Category: Finance Tips
Air Date: 06.04.2021

Whether you run a small business or invest in real estate on the side, we are all trying to maximize our passive income. Our guest today, Bobby Thames, is an expert in doing just that. Bobby spent the first ten years of his career at PriceWaterhouseCoopers, becoming an expert in tax credits and cost recovery solutions. He has since started his own successful business, CENTIVE, which delivers tax and cost recovery solutions for real estate. Throughout his career, Bobby has done a multitude of cost segregation projects from sports stadiums, to bank branches, to restaurants. In our conversation, Bobby explains the many benefits of cost segregation and how to apply it to real estate. He shares the tool his company is developing to help small businesses take easy and effective control of their cost segregation, and how to use it. We also talk about Bobby’s work in the green energy tax credit space, explaining how politics can impact and incentivize decision-making in real estate. Join us for a deep dive into cost segregation and learn how you can start applying these lessons today!

 

Key Points From This Episode:

  • Meet today’s guest Bobby Thames.
  • What Bobby learned during his first ten years at PricewaterhouseCoopers.
  • An explanation of cost segregation.
  • Why cost segregation is important for investors.
  • Why it’s important to break down buildings into their various components so as not to diminish passive income.
  • How the changes that the Trump administration made to the tax code in 2017 were beneficial for cost segregation, in large part because of his experience as a developer.
  • How Bobby’s company goes about doing cost segregation for clients and buildings.
  • Why Bobby and his company use the same tools that appraisers use and then do cost segregation.
  • Increasing your expenses through cost segregation to lower your taxes.
  • The reasons why it’s beneficial to do cost segregation for your business.
  • Why cost segregation can vary greatly depending on the context.
  • How small businesses can work with Bobby’s company to do cost segregation.
  • The new tool that Bobby’s company is making available for small businesses.
  • Energy-efficient home tax credits and how to qualify for them.
  • Bobby shares his keys to success.
  • The importance of networking and relationships as a small business owner.

 

Tweetables:

“At the highest level, cost segregation is a tool that allows you to accelerate your depreciation to lower your taxable income.” — Bobby Thames [0:03:51]

“This is a really good time to be taking advantage of cost segregation as those tax laws begin to fade out and new ones come in. We’ll see how favorable they are, but right now is a fantastic time to take advantage.” — Bobby Thames [0:10:28]

“If you are going to buy this building and sell it in the next year, the depreciation recapture is really going to take away a lot of the benefit that we pulled out, to begin with.” — Bobby Thames [0:20:23]

“Green energy is a really powerful tool and that’s because it gets a lot of support in DC, the first major difference here is we’re talking about tax credits, whereas with cost segregation, we’re talking about increased deductions.” — Bobby Thames [0:24:48]

 

Links Mentioned in Today’s Episode:

PricewaterhouseCoopers

Bobby Thames on LinkedIn

CENTIV

How To Win Friends And Influence People

Kent Ritter

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Interested in Investing Alongside me in our next multifamily deal?

Contact me at kritter@birgeandheld.com.

My operating partner, Birge and Held Asset Management have a twelve-year track record creating sustainable wealth for over 2000 investors through high-quality multifamily investments.

https://birgeandheld.com

Thanks for listening!

—Full Transcript Below—

BT: Being small business owner, it’s all about networking and connecting with people and I found, when I was at PWC, I kind of lived in a little bit of a bubble and didn’t even realize that I had my coworker’s work came in, we had a fun little network that I didn’t really have a network outside of my working bubble and I found, that has been the most important thing since I’ve left. I’ve met some of the greatest people I never would have met and when you find people and you make a real relationship with them and they become people who are willing to help you, it’s unbelievably powerful.”

[INTRODUCTION]

Welcome to Ritter on Real Estate, the show about how to passively invest like a pro. On each episode, I interview real estate experts who give their top investing advice, strategies, and tools that break down the insights and the practical steps to avoid the pitfalls and make better investments. I want to help you passively invest like a pro. This is Ritter on Real Estate, and I’m your host, Kent Ritter.

[INTERVIEW]

[0:01:03.2] KR: Hello fellow investors, welcome to Ritter on Real Estate, where we teach you how to passively invest like a pro. Today, my guest is Bobby Thames and he is the founder and director of operations for CENTIV, which focuses on tax and cost recovery solutions for real estate. Bobby spent nearly the first decade of his career at PriceWaterhouseCoopers, becoming a subject matter expert in tax credits and cost recovery solutions. Cost segregation is the most common tax incentive project Bobby’s done throughout the years.

