Episode 345: 12-03-15
On this week’s show, Matthew Rotolante shares how CCIM helped him build his business, we learn how to save money by going green with Don Weidenfeld and Julio Gonzalez, and Thomas Handler tells us what family offices need to do by the end of the year.
Matthew Rotolante, CCIM, SIOR – Managing Director – Sperry Van Ness / South Commercial Real Estate Advisors.
Rotolante is Managing Director of the Miami office of Sperry Van Ness, a national commercial real estate advisory and brokerage with over 195 offices nationwide and $9.1 billion in sales and leasing in 2014.
Sperry Van Ness provides leasing, sales, management, and valuation for commercial property in the asset classes of industrial, office, retail, multifamily, hospitality, and land. Sperry Van Ness Agents are called Advisors due to their client-first approach to real estate.
Rotolante was ranked the #1 Advisor in Florida and #7 Nationally in 2014. He is the Past President of the Miami CCIM chapter.
We discuss how he views the South Florida real estate market and how CCIM has helped him to build his business.
Green Energy Solutions
Julio Gonzalez is CEO of Engineered Tax Services – one of the only qualified professional engineering firms that have a staff comprised of licensed engineers, LEED Accredited Professionals, and tax experts ranging from CPAs to a former senior IRS executive.
We discuss green energy solutions and how to modify your building to save money and pay for it through green energy tax credits.
Family Office Year-End Strategies
Handler has extensive experience in the analysis, design and implementation of domestic and international business planning, financial and estate planning, asset protection, family office compliance and advanced tax planning strategies.
Handler is an advanced planning attorney focused on the analysis and structuring of sophisticated estate plans and family offices, and handling taxation and business planning issues for business owners, executives, professional athletes, celebrities and family offices. Handler has spent the summer meeting with some of the world’s most prominent families.
We will discuss family office year-end strategies.
Episode 345: 12-03-15 (To download, right-click and select “Save Link As”.)
Jim Fried: We’ve got a great show for you today. It’s the top of the month. That means that we’ve got our CCIM voice in this week. We’ve got Matt Rotolante, he’s a CCIM, SIOR, he’s the Managing Director of Sperry Van Ness here in South Florida. We’re going to talk about what CCIM means to him, a little bit about his family and of course, we’re going to talk a little bit Miami commercial real estate also. We’re going to have Thomas Handler on. Tom is the partner, the chairs the Advanced Planning & Family Office Practice at Handler Thayer there in Chicago. We’ve got a whole bunch of great clients. We’re going to hear what Tom recommends to do by the year end if you’re a big time family officer, if just a high network investor. We’re also going to have Don Weidenfeld and Julio Gonzalez, Don at Magnum Energy Solutions, Julio, the CEO of Engineered Tax Services and also has his own family office. We’re going to talk to these two guys about how to make money on your real estate, how to save money on your real estate when you go green. We will be back after this with our lead-off hitter, Matt Rotolante. Back after this.[commercial break]
Jim Fried: We’re back, we’re here with the CCIM voice, Matt Rotolante. He’s the managing director of Sperry Van Ness / South Commercial Real Estate Advisors. Matt is the Managing Director of the Miami office of SVN. Matt was ranked the #1 Advisor in Florida and #7 Nationally in 2014. He is the Past President of the Miami chapter of the CCIMs. Matt, welcome to the show.
Matthew Rotolante: Thank you, Jim. Glad to be here.
Jim Fried: I know that we’ve got somebody that’s holding that wants to say hello to you but before we get them, what was the difference between your administration and the current administration of CCIM? Let’s bring on Frank Rodriguez. Now, Frank, he got to let him answer first.
Frank Rodriguez: Absolutely, I love him. How are you doing, Matt?
Matthew Rotolante: First off, Franks has been doing a wonderful job. I had the same job a couple of years before he at it and it was during the recession so it was a little more difficult at that time but I think Frank has brought some wonderful energy to the position and has been some great growth with the program, so great job, Frank.
Jim Fried: Frank, what’s going on next week for the CCIMs?
