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Are you convinced that you need to perform a cost segregation study, but aren’t sure if you should do it yourself or hire a professional? There are several reasons why it’s worth the investment to hire a professional rather than try to do it on your own. 

Here are four reasons why performing a cost segregation study yourself would be a big mistake financially. 

A Professional Will Document Everything Properly – You Probably Won’t

If you aren’t a professional, there’s no way to know if you’re documenting your cost segregation study properly. If this isn’t something you’re used to doing, you are more likely to make mistakes that show an over or under-appreciation. 

It may not seem like a big deal, but documentation mistakes could end up costing you big at tax time. If you get audited, the IRS may not accept your documentation if it doesn’t meet their requirements. If that happens, you could be subjected to fines or back taxes.

The Cost Segregation Process is Complicated

Assuming that you are not a construction engineer, you will likely find the cost segregation process to be complicated and confusing. The process is also time-consuming, so it may steal time away from other more profitable endeavors. An expert can clarify and explain how assets are classified. Without an expert, you’re often left guessing. You can attempt to research anything that is unclear if you are prepared to sacrifice the time. In the end, without an expert’s advice, you’ll still be unsure if you did everything correctly. It simply isn’t worth the risk. 

Experts Can Better Read the Documents for an Accurate Analysis

If you hire someone with extensive experience doing cost segregation studies, they should be able to read and analyze all the documents related to the process. These documents include blueprints, architectural drawings, bid documents, and more. If you can’t read and analyze all of these types of documents, you need an expert. Without one, you could end up missing or misinterpreting something that will come back to haunt you later. 

It Isn’t That Expensive to Hire a Professional

You may be tempted to perform a cost segregation study yourself because you assume that hiring an expert is expensive. While there is a broad range of prices charged for these services, you may be able to get your cost segregation study done by an expert for as little as $2000. 

Whether you pay $2000 or $10,000, chances are good that hiring an expert will save you more money than it will cost you. 

As you can see, there are many risks involved when performing a cost segregation study yourself. It’s not that costly to get help, but it could be very costly not to. You will save yourself money, time, and stress by hiring a professional. In the end, you’ll be glad you did.

Interested in learning more about how you can leverage real estate to earn passive income? Contact the experts at Morris Invest today!