At Simple SEG, we of course provide cost segregation services. For $299, we provide cost segregation studies for residential rental properties with a cost basis below $500,000. We do not provide cost segregation for commercial, industrial properties or apartment buildings.
For small properties, we believe that we offer the best solution for investors. But we are a little biased. But we get questions regarding other cost segregation providers. So we decided to do a comparison of some of the players in the market.
We examined the large traditional firms, but then also took a look at other niche providers (like us). We will not give you our opinion of who is the best. Our goal is to stick to the facts and refer you to the websites of many of our competitors. This will allow you to do your own analysis. The ultimate goal is to provide you a valuable resource so you can make an educated decision. It’s as simple as that.
The following are a list of questions that should be answered by cost segregation firms:
- What is their track record and are there any property types they specialize in?
- Do they offer support in the case of an audit?
- What is the pricing structure and is it transparent?
- How long does it take to complete an average study?
For companies listed below this is not meant to be an endorsement. All firms have their own strengths and weaknesses. I also know clients who may speak highly of a certain firm, but have other clients that may have not been as pleased with the same firm.
At the end of the day, you need to do your own due diligence before you engage a cost segregation firm. Make sure to ask the right questions and get it in writing in advance.
Realize that most firms on this list will provide you with an estimate of your tax savings. This may come in the form of a formal proposal or simply an illustration of tax savings. In either case, get as much information up front before you engage a company.
Of course, we are not able to review every provider in the space. But we will examine the biggest providers. So let’s jump right in.
Best Cost Segregation Companies: Bedford
Bedford is an independent firm that does cost segregation and also other tax and energy solutions like R&D credits. They have worked in the large commercial space since their inception in 2002.
They tend to do larger properties, but have done smaller leasehold improvement projects. Their expertise runs across many types of real estate like office buildings, self-storage facilities along with complex manufacturing facilities. Check out more about Bedford here.
Cost Segregation Comparison: Ernst & Morris
E&M is one of the largest and oldest cost segregation companies. Per their website, they claim to have performed over 18,000 cost segregation studies. They are located in Marietta, Georgia, but have performed studies in all 50 states for CPAs, tax professionals and real estate investors.
I have reviewed reports issued by E&M and I believe them to be a very reputable firm. I have clients that have been impressed with their reporting and analysis. They have tended to focus on large properties with higher fees associated with competing studies for sizable properties. Accordingly, this may not be the best firm for smaller residential properties. Find out more about E&M’s process, fee structure and reporting here.
Top Cost Segregation Firms: Cost Segregation Services
Also known as CSII, these folks are large players in the commercial space. They claim to have completed over 13,000 studies in the last 10 years. They can do properties in all 50 states.
They also can do properties as low as $150,000, even though they specialize in higher dollar properties. The cost/benefit for a $150,000 study usually will not make as much sense with them.
I have worked with some associates of the company and they have always been respectful and diligent. Check out CSII here.
Best Cost Segregation Companies: Cost Segregation Authority
Cost Segregation Authority was established in 2006 and has completed thousands of studies. One nice advantage is that they have offices in several different states. Most of these states are in the west and southwest.
I worked closely with them on a large $10 million office building. This was when tax reform just kicked in and there was time spent interpreting the tax law. It was a great experience and the report came in close to the original proposal. You can take a look at Cost Segregation Authority here.
Top Cost Segregation Companies: Madison SPECS
This firm is another player in the large commercial space. They seem to have a big presence in the industrial real estate space. I have had a few clients engage them to do some large properties on the east coast.
It seems my clients have been happy with the service they have performed. They can give you an upfront proposal so you will have a good idea on the process and fee structure. You can find out more about them here.
The Results?
In comparing the popular firms, it becomes clear. They all tend to offer quality services for larger properties like office buildings, warehouses, industrial projects and other commercial buildings. They may not be as suitable for small rental properties like single family homes. But they are all effective and quality firms based on my experience.
I have clients who tend to believe that different firms “specialize” in different types of real estate. As such, they use one company for office buildings, a separate firm for self-storage and maybe a different company for residential real estate.
So which is the best firm?
The advantages of cost segregation are clear. I think that you already know that cost segregation is worth it. I can’t tell you which firm I think is the best one (again, I am a little biased). All the companies will have pros and cons. But with so many options in the marketplace, how do you select the best one?
First, realize that cost segregation firm offerings can be revised and updated. But at the end of the day, if you need a cost segregation study done for your average $2 million commercial building, you probably can’t go wrong with any of these companies.