Frank Rodriguez: For the CCIMs and for our listeners, we have a networker, it’s our end of year event, it’s going to be a bowling chain in our own little backyard, little Havana. And that’s going to be Tuesday, starting at 5:00 and we hope to see you, Jim, and it’s going to be a great network and opportunity to meet all the other CCIMs.
Jim Fried: I’m bringing at least an inch of business cards, give and get. That’s what I call, that’s what I say about it. Frank, we love you man. So, thank you for helping us facilitate this and we really appreciate all the time that you guys give us.
Frank Rodriguez: It’s been a great year. Matt, take it away, you have a great show.
Jim Fried: Wait, Frank, this is your last appearance as president.
Frank Rodriguez: Well, that is true. As technical president it’s my last appearance yet.
Jim Fried: Thank you Frank, you did a great job. Frank, we love you. Brittle take over, he’s going to do great and now on with the show. We love you, Frank, thank you for everything.
Frank Rodriguez: Thanks again.
Jim Fried: Now Matt, let’s talk a little bit about some of the topics that we wanted to cover today. I know we wanted to talk a little bit about why you got a CCIM, why don’t we start with that?
Matthew Rotolante: CCIM is very professional organization. It’s like an aftermarket education for commercial real estate. I studied finance on the grad, economics in my Master’s program and I didn’t really get the chance to apply a lot of those concepts.
Jim Fried: Me neither, in school, what’s that? I mean, here’s all these tools, now go out and use them. You never even worked on a car.
Matthew Rotolante: And that’s what CCIM does best. I really shows you how to apply financial concepts, present value, analysis, gap analysis and some other very specific things, the commercial real estate and to do it in a real time way, a lot of case studies involved in the curriculum. So you can basically take the course, come back after a week long course and meet with your clients and apply the knowledge literally the next week after you learned it. It’s funny because as a CCIM I spent a lot of money on my Master’s program at the University of Miami but the CCIM logo is what ends up on my business card. And that’s professional designation and the community really respects that. People really are looking for CCIMs so it’s a great resume builder. I’m also the University of Miami Alliance Chair so people that are going through that Master’s program will get credit towards the CCIM coming out of it. And then also, there’s a lot of ethical guidance as part of CCIM which is very powerful, you see it in our group locally here. We all share the knowledge, we all get along, working on deals together, share in the wealth, so to say. So it’s a really special group.
Jim Fried: I don’t think that anything could say it more importantly that it’s a group that you like to affiliate with that helps you build your brand and do deals and I guess before better for your clients.
Matthew Rotolante: Exactly. There’s a lot of Haves and Wants that go on each of the meetings so people are actually doing deals there, a lot of shared knowledge at each, at the lunches we usually have a vendor come in and explain to us different concepts whether it’s 1031 Exchanges or new technologies that are coming out, disrupted technologies in commercial real estate. All these things are important for your clients to know so it’s good for us to have that source of knowledge.
Jim Fried: I know that you wanted to talk a little bit about Sperry Van Ness, tell us a little bit about SVN.
Matthew Rotolante: When I was joining CCIM, two of the things I was looking for was a national network of individuals, CCIM has about 9000 professionals globally. And also the ethics were something that I really liked. When I joined Sperry Van Ness, I got that network also. It’s a national network, we have 192 offices. But the ethics took it to the next level because there’s what we call the SVN difference, there’s two main concepts there, one is that you split your, you co-broker your fees 50-50 with the co-broker and that you show the property to the entire market place. And by doing so you’re incentivizing competition and maximizing value for the customer which can mean a lot to the equity. You get a 10% bump on your price performance and if the person has 20% equity share in the property, that’s almost 50% difference in what he gets at the end of the day. So it means a big difference to the customer.
Jim Fried: I want to talk about, we’ve talked about the CCIM brand, we’ve talked about Sperry Van Ness brand, let’s talk about your brand for a second. Let’s talk about what really makes you tick. Tell me a little bit about that.
