Modern skyscraper rises above the old buildings of SoHo, New York City

Improving Buildings with Historic Tax Credits (HTC)

Historic tax credits (HTC) were initiated into the federal tax code in 1976, making it one of the top federal programs which  has helped preserve America's historic structures.

After an amendment to the federal tax code in 1986, 20% of the total construction costs are eligible for credits on both the state and federal side. (Ex. – If construction is $3,000,000, 20% state level is $600,000, 20% federal level is $600,000. This is a total of $1,200,000 in tax credit eligibility!)

Your tax credit is administered through the National Park Service and the IRS. Tax credits you'll receive are 20% of all your qualified rehabilitation expenditures, otherwise known as QREs. National banks have authority to provide financing for these projects.

Details on the Application Process
There is a three part application process.

In Part 1 of the application, you'll provide details on the Evaluation of Significance. This helps determine whether your storage unit property is eligible to receive funding or tax credits.

Part 2 is Description of Rehabilitation, which will determine if the improvements being made will compromise the existing historic significant characteristics of the building.

Part 3 is Request for Certification so you can get an official historic preservation certification from the State Historic Preservation Office.

One copy of the application will be going to the State Historic Preservation Office and the other to the National Park Service. The State Historic Preservation Office generally reviews Parts 1 & 2 of the application first and within 60 days.

Qualifications and Exclusions
The money you receive is required to go toward the rehabilitation, with the cost of rehab exceeding the pre-rehabilitation cost of the structures.

Look out for some exclusions on the IRS page about HTCs. Some expenses you're facing aren't covered with the funding. For instance, you can't use the tax credits on acquisition costs, carpeting, decks, furniture, or parking lots as just a few examples. 

Be sure to hire a consultant to assist you to study the rules carefully before you spent time filling out the application.


Concept by money house from coins

Self Storage: Real Estate Portfolio Diversification & Risk Mitigation

"Don't put all of your eggs in one basket." 

This philosophy revolves around the risk of losing everything when we become dependent upon one person, plan, or resource. While this advice applies in many scenarios, it is particularly relevant to real estate investment portfolios.

A diversified portfolio can protect against significant loss by spreading risk across multiple investments, markets, and/or industries. If something goes wrong with one investment, other investments can offset the losses.

How Can Self-Storage Help to Diversify Your Portfolio?
Diversification helps to mitigate risk, but it does not eliminate it altogether. One must take measures to introduce low-risk investments to a portfolio in order to counterbalance high-risk investments.

The relatively low risk of self-storage investments make them an ideal solution for passive investors looking to diversify a portfolio. Self-storage facilities are an ideal investment opportunity for the following reasons:

  • Low vacancy - Self-storage units generally boast low vacancy rates, especially when compared to their traditional real estate property counterparts.
  • Diverse customer base - The average self-storage unit serves a wide variety of customers, including millennials, baby boomers, businesses, military personnel, and more.
  • Performs well in volatile markets - The self-storage industry has repeatedly outperformed other real estate sectors, even in times of economic downturn.
  • Strong, reliable cash flow - The self-storage industry has been a safe bet for investors for the past 50 years. Occupancy has held steady and value has continued to increase over time. 

Mitigate Risk by Delegating Managerial Duties
Real estate investments rely on tenant’s rents to produce income for their investors. The upkeep of each property must be maintained in order to preserve the quality of each investment. If the quality declines, tenants may no longer be interested in the property and its valuation will fall. 

Hiring a property management service to perform tasks related to customer service, sales, property maintenance, and daily operations can help to mitigate risk. This removes the responsibility from the owner and allows the experts to facilitate the relationship with the tenants.

In turn, hiring a professional management company will also allow more time to scale the portfolio. Coda Management Group uses a top 3 nationwide operator to manage their properties to do just that, scale the business. Well worth the cost.



Contact Info

600 Waukegan Road, Suite 129, Northbrook, IL 60062

+1 847 272-7775

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Sunday: Closed

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