the total for qualified improvement property (QIP). 

How to use these documents with SegStream Pro

If you have any or all of these documents, congratulations, you’ve done the hard part. Now that you have the information you need, SegStream Pro will guide you through a series of questions where you use that information to fill out all the information needed for your cost segregation study. 

Instead of racking your brain for every detail you need, SegStream Pro takes the guesswork out of it by prompting you for the information. We’ve done thousands of these studies ourselves, which is how we designed proprietary software that makes it easier and faster for you to get through this process. 


Interested in seeing how it works? Schedule a demo and we’ll be happy to show you.

How to use SegStream to complete more cost seg studies in less time

Many CPAs take on less cost segregation work because they’re worried they can’t handle it or will end up outsourcing it. Learn how you can take on more cost segregation studies with SegStream Pro.

Many tax pros can’t take on as much cost seg work as they would like because it takes so long to get it done, especially as tax season deadlines arrive. For the clients they can handle, they end up working overtime and getting studies done at the last minute.

The question on many CPAs’ minds is, “How can I get more cost seg studies in less time?” The answer is SegStream Pro.

More studies in less time with SegStream Pro

Relying on traditional and manual methods such as hiring engineers to painstakingly go through every detail of a property slows studies down and keeps CPA firms from taking on more cost seg work. SegStream Pro is a custom cost segregation software that empowers CPAs to complete more studies and earn more through their cost segregation business. It achieves this by automating and streamlining the cost segregation process. 

With SegStream Pro, you can expect the following benefits:

  • Get cost seg studies done in 2-3 hours rather than 2-3 weeks. This enables you to take on more clients and earn more through cost segregation studies. 
  • Focus more on sales. Spending less time pouring over studies gives you more time to bring in more clients and further grow your business. 
  • Increase confidence in your studies. Because traditional studies are so complicated and take so long, it’s harder to ensure a higher standard of quality. With SegStream Pro, your redundant tasks are covered so you can focus on ensuring quality for every study.
  • Reduce your grueling tax season workload. Make more time for your family and have a life this tax season by automating redundant cost segregation tasks.
  • Forget outsourcing. SegStream Pro eliminates the need to outsource your cost seg work to other CPAs just because you can’t handle it all. Now you can do it all in-house. 

How does SegStream Pro make this possible?

When conducting a cost segregation study the traditional way, engineers and CPAs need to dig up a ton of information. Essentially, every little detail of the property needs to be cataloged and measured. This requires thinking of all the possibilities and all the questions to ask your property owner clients.

SegStream Pro, on the other hand, has all of the possible options already accounted for in the software. So, instead of going out there and gathering every bit of imaginable information, you’re guided through a series of streamlined questions. After you’ve answered these questions, an automated cost segregation study is produced. 

What this does is make it much easier to select and find the right information from your clients. If there is something missing, you know exactly what that is, rather than playing a guessing game. 

We created this system after doing thousands of cost seg studies the hard way, leaving no stone unturned. All of the conventions, tax cases, and everything else you need to look for are already in the software. For example, if you are working on cost segregation for a fence, the software will have a series of yes or no buttons for fencing material (wood, metal, chain link, etc.), and allow you to quickly input the length of that fence. 

This same process is repeated for every possible building component. This guided experience will turn weeks of information gathering into hours, and will automatically produce a report that details what components fall under what accelerated depreciation categories (5, 7, 15 years, or standard). 

Interested in seeing how this works? 

Reserve your spot for a live demo of SegStream Pro to see for yourself. It’s simple to use, and you could get started before this year’s tax season. 

Who knows, maybe you can take on more clients and say goodbye to grueling hours and paying extra to outsource cost seg work. 

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.