Matthew Rotolante: I think to do commercial real estate properly you have to be very passionate about it and I kind of got it in my blood. My family has been doing it since 1928 here in town. They’ve bought and sold over 2000 acres. When we’re buying properties back in the 30s we’re doing taxing purchases and you could look at a map of Miami Dade County back then and there was maybe three cities. If you look at the folio numbers, the first two numbers are the city so 01 is Miami, 02 is Miami Beach, 03 is Coral Gables so there wasn’t many other numbers after that back then. And if you could’ve thrown a dart at a map you didn’t know where the growth was going to come. But my grand-granddad, what he was able to do was very ingenious. He was able to recognize the avenues and the streets would end up, the major quarters would end up on the section lines. So he liked to purchase along the section lines. He also recognized that the meets and bounds surveying grid was a linear grid and that the earth is curved so there would be a rounding error every once in a while. He actually purchased the property back then that he picked up the additional 30 acres because that rounding error happened right there on that property. He also like to buy pine land because back then the canals weren’t cut so the areas would flood and he know that if the pin trees were growing on that land it was high area. So a lot of those little tricks came around. So I’ve tried to do that.
Jim Fried: Was he a Rotolante?
Matthew Rotolante: He was a Rotolante.
Jim Fried: Where did he come from?
Matthew Rotolante: Actually that was Henry Chester Mourad and that was my dad’s side on the side of my grandmother and he came from Kentucky. He was a self-trained, he started out as a chauffeur and basically the kids would have their school books and then they would pass them down to him and he had to wait in the car, wait for them to get back from where he was chauffeuring them and so he would read the books and he was self-taught that way. So, I never got to meet him, he passed away before I was born but I’ve heard a lot of great stories and gotten to see the benefits of his life.
Jim Fried: Matt, we’ve only got a couple of minutes. And I want to make sure we talk about some of the business you’re doing here in town and what you see in the market without soft pedaling your background because my gosh, the way that you focus on ethics in your family, who wouldn’t want to do a deal with you? Now tell me a little bit about some of the deals you’re working on. We’ve got about a minute and a half left and I’ll count it down so you can just go.
Matthew Rotolante: Okay. I’m working on a 330,000 square foot warehouse cold storage. We got some space there if anybody is in need of cold storage. We’re about to close a deal tomorrow hopefully on a 16,000 square foot restaurant, waterfront space on Brickell within a national finance bank. They have some new leadership over there so if anybody is looking for some lending possibilities there, they’re a great bank and then we’re also working on a deal up in Palm Beach on an 11 acre site with Jeff Green, the billionaire and he’s actually hosting a conference starting Sunday called ”Close the Gap” which we’re going to be attending and we’re also donating some money to the cause there. So a lot of deals, $40 million, hopefully we’re going to close this month so we’ll see.
Jim Fried: That’s what the year end is all about, Matt. I’m sure that you’re going to get to close them, I’m sure that your family is very proud of you as I know your peers because I know your peers, I’m one of your peers and I’m proud of you. Matt, if they want to get a hold of you, how do they find you? And speak slowly because we’ve got a lot of Jets fans that listen to the show.
Matthew Rotolante: We’re located in Doral. You can always call me on my cell phone 305 490 6526. We have a great office, great staff, we’ve got about 16 advisors, we’re in all the verticals, retail, multi-family office, industrial so we’d love to help anybody out there that’s looking for some service.
Jim Fried: Matt Rotolante, bedrock of our real estate community, former president of CCIM, now managing director at Sperry Van Ness here in Miami Dade County. Matt, thank you so much for being part of our show today.
Matthew Rotolante: Thank you, Jim. I appreciate it.
Jim Fried: It’s my pleasure. We’ll be right back after this with wealth advisor attorney Thomas Handler, family offices, protecting yourself by year end. We’ll talk about it. Back after this.[commercial break]
Jim Fried: All right everybody, ladies and gentlemen, it’s now time to bring in the man, the myth and the legend, Thomas Handler. Tom is the #1 asset protection guy in the family office space as of today, from the best of my knowledge. Tom, welcome back to the show.
Thomas Handler: Jim, it’s a pleasure to be with you, thank you.