Performing numerous cost segs on everything from large sports stadiums to bank branches to restaurants and looks like just about everything in between. In addition to cost segregation, Bobby works in green energy tax credit space, maximizing credits and energy efficient homes, solar energy and alternate fuels. Thanks for being on the show today, Bobby.

[0:01:58.8] BT: Yeah, thank you for having me.

[0:02:00.7] KR: This is good, I don’t think we’ve had anybody to really focus on cost segregation on the show. I think it’s important for every investor to understand, it’s kind of one of the main tools in the toolbelt of an operator, right, or multi-family operator to be able to drive value and create value. Glad you’re here today to really dig in and share with our listeners what exactly that is because it sounds very complicated.

Before we get started, why don’t you tell us a little bit more about yourself and your background?

[0:02:30.6] BT: Yeah, absolutely, I appreciate it. I came right out of college and went to work at PricewaterhouseCoopers where I got pretty quickly folded into the tax incentives and tax credit space. I did that for several years, moved up into higher rolls throughout and got to where I was building the teams out down in Atlanta. I got put on a few special projects just like you said earlier, you haven’t had a cost segregation guest, cost segregation’s kind of an under surveyor even at those larger firms. I was then asked to move out to Denver and start a new group there doing cost segregation because they actually didn’t have a team out in Denver.

That was about the first 10 years of my career as you mentioned and then as I was building the team here in Denver, I decided why build a team for this large company, why not go out, build my own team and try to take this tool down to every market here because again, you said you hadn’t had a guest and I think that’s because it really is an underserved area. Yeah, that’s my quick background, it was all at PWC up until founding CENTIV.

[0:03:46.8] KR: Explain to us what cost segregation is?

[0:03:50.6] BT: Yeah, at the highest level, cost segregation is a tool that allows you to accelerate your depreciation to lower your taxable income. To put a little more color to that, when you purchase a building and you have income, you don’t suddenly get to write off that income. You still have it, you’re still taxed on it, you would slowly over time recoup that and have an expense but it will take 39 years so if you go and spend a million dollars on a building, it’s going to take you 39 years to remove that from your books so to speak.

What I do with the cost segregation is I go in and I pull out, in addition to the 39-year property that does exist, that’s your foundation, your walls, your roof. I go in and pull out all the other short life assets, your five-year assets, your seven year and your 15. Bring all those forward, depreciate them quicker and allow you to expense that money as quickly as possible.

[0:04:48.8] KR: Got you, why is all that important to investors?

[0:04:53.3] BT: For investors, especially with passive investors, there’s only so much you can do to lower your passive income. This is a really great tool for doing that with – it does follow those kind of passive laws, passive gain rules but with your passive activity, it allows you to get rid of – it’s different for different situations but it allows you to get rid of a lot of that passive income immediately especially if your passive income is related to real estate, which these tools are specifically built for.

[0:05:27.0] KR: Got you. Give me a little more color, walk me through, you said you’re taking these assets, five-year assets, 15-year assets and you’re bucketing these, et cetera but say, you walk into one of my multi-family properties, right? What are you doing when you’re there?

[0:05:46.1] BT: Yeah, it’s all about looking at that building, not as one big unit of property. Your generalist CPA is going to look at that building as one building, one 39-year piece of property and what I do is I try to look at it in terms of all the things that make up that building, right?

We do that mostly through the construction cost detail but when we’re going through the building, we’re looking for those things and what they typically are is if you think of an empty shell of a building, that’s your 39-year property, if you think of a very boring warehouse in the middle of nowhere, that’s a lot of 39-year property.

When you talk about these multi-family housing units, they have a lot in there that’s not building and it’s a wide variety of things and it can even be things like your electrical system. Just to give a little bit of an example here, the electricity that keeps the lights on in your hallways and corridors, that’s all that 39-year building stuff.

Now, the electricity going to a refrigerator or stove or a business, gosh, you know, if you have computers in a business area for your people living there, those types of things, the electricity that supports those is actually short lived. We go in and do an engineering analysis, look at your electrical systems, even plumbing, different pipes that go to a bathroom are treated differently than pipes that go to a sink. 

