All Forum Posts by: Brad S.

@Russ Kitzberger Thanks for the reply! You are correct about property taxes affecting "all properties". We see the taxes passed through to the tenant more on the retail side, but apartment owners can also mitigate the increases through rent increases, so you would be correct. However, let's say an investor is buying a deal for $125,000,000 in TX and the current taxes are $2,435,357. The sale will impact likely impact the year 1, 2, and 3 taxes and would be somewhere in the $3,200,000 - $3,700,000 range. That's a pretty substantial jump. What happens when the market no longer demands the type of rents we are seeing? A high tax liability can and will affect cash flow, that is certain. 

@Jeff Costa Thanks for the reply! That would be a realistic expectation but it also depends on where your property is located because some states will drop millage rates during a reappraisal year or the rate stays flat. There are appeal strategies you could take advantage of to lower your property taxes and offset the increases year over year. Just make sure you are not just sitting back and taking it on the chin just because you expect they will go up. 

I am just curious how much emphasis fellow investors put on property taxes and the impact that the sale will have on future tax liability. I guess it depends on who you ask, but in my experience, property taxes are typically a property owner's biggest expense. Would you agree or disagree?

 I am curious to know everyone's thoughts and experiences when estimating/budgeting their future property taxes. Whether it's a buy and hold, new acquisition, etc., do you look at property taxes as being a deal breaker or not that big of a deal? 

Also, assessment cycles, appeal freezes, millage rates, caps, etc., vary from state to state so be sure you are looking at all variables when estimating your property taxes. 

@Juan Rodriguez where are your rental properties located? Depending on the state, there might be appeal strategies available to you that you might not be aware of to help lower the tax burden. 

@Ititi Obidah Thanks for the question and nice to meet you. Well, since the homestead exemption can only apply to one property which also has to be the current legal residence so that would be out of the question. Do you know if your client has filed an appeal recently? There are appeal strategies that would be available to your client that would essentially lock the value in for the current year plus two additional years. That’s one way to offset future increases. Residential properties in Georgia are based on market value as of January 1st each year so it would depend on what the sales and equitable comps are in your clients area. Since most homes in Fulton County are not cookie cutter and can differ one block from the next, you would have to look at the grade factor and compare that with the same graded homes as well as other property specifics. You can always message me if you have any further questions. Happy to help.

@Alex Jansen I totally missed your inquiry. To be honest with you that is not my area of expertise but to answer your question I haven’t seen any cases where that has worked in any state. I know of only one group out of FL that is doing this and there are some acquisitions out there that have gone this route that we will have a better idea on if it works or not after this year. I am currently tracking properties that I know of that will be going this route to see if it actually works because as or right now it’s still fairly new and there isn’t enough data available to say it works. I have a couple of clients that are doing this in GA and one of the counties that they are trying to do this in will put up a fight. There are plenty of appraisers out there that will fight this tooth and nail so whoever goes this route should be prepared to put up a good fight because not only is this taking money from the local municipalities it’s also impacting state revenue which I imagine will open another can of warms. I am not advocating against it by any means, I am just trying to think like an appraiser would if this were to come across my desk. It’s such a new concept that any seasoned appraiser will pick the allocation apart so I don’t see this getting resolved at the County board level. Perhaps I am wrong and maybe it does work. As an investor I would want it to work so please know I am not advocating against it. We are just in the wait and see phase but will know soon enough. Stay tuned.

@Ajay Mehta that’s a great question. TX is non-disclosure so I am never going to say they will base it on just the purchase price year 1. However, if the property is marketed after the sale (news letter, Costar, etc) they have the resources to find sales and will reassess based on a % of purchase. We are estimating 80-85% of purchase in year 1. If you want to shoot me the details and a private message I would be happy to take a look at the property for you. Let me know. 

@Ajay Mehta Thanks for the question Ajay. It would be based on the % complete as of the assessment date, January 1st of each year. With the exception of low income housing, the appraisal districts would use a cost approach for anything under construction. 

@Will Gaston Hi will! That’s a great question, and yes, it is available in all counties as long as it is filed by the deadline and meets the criteria because not every property will receive the full exemption. 

@Gerardo Waisbaum glad I could help you out. Hit me up any time. Have a great day.