Jim Fried: It’s my absolute pleasure to have you on. And basically, everybody what you need to know is Tom, he chairs the Handler Thayer Advanced Planning & Family Office Practice. Tom is basically the guy who single-handedly is helping me understand the family office market. So, Tom, we need to protect people’s you know what by the end of the year. What are we going to do?
Thomas Handler: The nature of December, and I don’t see this ever changing, is that everyone that should’ve done things or implemented strategies earlier in the year wait to the last minute or alternatively they didn’t realize that kind of condition they’re going to be in and so now it’s time to act. So there’s really four areas that people are focused on. One would be income tax planning overall, second would be charitable gifts which are deductions for income tax purposes, the third would be family gifts which are actually gifts that have both an estate tax and income tax component and then the fourth, defensive measures and compliance designed to protect a long-term wealth.
Jim Fried: So if people who are doing all those things are looking at that, it sounds to me like they can’t just have one person on their team. It sounds to me like they have a team.
Thomas Handler: I think probably in doing any of these projects it requires collaboration. So tackle this without a multi-disciplinary team is not likely to get resulted of family looking for but with respect to the income tax these of particular, you got your accountant and you got your attorney who might have a business CFO or someone else involved. And perhaps your investment people who are helping your determine what you can give or what you can sell, the capture losses and harvest those losses or what should not sell or try to match capital gains and capital losses to neutralize the tax, in fact the both. And in doing that, for the most part, the most impactful strategy is it’s too late, there’s a saying that I learned earlier in my career that said ”After Thanksgiving all the turkey is at the street”. The strategies that people are running around with the last minute are probably those that you shouldn’t be doing because they may not be well thought out and are done in desperation. So if someone is holding up a deal saying like a gymnastic sign, 7 to 1 right off, that’s probably not where you want to be. So for the most part those year end things don’t work but there are some that are viable. And part of the problem with last minute deals is that the majority of the tax benefits, particularly in a business are directly tied the number of months that you’ve been involved in that strategy or structure or plan or technique. So you’re only going to get 30 days or one month benefit if you do it at the ninth hour. That isn’t the case with everything. So for example, benefit plans are executive compensation, these are things that have to be put in place by year end but with respect to qualified plan, you don’t have to fund them until the due day of the tax return including extension. So you can set up a benefit plan you’re in, you may have an opportunity to fund it maybe up to October 15th of next year and yet get a deduction for 2015. So pretty impactful stuff. So I think the kinds of things that people are looking at in particular acceleration and deferrals, so if you’re a cash basis tax payer, you send out your bills late in December so nobody pays you and you prepay all your January expenses as simply as the impact of legally accelerating your deductions rather than waiting the last minute because if you’re right to check on January 1, it’s a 2016 deduction, if you’re right at in December 30th, it’s 2015 deduction if you’re cash basis tax payer and the same thing with the deferral revenue if you send the bills out late, you’re not going to get that money come next year. Agro business and oil and gas are two areas where no matter how high the revenue in most business once you have $5 million in revenue you’re going to be forced onto accrual if you’re not forced on do it some other way or you didn’t elect it. But agro business and oil and gas, they can use the cash method of accounting forever. And so you have the opportunity to get into transactions of the ninth hour and you still benefit from the entire amount spent even though it was done in one month. So those are good year end opportunities.
Jim Fried: Tommy, no, no, hold on a second. So it sounds to me like the best year end tax planning happens at the end of the prior year almost. You got to be all geared up.
Thomas Handler: It tends to be, people are starting now looking at 2016. So the question is if you’re in a project for 12 months or you’re engaged in a structure or strategy for 12 months getting 12 months of benefit a lot better than getting one month of benefit with the exception of those outliers that I mentioned and things like private placement life insurance that allows you to interfere like any insurance policy allows you to defer the revenue it not even deferred. If you’re willing to avoid the income tax on revenue insurance will all put it in your state but assets investment planning insurance company and life insurance policy are simply not subject to income tax. So if you want to do that earlier in the year rather than later to maximize the benefit of that much like making a contribution to an IRA or a pension plan. You can make it in January, you get the full 12 months of earning and the difference over a lifetime the funding your IRA every January rather than every December, that’s a huge amount of money. I think charts on this, it’s quite material depending on your age and the amount that you’re contributing. So, yes, it’s a good time to lay a foundation for next year.