It’s really digging out everything. There’s some low hanging fruit too, carpet, blinds, decorative, lighting, chandeliers that we also obviously grab but there’s a lot hiding in there and we make sure we get it all.

[0:07:31.7] KR: You’re taking the components of a building, are you breaking a building down into its components, right?

[0:07:37.4] BT: Yes, absolutely.

[0:07:39.0] KR: These different component parts have different depreciation schedules. For example, carpet, right? What’s a carpet depreciation? Like five or seven years?

[0:07:49.7] BT: Seven years on carpet.

[0:07:50.6] KR: Seven years, right? You’re able to depreciate that carpet over a seven-year period versus over – I think multi-family is like 27 and a half, it’s like a 39 and a half for like a commercial building. I may be right but being able to accelerate off of that versus having to take that carpet and accelerate that and/or depreciate that carpet over 27 and a half years. I mean, 27 and a half years, you probably have replaced that carpet like five to eight times?

[0:08:20.0] BT: Absolutely.

[0:08:20.8] KR: Maybe even more than that. You’re able to really – seems like move these things, depreciate these things on the life of the specific item versus of the entire building, right?

[0:08:32.9] BT: Absolutely, that is the entire goal, right? Move as much of that property into their short lives as possible. Yeah, you’re exactly right. You want to – accelerating that depreciation is what drops your taxable income. That’s the goal of almost everything I do and I don’t just do cost segregations but the other, you know, the tax credits that I do. Everything is about lowering that taxable income in that tax liability, you know? Write smaller check to the government at the end of the year.

[0:09:03.3] KR: Yeah.

[0:09:04.1] BT: That’s my goal.

[0:09:06.4] KR: There’s other benefits related to kind of current tax laws of doing a cost segregation, right? Of kind of accelerating these items, being able to take the depreciation kind of in year one, right? Can you explain how all these things come together in terms of current tax environment and how that can really be – it’s really kind of a multiplier effect that goes on.

[0:09:29.7] BT: Yeah, there’s a few benefits to come out of these projects. One, you’ve hit the nail right on the head, right? You’re bringing everything forward, accelerating it. Then I do want to make it clear that when I say five years, seven years, 15 years, that’s actually misleading because there’s bonus depreciation, which right now is running at a hundred percent. That was part of Trump’s tax plan in 2017 made for some really favorable changes for cost segregation and you know, that’s because Trump was a developer, right? 

When you have a 15-year piece of property, you’re not depreciating it over 15 years, you’re expensing it in the first year. Anything under 20 years is eligible for bonus depreciation. Everything that we move is immediately written off under a hundred percent bonus depreciation. That’s going to go away in a few years so this is a really good time to be taking advantage of cost segregation as those tax laws begin to fade out and new ones come in we’ll see how favorable they are, but right now is a fantastic time to take advantage.

[0:10:42.0] KR: Right, because you’re not only moving it up, right? You’re moving anything under 20 years up to year one, right?

[0:10:47.3] BT: Yes.

[0:10:49.6] KR: You’re also doubling that if I’m right, isn’t that right? With the bonus depreciation?

[0:10:55.4] BT: Well, if you moved, let’s say we have a five million dollar building and we move, let’s keep it simple, we move half of it to short life, 2.5 million dollars, in that first year, without a cost seg study, you’re probably going to see one and a half percent depreciation on the whole thing, one and a half percent of five million dollars, but with a hundred percent bonus, we’re going to see and you know, let’s say we reclass 50%.

We’re going to deduct 2.5 million dollars off your books in that first year. Complete half of your building is immediately written off, you’ve lost that from taxable income so let’s say you made 10 million dollars that year, now you’ve only made 7.5 million dollars when it’s time to write the check.

[0:11:46.8] KR: Yeah, that’s how it’s so powerful for investors, right? Because the income that you’re receiving from the operations of the property and even as a passive investor is, and I’ll speak from my own experience because I know everybody’s tax situation’s different but for my own experience, it’s completely offset any of the taxes I would have to pay on the income I’ve received. The depreciation’s completely offset that and really, in my experience, that last largely through the entire hold period of the deal.

You’re really not paying taxes on that income through the hold period and there’s depreciation catch-up when you sell but it really is a huge value and especially if you start – if you have other real estate or other passive investments as well because you can apply those expenses kind of across that whole bucket and you can say in other investments as well, right? Really powerful if you are buying, if you’re selling and buying another property in the same year to be able to offset capital gains.

