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Updated over 4 years ago,
How to Underwrite Property Taxes on a Multi-Family Deal
Long time lurker, first time poster.
I'm starting to pursue my first multifamily deal (looking at 20+ units ideally). But when doing my underwriting on a deal, the biggest question for me is how to properly account/underwrite the property taxes. The current owner is obviously paying taxes on a lower appraised value than what I am likely to purchase the property for. Do I assume my property taxes will be based off an appraisal value very close to the new purchase price? Are property taxes on multifamily properties calculated the same way that that single family homes taxes are based off the area tax rate? This would likely be in Texas.
What's the best method to make sure you account for the correct amount of property taxes when underwriting a deal? Thanks for any helpful replies in advance.