COST SEGREGATION FOR LUXURY RENTAL VILLAS
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.
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.