[0:12:44.7] BT: Yeah, as your portfolio grows like you mentioned, one property can take out a lot of that income from your other passive investments so a really great point there and yeah, it’s a strong tool, it’s a really strong tool. Again, I keep coming back to this but it’s being underserved in this market.

[0:13:05.8] KR: Yeah. Are you guys, are you physically going onsite and like itemizing. If I have – you mentioned using construction records but say it’s value add deal, we’re buying a property and we – the propertie’s existed for 30 years, right? We want to do a cost seg, are you physically coming onsite and itemizing the things that you’re seeing in this property?

“Okay, here’s the light fixtures, here’s the carpet, here’s that” in creating kind of the schedule, is that how you do that? How do you go about this?

[0:13:36.3] BT: Yeah, the situation you kind of spoke to there, if you purchased a building and you know, not many people are going to hang on to all that cost detail through the years and they’re certainly not obligated to pass it over to someone they sell a building to. I’m talking about the general contractor from the original bill. In the absence of that data, we kind of do exactly what you just said, I will show up with my pen and my paper and my – my gosh, to measure – 

[0:14:05.6] KR: Measuring tape?

[0:14:05.7] BT: My measuring tape, Jesus, I apologize for that, I just blanked. My measuring tape and yeah, we’ll go and what we can’t find online because a lot of his stuff is public, you know, you can go to county assessor’s websites and pull some of the old blueprints and stuff but in the absence of that, yeah, that’s exactly what we do, we’ll go and measure. We’ll be counting certain types of outlets, be counting light fixtures and then we use a marshal evaluation systems, which some people in the real estate world are familiar with, it’s the same thing appraisers use.

When an appraiser would show up to appraise a building for you, we’re using some of the same tools. I’ll rebuild that building essentially on my desktop, same way an appraiser would using the measurements I’ve taken but then on the back end, what I do is I then go and cost seg it. As soon as I make that building up of all these different factors and then I start bucketizing those cost.

[0:15:01.8] KR: Got you. 

[0:15:03.6] BT: I also, you know, on the other side of that where all the construction cost detail is available, I still go to the sites and that’s because a lot of times some things won’t pop out on cost detail, right? I might walk into a multi-family lobby and see all these decorative woodwork on the ceiling, wall paneling, a nice fireplace, all these things that don’t jump right out of the cost detail but when I see them, then I know I need to go find it in the cost detail. Start asking questions.

I always do a site visit for anything above a single-family home type deal.

[0:15:40.2] KR: Yeah. There’s clear tax savings and tax reasons to do this but it also seems to me that there could be some reasons for me, other reasons for management to do this as well. I mean, it seems like a valuable tool to have this kind of this breakdown of everything that’s in your building and the expected life of these items, right?

How do people leverage that from a management standpoint?

[0:16:06.2] BT: Yeah, it does circle back to tax in this particular example I have for you but one thing that I do or for that most cost seg providers do is not just break out those five-, seven- and 15-year cost but breakout what is your 39-year cost. 

The IRS defines nine building systems. We’ll name them all but plumbing, HVAC, electrical, roof, there’s general bucket. I break that portion of the building out as well so you’re not really seeing any tax benefit upfront because it’s just 39-year property that’s in your roof and 39-year property that’s in your HVAC.

But, I think, I work in a lot of commercial so I apologize for the 39 years, you’re absolutely right, residential real estate 27.5.

[0:16:55.9] KR: Got you.

[0:16:57.5] BT: What will happen and what anyone would tell you is an HVAC system is not lasting 27 and a half years. When that HVAC system breaks and you need to replace it. I’ll have that basis in the HBAC that you can go ahead and know, “All right, we need to write off this $450,000 this year” because we know what we paid for HVAC and we know we’re getting a new one. What will typically happen if you don’t do a cost seg, you’ll just end up sitting there with both of those on your books and then you’re paying even more tax. 

[0:17:31.6] KR: Right, so if something does like in your example, you’re going, “This thing died, I need to replace it” it still has some life left from a depreciation schedule standpoint. You are able to go ahead and take all of the depreciation like essentially write it off exactly the same thing. 

[0:17:48.2] BT: Right, the remaining basis. 

[0:17:50.0] KR: The remaining basis, right? Which is the remaining – the depreciation you have not taken yet I guess, right? 

[0:17:55.4] BT: Absolutely. 