Jim Fried: What are the types or sizes worth of magnitude? We’ve only got about three minutes left and I want to give at least the minute at the end for you to tell people how to find you. So we’ve got a couple of minutes to talk about what is it, how big does a family have to be to really begin to get economies of scale with your type of services?
Thomas Handler: We’re looking primarily people with net worth of $10 million plus. It could be high income, it isn’t just necessarily net worth, it’s high income or growing business but that’s pretty good bench mark. And I’ll mention quickly through this, this is a time of the year to make charitable gifts and annual gifts to family members that will avoid the annual gift tax because of the exclusion so for those who have made their charitable contribution or their gifts for family members, if they’re not done by the end of this year, the exclusion for 2015 is lost, it doesn’t carry forward so now is the time to make those as well.
Jim Fried: We’ve got seriously two minutes left, I want to get a real quick bite-size takeaway and then contact information for you and Handler Thayer.
Thomas Handler: Sure. I think tax planning is better done in a strategic manner and not looking at a particular panacea, one strategy is going to solve all your problems, the combination of using whole bunch of things, IRA, pensions, 529 plan, things that defer tax, things that aren’t subject to tax, they’re just for bonds, things that aren’t taxable in your state, it’s a lot of small things putting together and a thoughtful way that have a large impact over your lifetime without taking any unreasonable tax risks that you don’t need to take. So, coming up with a strategy and doing things thoughtfully rather than piece meal or year end panic is the way to go about tax planning and estate tax planning. And to reach me, we have offices in Washington DC, Boca Raton and Chicago. I’m in Chicago and my number is 312 641 2100.
Jim Fried: Tom, we’ve got 30 seconds left, I want to hear what the Black Hawks are going to do this year.
Thomas Handler: I’m counting on good things with the Black Hawks. They’ve been playing some pretty good hockey. The salary cap hurt us because we are forced to trade away some very solid players that would like to keep and so helps even out the talent in the league but we’ve got some very solid court players, they’ve been playing good hockey and I’m looking forward to another very solid year. Surely, we’ll make playoffs and with three Stanley Cups in five years, it’s been a great time to be a Black Hawks fan.
Jim Fried: I always have to give you a chance to pound your chest. Tom, thanks for coming on, talking hockey and talking family office protection. As always, Thomas Handler, we’ll have you on again right after New Year’s to talk about what to do in 2016. Thank you so much, Tom.
Thomas Handler: Take care, Jim. Best wishes for the holidays and a great new year.
Jim Fried: Back at you. We’ll be back after this with Don Weidenfeld, Julio Gonzalez and how to keep your properties green and saving your money. AC, take it away.[commercial break]
Jim Fried: We are back and we are at the go green time. The light is flashing green, energy is wasting and we need to talk to Don Weidenfeld and Julio Gonzalez about why we need to go green and why we need to make sure that our buildings are efficiently allocating costs. Guys, welcome back.
Julio Gonzalez: Hi Jim.
Jim Fried: Hey, July.
Don Weidenfeld: Thank you very much, Jim, we appreciate that. Glad to be back.
Jim Fried: Listen now. I’ve been seeing Julio all around town at the family offices. High five Julio, I don’t think I met one person that didn’t meet you at the conference. Why do you go to all these family office conferences?
Julio Gonzalez: We’ve been going to the family office conferences to create awareness. One of the things that people aren’t aware of out there even in the family office community is that there’s the substantial energy tax credits that really help mitigate the risk of investing and upgrading and making the buildings more efficient so although the tax benefits went out there since 2006, there still continues to be a low awareness and obviously a bit part of a family’s portfolio is real estate investing. So we’re out there trying to get them educated on the tax incentives and how that can benefit their investment portfolio.
Jim Fried: July, you go out, you got your group, you go out there, you must bring five, six, seven people to these things with you bring your engineers and all those folks. You’ve gone out, you meet some folks, it sounds like they want some cost segregation analysis and you say ”Hold it, I can save you even more money. Let me call my friend Don”. Don, what do you tell these people?
