How We Deliver 25-30% After-Tax IRRs
High leverage meets tax efficiency: the 60/30/10 capital stack creates 9:1 leverage where the 10% equity captures 100% of depreciation benefits.
Combined with Opportunity Zone structures, this turns 15-18% pre-tax IRRs into 25-30% after-tax returns for qualified investors.
The capital stack comparison
How 60/30/10 creates 3.5x more tax benefit than traditional structures
Traditional Multifamily
Great Expectations Approach
Example: $10M Property with Cost Segregation
Traditional Structure (65/35)
Great Expectations (60/30/10)
The 3.5x Advantage: Identical $2M Year 1 depreciation, but with $1M equity instead of $3.5M, the tax benefit is 74% of equity versus 21%—a 3.5x multiplier. Cost segregation accelerates 15-25% of basis into Year 1, creating massive immediate tax shelter that flows entirely to the small equity base.
Four components of tax efficiency
How we turn 15-18% pre-tax IRRs into 25-30% after-tax returns
In our 60/30/10 structure, the 10% equity captures 100% of depreciation benefits. When combined with Opportunity Zone structures, this creates compounding benefits that dramatically increase after-tax returns for qualified investors.
1. High Leverage
60/30/10 capital stack creates 9:1 equity leverage on development projects
2. Accelerated Depreciation
Cost segregation: 25% of basis in Year 1 creates 74% tax shelter on equity investment
3. Basis Reset at Year 10
Depreciation recapture forgiven—basis resets to FMV without tax liability
4. Tax-Free Appreciation
All appreciation after Year 10 permanently tax-exempt for qualified investors
Complete Example: $10M Development Project
10-Year Opportunity Zone hold period
Capital Structure
Depreciation (Cost Segregation)
At Sale (Year 10) — Property Appreciates to $15M
WITHOUT Opportunity Zone
WITH Opportunity Zone
Tax Savings During Hold
$1.47M
147% of equity
Tax Saved at Sale
$2M
200% of equity
Total Tax Benefit
$3.47M
347% of equity
A $1M equity investment generates $3.47M in cumulative tax benefits over 10 years. Combined with 9:1 leverage and property appreciation, this structure delivers 25-30% after-tax IRRs while maintaining affordable rents.
Why this strategy is sustainable
Structural advantages, not market timing
This isn't a loophole or aggressive tax avoidance—it's how affordable housing financing is designed to work. The tax code incentivizes capital deployment to underserved communities (Opportunity Zones) and affordable housing projects (accelerated depreciation schedules). Our capital structure simply optimizes these existing benefits.
Mission-aligned capital access
Subordinated debt from public housing agencies and impact investors is only available to operators with proven affordable housing track records and social purpose commitments.
IRS-compliant structures
All depreciation schedules follow standard cost segregation studies. OZ benefits require 10-year minimum holds and strict compliance with census tract designations.
Operational discipline required
Tax benefits don't matter if properties underperform. Our 40-50% operational cost advantage ensures NOI supports both tax strategy and cash-on-cash returns.
Not for every investor
Maximum benefit requires high ordinary income (37% bracket), ability to use passive losses, and capital gains eligible for OZ deferral. Qualified investors see dramatically higher returns.
Want to see deal-specific tax modeling?
We provide detailed waterfall projections and tax impact analysis for each investment opportunity.
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