Jennifer Joyce is an experienced real estate professional specializing in Texas. Fund Management and Asset Management span over 20 years of performing various real estate investment activities. Jennifer started with single-family investments and then transitioned to commercial real estate in 2007 with an emphasis on large value-add opportunities. She has an excellent reputation for building relationships with brokers, professional services, investors, and vendors. Puts a great amount of focus into building a team to acquire and operate properties. Dedicated to providing transparency, well-thought-out business strategies, and financial reports to her investors. Great promoter of community development activities that take pride in safe and livable solutions.
Episode Highlights Here:
Jennifer Joyce:
We saw this before the Trump Tax law kind of in the SUV or large trucks space, and it was called Section 179, where you could pull the whole value of that truck per purchase into the year you bought it in.
Pierce York:
For those people who don’t know what a cost segregation study is, do you want to explain that?
Jennifer Joyce:
Sure. So we hire a team of engineers that go and pick apart our buildings, and they put them into buckets based on what we’re talking about, you’ve got sticks and bricks, you’ve got paint and countertops, and you’ve got everything in between. Those can actually be bucketed into five-year, 15-year, or 27 and a half-year buckets for depreciation purposes. But under the Trump administration, he actually created a new rule that allows us to pull a lot of that depreciation forward into the first year. And so now, this is a strategy that people use across the whole commercial real estate space. Sometimes even in single-family portfolios, where those engineers can tell you how much of those depreciation dollars can be brought up into year one, we saw this before the Trump Tax Law kind of in the SUV or large trucks space, and it was called Section 179, where you could pull the whole value of that truck per purchase into the year you bought it in. So a lot of business owners would go buy a new vehicle and then depreciate 100% of that asset in the first year. It’s very similar to that. The one problem with what we’re doing is it’s going to taper off after this year.
Pierce York:
So for those of you who are possibly new to the show, just a quick overview of the depreciation. Typically, you have a building that you can write off a loss at, 27 and a half years. It’s called straight-line depreciation. It basically allows you to put the stuff that’s not going to last 20 years, like a light fixture, in a different bucket, as you said, and write it off earlier. So you can take some more upfront, and you deal with less on the back end. So now, since you kind of talked a little bit earlier about your ability to anticipate and whatnot, I’m gonna dive in, because I’m really curious, what are you guys planning to do after this bonus depreciation kind of starts tapering off, and how are you guys pivoting?
Jennifer Joyce:
So a lot of it is using the tax-free strategy called Cash-Out Refinance. So we have a lot of assets that we’ve implemented new efficiencies into, we’ve pulled the bad efficiencies out, and we’ve created more value in these properties showing in the net operating income. Now we have an appreciated asset that we can either sell or cash-out refi will sell is a tax event, the cash-out refi is not a tax event. So it makes sense going into this next part of the economic cycle if it’s possible to protect the asset by not pulling too much out of the asset for a cash-out refi. But some of it, those dollars can be given back to the investors tax-free and they can take those dollars and reinvest them elsewhere.
Pierce York:
That’s an awesome strategy.
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About Jennifer Joyce
Jennifer Joyce is an experienced real estate professional specializing in Texas. Fund Management and Asset Management span over 20 years of performing various real estate investment activities. Jennifer started with single-family investments and then transitioned to commercial real estate in 2007 with an emphasis on large value-add opportunities. She has an excellent reputation for building relationships with brokers, professional services, investors, and vendors. Puts a great amount of focus into building a team to acquire and operate properties. Dedicated to providing transparency, well-thought-out business strategies, and financial reports to her investors. Great promoter of community development activities that take pride in safe and livable solutions.