Don Weidenfeld: Actually we work very well in conjunction with Julio and Engineered Tax Services. But Julio’s group actually pays for a lot of our equipment with the cost segregation that they do as well as the energy tax credits and what not, but our products come in and we control the HVAC controls and the lighting controls and we use all our occupancy centers in order to reduce the consumption of energy usage between 25% and 40%. And that gets paid only by Julio and his credit.
Jim Fried: Wait a minute, I got Matt, the CCIM president was standing back there. He just said ”Oh, wow” when you said that, Don. It sounds like Julio is right. Even with practitioners in the field people don’t realize the cost savings that could be achieved and how they can do some of the stuff for free. And Don, you said something to me that I think holds a lot of water. Now you’ve switched things for 10% to 40%. You created new value – I’m going to say it this way – out of thin air with the help of Julio. Is that right July?
Julio Gonzalez: That’s exactly right. Basically, Don has come up with an energy product that is so cost-efficient and basically creates energy efficiencies that are remarkable and has brought the costs down so much through his technology that the tax benefits that we create some installation of his product typically will cover the entire cost of the installation in terms of the tax benefits.
Don Weidenfeld: And then the owner on the translation side is that the owner then gets the benefit of a reduction in their energy bill which translates directly into the bottom line where their net operating income now goes up because we reduce the expenses and then that translates using an eight cap rate on the real estate to over ten times the amount of the energy savings. So it really becomes an enormous money, enormous increase in value to the piece of real estate that you’ve done the energy efficiency.
Jim Fried: I’m going to have to say that I’m bringing in a co-host here. Matt was back there, his head was bobbing up and down like one of those dogs in the back of your car and he was smiling so I want to have him come on and maybe join me. Maybe he has a question or two too. Julio, you’ve gone to this conference, you’ve met some of these high net worth individuals and such like that, but there’s lots of families out there where their only asset is real estate. Can you help somebody that just has a net worth of just a couple or $3 million and a lot of it is their asset?
Julio Gonzalez: Yes, the great thing about what we do in the condos is really impactful to the individual investor and investors that have large portfolios. I’ll give an example, I have a 10,000 square foot building where we have our operations, Don came in, did an installation of is product, our energy costs were cut in half so 50%. The total cost of the product was about $10,000 and our cash benefits were over $10,000 so in essence, we had a big production on a small property and it was paid for to the incentive.
Jim Fried: That’s great. Don, I’ve got Matt here, Matt, do you have clients that this might benefit do you think? Hold on, AC, he was asleep there in the room. Go ahead Matt, ask your question.
Matthew Rotolante: I would think it would benefit just about every client whether it’s a user, investor or otherwise, the actual tenants that are in the buildings would also benefit from the lower energy usage. NOI, when you cap it out, there’s some incredibly low cap rates in today’s environment, lower that we’ve ever seen due to the lower interest rates so it’s very dynamic when you’re having a little bit of a pop on your NOI. It really provides a big huge benefit on price performance for the value of the asset. So I would say just about anybody would benefit and these are definitely things that we want to tell our clients about and we are already doing it in many ways.
Jim Fried: Don, I cut you off. Go ahead.
Don Weidenfeld: No, you didn’t cut me off.
Jim Fried: Okay, Don, you’ve got your energy installations, you can install them in all kinds of different property types. What are some of the property types that benefit most?
Don Weidenfeld: The ones that benefit the most are two biggest verticals, our hotels as well as universities, our student housing and what not because generally speaking, in a situation with a hotel the owner is paying the electric bill and the occupant is not and has no care in the world about the electric consumption in most cases and they push the air conditioning down to the lowest they can go and then they leave to the day.
Jim Fried: I never do that Don, ever.
Don Weidenfeld: I think that I would put that in more than everybody would understand but the fact of the matter is, the owner is paying that exorbitant electric bill which in a lot of cases, even if you own some properties locally or overseas or what not, we do a lot of installations in the Caribbean now and Hawaii and where kilowatt hours is 60 cents or 30 cents of kilowatt hour, it’s crazy. But we also do a lot of installations in Florida, Orlando and California, Arizona and it could actually work, I was saying there’s not a piece of real estate in the country that can’t use energy efficiency products.
