All Forum Posts by: Mike Welch

Hi Craig - best of luck to you!

That 3% tax rate (3K tax on 100K property) is equivalent to Pima County, Az ($1.5K tax on $50K property).

I've always considered a reasonable property tax rate to be ~1%, not ~3%.

Thank you Ed. Based on your note, I've reached out to a local property tax appeal company based in Pima County where the property is located.

For the property in question, my current effective tax rate is 3% of the purchase cost of the property (property purchased for $50K / taxes are $1500 / year). The county, in essence, wants in excess of two months of what the property's rental value is currently.

Even living in San Francisco, a very liberal and heavily taxed county, my effective tax is approximately 1% of my property's current value.

In researching this issue, I read the following quote from the tax assessor:

Interesting perspective. I understand, but I'm not sure I agree with the logic, particularly as the county in question states at their website the following:

"Taxes are levied based on the assessed value of your property."

The two statement (taxes are based on value of property, and just because your property is worth less does not mean it will be taxed less) are contradictory.

My intention is long term hold (20 to 30 years). I'd like to purchase and rehab (on avg) on property per year.

I bought my first property in July 2011 which is now fully rehabbed and rented. I purchased the property as a short sale for significantly under the value the tax appraiser based 2011 taxes on.

I've read up the county's tax appeal process and know what steps I need to take.

I'm very interested in what experiences other investors have had when purchasing properties for far under county assessed value.

1) Do you regularly appeal the tax value on every property you acquire?
2) What information do you provide that has proven successful in acquiring a lower rate? Do you find tax appraisers responsive to detailed analysis of comps, for example?

I've searched past forum postings, and find this topic to be not widely discussed, and much of the information is pre-2008.

Your comments and experiences will be very welcome.

I invested in my first property in Arizona earlier this year. I bought in the town I went to college in, where I had lived for ten years, had friends, etc.

It is critical to have a broker you like and trust who will guide you to gems and away from bad neighborhoods, risky properties, etc. I was fortunate to find a broker who new the area well, was an investor himself, and had a GC background.

My goals are hold and rent over the long term. I located a property that was a short sale opportunity, and closed on it within 30 days. I then spent one week at the property, renovating it (roof replacement, A/C upgrade, floors, paint, etc).

Getting a good local team in place is critical. I needed to locate a good handyman, electrician, etc. Additionally, I interviewed 3 property managers, then went with one my broker recommended. She has done a great job helping me stabilize the property which is now flowing cash with a good tenant in place.

McKellar's comments about 'managing managers' is correct. I can't imagine trying to manage this property directly as some tried to convince me to do. Having a property manager has been a key to success.

I'm now beginning my search for my second property. Acquiring and rehabbing for long term hold one property per year will be my focus. I plan to continue investing in this out of state market as the Bay Area, where I live, is not a suitable climate for investors. Now that I know where to go for repairs, property management, etc., I anticipate it will be much easier moving forward.

Overall, it would be preferable to be in the same city as the properties I own, but this simply isn't possible currently.

Given that we're a small, 4-unit, owner-managed HOA, we've thus far not had to employ legal counsel (knock on wood).

I just received the quote, though, and learned that the policy being suggested as an alternative is offering a slightly less expensive rate along with better coverage.

So, a silver lining to the big bank arrogance!

Hi Jon,

I own one of four condos and my loan is not through this bank (WFB). Only one of the four condos (that I'm aware of) has WFB financing.

What I'm surprised by is their ability to dictate insurance terms to the other three owners at the location if they're not paying the premium.

How can the promissory note between a lender and one borrower impact the other three owners? I, for one, have no agreement with this bank. How can they compel me to double my insurance coverage?

I've been managing the insurance policy renewal for my 4-unit HOA in San Francisco since 2005. Once I did some shopping around and found a broker and insurance carrier offering good rates, I've simply renewed each year with the carrier.

This year, the broker notified us that one of the lenders (WFB), who has a fractional interest in one of the four units, is demanding that we double our liability coverage.

Given that the lender is not paying the premium, and that they only half a partial stake in 1 of the 4 units in the building, what legal rights do they have to compel the HOA to seek out a higher premium and double liability coverage?

I'm baffled by this issue, and wonder if any of the investors at this site have run into this issue when dealing with condos you either own primarily or invest in?

Thank you in advance for your replies!

This entire post, resurrected from August, is bringing back unpleasant memories from the 'home stretch' period of getting my first property rental ready.

The 'happy ending' I reported turned out to be false. The contractor I had hired to remove the debris utterly fabricated his report that the rubbish had been removed. He accurately described the area where the pile was, and stated there was nothing there to clean up. He was totally lying! I suppose he simply had no desire to deal with the situation and, rather than telling me this, he stated the property required no clean up.

As I live in SF, and this property is in Arizona, I had no easy way to check up on his story, and simply assumed he was telling the truth. Personally, it would never occur to me to lie to another person in this way, so I assumed he was being honest. Long story short, I hired another hauler who (after nearly dieing of heat exhaustion) managed to get the mess cleared out.

I can report that this property is now rented out after having been substantially renovated. More issues related to the previous owner's policy 'zero maintenance' have crept up since the property was rented (under the slab plumbing leak that required two expensive plumber bills). However, the property is now generating rental revenue.

Before diving into a second / third rental property, I've committed to waiting 12 months to better understand what the true ROI is on my money. While it was a bit stressful getting this property in order given its condition and my lack of knowledge, I'm really excited to purchase and renovate more SFR's.

In the next ten years, it is my goal to have enough rental income to pay at least my living expenses so that my full time employment can be saved for retirement.

I was on the Apple campus consulting today when the announcement came out. It was clear this was old news to the Apple employees; it had already been announced earlier in the day.

Apple's Cupertino campus is a very exciting place to be currently. It is packed to the gills with talented and passionate people. They're a mix of old, seasoned veterans, and young kids who make their way around on skate boards.

Jobs couldn't have left at a more prosperous time for his company.

I recall the early 2000's when Microsoft lent Apple money to keep them in business (and to keep the DoJ off their case - they needed another OS using Office to fend off anti-trust suits). Over the past ten years, their rise has been remarkable.

We need more U.S. businesses like Apple and more innovators like Steve Jobs.