[0:17:55.9] KR: I don’t know how to say that but yeah, the remaining basis and you’re able to take that right away. 

[0:18:00.8] BT: Expense it. 

[0:18:01.5] KR: Expense that, right? Then you are increasing your expenses, which is going to change your bottom like, it’s going to lower your taxes, right? That’s a valuable tool, right? 

[0:18:11.9] BT: Yeah. 

[0:18:12.5] KR: You can do that and how granular can you get as you’re doing that? 

[0:18:16.3] BT: I can get pretty granular, I mean so these typically stop at kind of those nine IRS defined building systems because that’s I mean, they didn’t pull them out of thin air. They’re pretty well defined. You know they’re good, it is good to know much you’ve spent on your roof. Behind that what I also do is break out everything that they last at that level of detail as well. Essentially a deliverable for me is going to be built at the very bottom of the cost detail and it is going to go through different schedules to finally wind up at a summary of the highest level of summary could be four numbers. 

You’re 39, 15, seven and five but below that you are going to know everything that goes into the seven year book end, right? You’re going to have a line item list at everything that makes up your seven year. 

[0:19:09.6] KR: This cost seg and I kind of playing coy here because we do cost segs on all of our properties but if there’s – it sounds like a no-brainer, what’s the reason why somebody would want to do a cost seg? 

[0:19:21.1] BT: Yeah, that’s a good question and I’ll start the answer to that question by saying, we will always look into these factors for you at the beginning of any project. We are not going to do a cost seg on a building that doesn’t need to be cost seg or won’t benefit you. Some of the reasons we might do them, it’s going to depend on your income. You know, if you are not in a profitable state, I mean you can obviously still be making money but if your business isn’t, there’s not a great need to accelerate your deductions, right? 

If you are already not paying tax this year and you are working in kind of a net operating loss, we can certainly do a cost seg and increase your NOLs because they carry forward but a lot of people don’t have an appetite to go spend money on something when they’re not paying taxes and I completely appreciate that, so that would be one. We would just want to know, “Hey, are you taxable?” Another big one is going to be how long are you holding onto this building. 

You mentioned it earlier, depreciation recapture. That’s something you have to factor in. You know, if you are going to buy this building and sell it in the next year, the depreciation recapture is really going to take away a lot of the benefit that we pulled out to begin with. So it’s how long you’re keeping it and how taxable you are, are you passive or active? Now, those to me are really the two biggest factors. In my opinion every building should be cost seg. 

Every commercial income producing building should be cost seg, so no real style of building. Like I said, I used to cost seg warehouses out in the middle of nowhere or distribution centers. Now they’re not going to get the same benefit but they’re still benefit and the return on investment is always favorable. 

[0:21:06.8] KR: Yeah, no absolutely and to that point, return on investment, what does a ballpark of cost segregation study costs? 

[0:21:15.8] BT: Cost segregation can vary greatly and I actually really like to tell you about this kind of new tool that we’re doing to lower these costs as much as possible. 

[0:21:25.7] KR: Sure. 

[0:21:26.3] BT: But right now, the lowest cost seg, let’s say for a multi-family housing, you know that’s again, there’s a lot of variety there. I’ll say a $4,000 project ongoing right now and an $80,000 and one is a big headquarters and one is some lawyers who opened up. They kind of pooled their money, they’re different firms and they bought a nice little house or a nice – it’s larger, so that one is running about four grand. Doing a big headquarters for a larger US based corp, big headquarters down in Atlanta and that one is 80,000 and it is all just about the time that it takes. 

It takes less time to decipher through all the cost detail on a smaller office than it does a 60-story headquarter. Now that new tool that may appeal to more of your listeners who don’t have a $300 million headquarters is a way that we’re trying to bring this, you know, this tool of cost segregation to every market tier and this would be more for maybe your small office but more so for an investment property, you know one for each. 

If you own five, do it five times. If you own one, it’s just the same but what it does is it allows you to take a little bit of a role in the cost segregation. You’ll be asked to kind of fill out, you know provide some information, even take some photos, basically supply us everything we need to do our cost segregation in a way that’s as effective as possible and as efficient as possible so we can turn it around at a much lower price and so that would be again, it’s not fully developed. 

We haven’t run it through the ringer to make sure but our goal is to keep that somewhere in the 800 to a thousand dollar range so you can do a cost seg. Again, a little bit of a time investment, we’re keeping that dollar investment as low as possible. 