Jim Fried: Julio, we’ve only got a couple of minutes in this segment and I hope you can both of you guys stay for another segment.
Julio Gonzalez: I’d rather stay for another segment.
Jim Fried: Great. Now, Don has these clients, he says to me that, we’ve just went through that some of them are more energy sensitive than others and they benefit more, who are the types of clients that you give the biggest benefit for, Julio?
Julio Gonzalez: We basically would have the same type of profile that Don has certainly, hotel operators, student housing are some of our best clients in terms of the benefits but we work for every property owner and we drive that constantly $70 million a month of benefits for our clients and we’re really paid for success. So the great thing is with what we do and with what Don does is that it literally pays for itself, the educated real estate investor to maximize their efficiency through these tax benefits.
Jim Fried: We only have a couple of minutes, about a minute left in this segment, we’re going to do another segment but maybe people won’t be there at the end of that one. Guy, quick – well I say quick and then I ask them to go slow – go speak slowly because we have Jets fans that are listening and I know Julio very involved in the NFL so I apologize for insulting some of the people you know and that you may work for. But tell people how they can find you. Julio first.
Julio Gonzalez: Our website is engineeredtaxservices.com and we have a lot of great information on the website about the tax incentives so we’d welcome anyone to visit our website.
Jim Fried: Okay, Don, where can people find info about Magnum?
Don Weidenfeld: magnumenergysolutions.com, our website also has a complete information where we can send it out to you as well.
Jim Fried: We’ll be right back after this short break. I want to talk a little bit about more about what you guys do. I also want to talk about the involvement you have in the community because I know that you’re both extremely involved in the community that’s important part of who you are and what makes you and your team special. We will be right back after this short break. Coming back with more how to save money by going green with Fried on Business, Julio Gonzalez and Don Weidenfeld.[commercial break]
Jim Fried: We’re back with Don Weidenfeld, Managing Director at Magnum Energy Solutions and Julio Gonzalez, the president and chairman of Energy Tax Services and I got my co-host right along with me, Matt Rotolante, the CCIM voice today. Matt, you had a question for the guys or a thought here?
Matthew Rotolante: Yes, this is incredible services here and I was wondering what’s the break even on some of these because you get the benefits I guess long after they’re paid for, right?
Don Weidenfeld: Yes, absolutely. Just to give you the time frame without Julio’s credits and with the credits obviously the break even is instantaneously because it gets you not only the cost segregation but also the 179 D credit.
Jim Fried: That’s the credit for the install, right?
Don Weidenfeld: Savings being 25% to 40% and your payback without any of the incentives is approximately 14 months. So you’re less than two years and all paid.
Jim Fried: But Julio gets it for free. Julio, how do you get this stuff for free? I didn’t understand, Don gave me a bunch of numbers. Is Julio still there? Julio wants to have a call. Well, anyway, Don-
Julio Gonzalez: What Don is –
Jim Fried: There we go.
Don Weidenfeld: You have because we work very well –
Jim Fried: No, hold it, Julio is back, I got Julio back. Julio?
Julio Gonzalez: I apologize. But basically I was on mute but what I was trying to say was that Don basically payback hits us in about two years and we basically cut that down instantly because of the tax incentive. So, they work well together.
Jim Fried: Julio, we talked a little bit about some of your clients, I know you do a lot of public assembly facilities and stuff like that and such as well. What is the coolest property you’ve done a cost segregation analysis for?
Julio Gonzalez: I would say Faneuil Hall Boston was one of our landmark properties. We just did the energy tax studies for Empire State Building in New York City and as you mentioned we obviously have done a lot of stadiums in the NFL so those are some of the fun properties we’ve worked with.
Jim Fried: That sounds really cool. Don, it sounds like there’re some energy savings in some of those buildings out there. Don, what can you do for the NFL? I mean, they got a bunch of lights they use.
