Our Strategy
We specialize in developing and renovating excellent apartment buildings in Texas, targeting high returns. To boost after-tax profits, we utilize tax incentives such as the Opportunity Zone tax structure, Historic Tax credits, 45L tax credits, property tax abatement, and cost segregation. Our expertise in Texas real estate and commitment to after-tax profitability are ideally suited for taxable investors.
Since 2011, Savoy's principals have invested more than $110 million across over 50 real estate ventures in Texas, demonstrating a strong track record in the market.
With 27 projects successfully sold, Savoy boasts an impressive weighted average Internal Rate of Return (IRR) of 40.5%, achieved over an average holding period of 4.7 years.
Opportunity Zone
Savoy has invested over $63 million in qualified capital gains across 20+ real estate projects in Texas, leveraging the Opportunity Zone (OZ) tax incentives. This strategy offers two key advantages: deferral of tax on current capital gains and tax exemption on appreciation and depreciation recapture for these new investments.
For more education on OZ investing, click below
Historic Tax Credits
Historic tax credits offer developers a powerful tool to lower renovation expenses for buildings designated as historic landmarks. By encouraging the conservation of historic architecture, these credits play a vital role in community revitalization. In Texas, the appeal of Historic Tax Credits (HTC) is especially strong, with a federal credit covering 20% and a state credit adding another 25% of qualified renovation expenses. This combined 45% tax credit significantly offsets the cost of preserving our architectural heritage.
45L Tax Credits
The 45L tax credit offers a direct reduction in tax liability for developers who renovate or construct apartment buildings to meet specific energy efficiency standards. Depending on the energy efficiency level achieved and the use of prevailing wages in construction, tax credits can range from $500 to $5,000 per unit. Before beginning construction, we collaborate with our General Contractor (GC) to analyze the potential financial benefits of pursuing these credits.
Property Tax Abatement
Savoy has received more approvals for Public Facilty Corporation (PFC) projects in the City of Dallas than any other developer. The PFC structure enhances returns because it allows projects to receive a 60+ year 100% property tax abatement in exchange for restricting half the units to a lower rent. Although this strategy can be challenging to apply, it works well when there is a good partnership with local governments that want to facilitate more affordable housing.
Savoy has also received tax abatements in San Antonio and Lamar County
Cost Segregation
Savoy hires specialists to dissect property components, distinguishing items such as carpets and landscaping as "equipment" or "personal property" instead of building parts. This strategy accelerates depreciation rates by 2-5 times, enabling significant upfront write-offs. It allows investors to deduct a substantial portion of the purchase or development cost upfront, rather than over the entire holding period.
Within the Opportunity Zone (OZ) tax framework and Savoy's 10+ year strategy, these depreciation deductions enhance returns without the need for recapture upon sale of the assets.