[0:23:34.4] KR: Yeah, that’s interesting. It sounds like kind of a do-it-yourself tool for a cost seg? 

[0:23:39.9] BT: Yeah, we’re calling it a professionally guided do-it-yourself because you will talk to me, you know it will come with a – kick it off with a quick call to tell you what we’re trying to accomplish, why we’re asking for what we’re asking. We’ll be very available for questions as you go. It’s a very supported process but yeah, again, just to keep those costs as low as possible and make this a tool that’s more readily available for everyone in the market for it just like you do a little bit of the work with us and still get a very good deliverable. 

I mean we’ll take your photos, write the memo, put everything into a deliverable that you keep in PDF format and that kind of rolls around the audit preparedness. 

[0:24:27.0] KR: Got you. Well, cool. That is something I have not heard about so I think for smaller investors out there that can be really a valuable product.

[0:24:33.0] BT: Absolutely, it’s for yet. 

[0:24:35.7] KR: We’ve spend a lot of time talking about cost seg and I think it’s great information but I know it is not the only thing that you do. Tell me a little bit about these green energy tax credits and how do we take advantage of those? 

[0:24:47.4] BT: Yeah, green energy is a really powerful tool and that’s because it gets a lot of support in DC, with the green energy, the first major difference here is we’re talking about tax credits, whereas with cost segregation, we’re talking about increased deductions. Where cost seg will make it look like you made less money, tax credit is just the government giving you money for doing something that they want to encourage you to do. 

The best one and the most powerful one is I think called 45L and it is fantastic especially for multi-family housing and just to be brief on it, 45L is a home or energy efficient home tax credit that says it was created in 2006 and so the bar is set in 2006 and you have to beat the energy standards of that area by 50% or more. If you’re building in California, you have to do it by their new standards. They’re 2020 or ’21 standards are already 50% higher so you’re going to qualify just because of where you’ve built. 

That is not the case in every state but if you beat those standards, then you are eligible for $2,000 per door. If this is a single-family investment home and you own one, it’s $2,000. That’s great, it’s a $2,000 tax credit, it may still be worth doing but if you own or if you are invested in a multi-family housing, let’s say you have a 160 doors in there, we are talking about $320,000 tax credit. Really powerful tools, they do require a HERS-certified engineer come out and visit the property, which again, kind of takes away from that single-family home because you do have to have someone come and visit that property. 

It is much easier to get someone to go to a multi-family housing but in all stands, a very powerful tool. We’re talking, you know, tax credit in a large amount and it’s been extended. 

[0:27:02.7] KR: Is this something you can only do on new construction or is this something that you can do on a building that already exists? 

[0:27:08.5] BT: Yeah, so you would have to do renovations that took you from not making it to making it if the building existed. This is a tax incentive for kind of the developer of the property. If you’re invested in a firm that’s developing the property, yes, you can get it. If you purchased a property, it’s not really for that group, so this is more for the builders or the developers and being a part of that investment side.

[0:27:38.1] KR: Got you. 

[0:27:39.4] BT: You can do both of these together. You can do a cost seg on a building and take the 45L credit, so nothing is saying that you can’t. They work well together because you would actually remove the basis from that 27 and a half year bucket, where you know, you take the $2,000 per door, you reduce the basis out of your 39-year property. You really are in a sense getting to kind of double-dip in a way but not really.

[0:28:10.5] KR: Got you. Well, awesome. Two really good programs, I think good programs even if you are not an active real estate investor to understand and be able to use to evaluate deals, right? I mean you want to know are your sponsors in the right situation, are they leveraging these tools, right? I mean cost segregation there is not a lot of scenarios like we talked about where it doesn’t make sense to do a cost segregation especially on larger properties, right? 

Then the other one is a little more niched but if you are investing in new development, I mean something to make sure that the sponsor is evaluating, right? At least understanding that the strategic decision was made to go one way or the other, right? 

[0:28:52.1] BT: Yes, so it is a good indicator that you know, all the – everything is being turned over and checked and seeing how much value can we bring our clients as the sponsors and that is a good measuring point. It sounds like you do it on all your properties, which is fantastic. 

[0:29:08.3] KR: Yeah, very good. Well Bobby, thanks for sharing all of this information with us. Before I let you go, I want to bring into our keys to success round. I’ve got a few questions I’d like to ask you. First one is, what is the one question that every investor should be asking their deal sponsor? 