Don Weidenfeld: I would say. Not only do they have a bunch of lights, they also have a bunch of office space within the stadium. There are the offices that they use. In addition to that, I know because I’ve been in Julio’s. We did the air conditioning systems in all the suites, generally are running 24/7 and we can put in our occupancy sensors in controls where they would be shut off when people are not in them.
Jim Fried: It sounds like I got to put this on tape and send this over to Julio so he can flip to some of his friends at the Dolphins. Who are some of the people that you work with. It sounds to me like everybody you guys work with can have a cross-benefit. Julio?
Don Weidenfeld: 100%. Actually, we met with a few clients recently in the last weekend and we’re just feeding them into Julio because once we explain them the cost segregation analysis and the amount of amortization, dollars that they can receive back, it’s an absolute home run even if it isn’t allocated toward the energy savings but we were meeting with student housing developers that had 12,000 units for instance, and a number of different properties. And they can come in and give them millions of dollars worth of credits to do the cost seg. And in addition to that, we have a property that’s 28,000, it’s a resort time share, resort company that’s got 22 properties and 28,000 rooms and we’re getting Julio with his team in there to do all the cost seg for them. The credits will be in terms of millions of dollars, way in excess of what they’ll spend on our energy consumption.
Jim Fried: Don, Matt has a question. Go ahead, Matt.
Matthew Rotolante: Julio, isn’t the history of cost segregation where waterings actually fought the federal government on everybody’s behalf to be able to subdivide the 39-year straight line depreciation to be able to get the accelerated depreciation, isn’t that part of the history?
Julio Gonzalez: Yes, that’s part of the history. I mean, law greens hustle corporation of America and 190 other Fortune 500 type companies and basically what cost segregation is is accelerating the depreciation in the building by breaking the building down to components so that as opposed to writing off or depreciating building over 40 years, you can basically write structural components from the non-structural components and write those off over a five year period or even quicker. So, for wealth preservation, minimization of tax and the benefit that comes from being able to expand your building much quicker, that’s what cost segregation is for.
Jim Fried: It sounds to me like the cost segregation is for as helping people save money, is what that’s for.
Don Weidenfeld: It’s not only just that, the matter of fact, it just follow up a little bit-
Jim Fried: We’ve got like two minutes in the show, Don, so it’s got to be good.
Don Weidenfeld: Yes, I mean, 179 D for instance, allocates about $1.80 a square foot for energy savings equipment that goes in and it’s actually going to be increased next year, and our equipment costs about $1.25 a foot roughly. So that’s where Julio came in and did his own building and put money in his pocket.
Jim Fried: I want to leave it at that, but the thought of Julio putting money in his pocket, that makes you happy, Julio, doesn’t it?
Julio Gonzalez: I’ve been significantly happy with our system and then I think that Don didn’t really share is that you can control the system from your phone anywhere in the world. It’s pretty awesome.
Jim Fried: That’s great. Guys, real quick, we’ve got about a minute left, so, Julio, your email, I mean your website and then Don, yours, and then we got to go.
Julio Gonzalez: Okay, it’s engineeredtaxservices.com and a lot of great content on the website.
Jim Fried: You’re the best, Julio. Don?
Don Weidenfeld: And our website is magnumenergysolutions.com. You can always reach me on my mobile 561 702 9000.
Jim Fried: I’ll be doing that right after the show. Guys, thank you so much, I want to thank you both for being sponsors on the show. I want to thank Matt, the CCIMs for being sponsors, KIND Snacks, Warren Henry Automotive, The Miami Marlins, South Florida Business and Wealth Magazine, EarlyShares, Xpresso Marketing, Social Media 305, The NFL Alumni Association, Lauren’s Kids, Magnum Energy Solutions, The Bergstrom Center for Real Estate Studies, Engineered Tax Services, I want to thank you, my listeners, Facebook, LinkedIn, Youtube, Twitter. If you missed today’s show, it’ll be on our web page www.friedonbusiness.com. This is Jim Fried for Fried on Business. Look for us on 880 AM next Thursday. Why? Because I love doing this. Remember, this is not a rehearsal, this is your life. The person that wants to do something finds a way, the other finds an excuse. Now go out there and make it happen. D, it’s yours.