Texas property tax underwriting best practice

[Kim Wendland]

Hey Underwriting Gurus investing in Texas!

Given that Texas property taxes are valorium based (i.e. value based) and that the appraisal of property generally increases each year, how do you project property tax increases in your underwriting?

As a resident, I'm very aware that property tax increases can vary dramatically year to year. For example, it may rock along several years increasing around 5% then suddenly rise higher. One year in particular, it increased 22%. So, I'm trying to be conservative and allow for increases, but also don't want to kill deals being too conservative.

What is your best practice?

[Greg H.]

@Lucia Rushton

Texas is a non disclosure state so sales prices are not published.  So while the Appraisal District sends out a survey, I cannot for the life of me understand why one would send it back if it is not to their advantage.  Property assessments rarely match the sales price.  I have bought properties for $100K that was assessed for $200k and paid $200k for properties assessed at 100K and both were great deals