[0:29:26.3] BT: Well, I think if you are asking me that question we’d probably have to come around to how optimized are we for our taxes. You know, I think a lot of times that kind go into a black box with these sponsors and you know, that might not be a question you think to ask. I think it’s an important question to ask, you know, are we doing everything we can to keep our passive income at zero? 

[0:29:48.7] KR: Right, yeah I think making sure you’re asking that they’re doing a cost segregation study, right? 

[0:29:53.9] BT: Absolutely, yeah. 

[0:29:55.0] KR: Make sure they’ve got budgeted. 

[0:29:57.0] BT: Or if there is 45L opportunity, are we taking advantage of that. 

[0:30:01.3] KR: Yeah or if it’s a new one, yeah absolutely. 

[0:30:03.4] BT: Absolutely, for sure. 

[0:30:04.2] KR: What are you most proud of in your career? 

[0:30:06.2] BT: Oh my career, I have to say starting this business. You know, you and I spoke for a moment before we got started here. You’re also an entrepreneur, there is pride in that. You know, my grandfather owned his own business, my dad owned his, plumber and then lawyer and now I’ve got mine as a tax consultant and I’ve been enjoying it. I’ve got some pride in it for sure. 

[0:30:29.3] KR: Congratulations on doing that. What books should everybody be reading? 

[0:30:33.2] BT: I read a book that helped me out and it was the advice of a former kind of – someone I looked up to at PWC and helped me kind of shaped my career and it’s called How to Win Friends and Influence People and it is actually quite an old book but it kind of teaches you how important relationships are. Obviously in your personal life but in your business life, in everything that you do, if you can manage to spend a little bit more time on the personal side of things, it can do wonders for you in terms of your success and in my opinion, your personal happiness. I think making those strong relationships is very free on all fronts in my opinion. 

[0:31:18.3] KR: Absolutely. Yeah, absolutely. That is a great book, I’ve read it and very valuable and it is kind of the old school but still relevant to today. What is your number one key to success? 

[0:31:31.0] BT: I think it has to come back around to kind of that same area. I mean being small business owner, it’s all about networking and connecting with people and I found when I was at PWC, I kind of lived in a little bit of a bubble and didn’t even realized it. I had my coworkers, work came in. We had a fun little network but I didn’t really have a network outside of my working bubble and I found that that has been the most important thing since I’ve left. 

I’ve met some of the greatest people I never would have met and you know, when you find people and you make a real relationship with them and they become people who are willing to help you, it’s unbelievably powerful. 

[0:32:16.3] KR: Yeah, absolutely. I mean networking is key, right? 

[0:32:19.8] BT: That’s how I feel. 

[0:32:22.5] KR: Awesome. Well Bobby, thank you again for coming on the show and providing so much value and education for us. If folks want to get in touch with you or learn more about what you’re doing in CENTIV, how can they reach out? 

[0:32:34.4] BT: Yeah, so I’ve got a website, CENTIV and it’s a dot tax, so centiv.tax. All of my contact information is on there as well as you know, a good list of services, it’s what you would expect from our website. You can reach me through there. I am also very active on LinkedIn. I encourage anyone who is listening today and wants to learn more to connect with me on LinkedIn and also follow CENTIV’s LinkedIn page where you know, we do posts about minor changes, some opportunities, things like that that you can keep an eye on and if you’re okay too, if anyone reaches out to you and wants my information, I’ll make sure you have all my material too so if anyone asks. 

[0:33:23.1] KR: Yeah, absolutely and we’ll make sure that everything, the website and contact gets posted down in the show notes so as folks are listening, they can just click on it if they want to learn more. 

[0:33:33.9] BT: Yeah, absolutely. 

[0:33:35.2] KR: Thanks again Bobby, have a good rest of the day. 

[0:33:37.7] BT: Yeah, I appreciate it. You as well, thanks for having me. 

[0:33:40.4] KR: Absolutely. 

[END OF INTERVIEW]

[0:33:41.6] KR: Thanks for listening to another great episode or Ritter on Real Estate. Hit the subscribe button to make sure you don’t miss out on the content that will make you a better investor. Also, visit kentritter.com for articles, videos and tools curated just for passive investors. Until next time, this is Kent Ritter on Ritter on Real Estate. Now go out and invest like a pro. 

[END]

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