All Forum Posts by: Jack Lee

@Jack Lee This doesn’t help you now however for future deals you should be underwriting your property tax expense at the purchase price.

This will help the big surprise down the road. Especially now where some homes have doubled in price and are assessed closer to 2017 price.

The time and energy spent fighting the assessors isn’t worth it in my opinion. Been there done that.

One idea is to use your bank appraisal if you got a loan and had one done at the time of purchase.  Normally they will at least push the value down to that appraised price.

If you are in Dallas, one thing you can do is pull real comps with pictures and if your home has flaws compared to other homes, like high traffic area, foundation issues, old windows, and the like, then perhaps you can argue the comps they have used.   Also for example if you had to trash the house out after a renter was in it, or if you bought a fixer, show them those pictures.   Show them the pictures of the grass 2ft high.

I would also go IN PERSON, as far as I know it is NOT available online and pull what they call the run sheet.  Make sure that run sheet matches what you have.  I see plenty of mistakes on them.  Size, beds, baths, garage #, and everything else the put on that sheet.  Having it accurate in your favor can make a difference sometimes.  Someone on BP just posted their home shows 300sqft larger on the tax roll than their bank appraisal.  That could be an issue at $200-$300/sqft or whatever your home prices out.

If you go in person, I often hear the board reps say they want pictures to prove why your home should be valued less.  So give them what they want.

Also you should ask for an evidence package of what they want to use as comps. I often pick those apart. Sometimes they will use homes from different school districts, different neighborhoods, foreclosures, and so many other bad comps. One year when I got about a $50,000 reduction, they had used homes that were in no way similar to mine, because that's all they could find in MLS.

I've seen boards go all over the place with what comps they will allow or not allow.  The law says it should be the value as of January 1st, 2023....I've seen some say no comps sold after that.  I've seen some say comps no more than 3 months on either side of that date.   I've seen some say no foreclosures?   Last year when I was in front of one board I put them on the spot before we got started and asked what date range they would allow comps?   So I was able to eliminate most of the CAD comps he was using.

Also if they don't give you their evidence, they CAD person can't use it against you.  I've been lucky and unlucky this way.   When I quoted and distributed the law, one board didn't like it and wanted to reschedule the hearing.   Also their computer operator wanted to testify against me and explain stuff...but he wasn't sworn in, so I challenged that.   One struck off some of their properties they wanted to use as evidence.

One thing I feel is they are often totally unfair, cherry picking the highest comps...I used to be fair and really try hard to use similar comps...but I'm so jaded now, I typically just pick the lowest ones and use those.  I don't think they've every agreed to use the number I come up with any way, so I'm just hoping for at least some adjustment.

Not sure if your county has automated adjustment, but if they do and you don't want to spend a lot of time, you can try that.  I'm guessing you have to be close, maybe 3-5% discount to get auto approval, but not sure about that.  You can also go 1 on 1 with an appraiser and see if they will give you what you want.  That's probably worth a shot, if you don't like it, then you can go in front the board or board reps.

Good luck.

@Jack Lee I have property in Dallas county and had this happen to me last year. I was unsuccessful in my protest but in talking to other RE investors around Dallas and Tarrant County, the sweet spot they've found when protesting is trying to get the taxable value down 2.5-3%. You're not going to get the taxable value down to your purchase price. Appraisal districts are greedy for the tax revenue. Knocking off small chunks at a time is better than nothing.

Did you get full copy of the appraisal?

All the details you mention have zero influence on a residential appraisal.

Property is in Dallas? 

Comparable sales are what is used. 

You need 3 comps with similar square footage that closed with a loan in the past two months. Properties should be in the same tract, or you need to know how to adjust them for condition, age, view, upgrades, amenities, and 20 other things.

You need sale date, value, upgrades... 

Get a Realtor to help you

You want them to lower it then tell them all the details wrong with your house verses' the comps you found.

In writing, with facts, check and see what square footage they claim.

These things do not include in your rebuttal:

homestead exemption on the 2022 appraised value. Believe it has a 10% increase cap yearly. Now that it's classified as an investment property, it no longer can claim homestead exemption and as a result the proposed appraised value jumped off the roof!

@Account Closed

Most times house hacks in areas that you actually want to live will not cash flow or break even right away. If you can manage the negative cashflow for 2-3 years personally, the rents will eventually break even if not cash flow by the time you're moving on to another one. Also, putting 3.5-5% down compared to 25% can also dictate whether you can break even or cash flow right away. Best of luck

@Jack Lee

Really, the best thing is have both the TItle and the loan with the LLC. The "frankenstein" model to me where they are split are just a recipe for piercing your corporate veil in my layman's point of view. Unless you generate more paper, who pays the mortgage for example? If the LLC does it, then it should be co-mingling. Granted, single member LLC's are disregarded entities for tax purposes, but YOU should be itemizing the interest costs in my opinon because your LLC can't be doing it since its not an expense. Furthermore, since you aren't supposed to treat the entity as an alter-ego, how can you quit claim deed the property to it (without more "paper")? Since consider if you quit claim deeded to me (I'm another stranger like your LLC), why should I rent out the property? I'd just sell it and take the money and run...

Anyway, as mentioned, legal entities such as LLC's are NOT eligible for conforming residential loans. Most investors want the limited liability of the entity but don't want the pay for the generally more expensive Commercial loans that LLC's have to obtain. Most lenders are "residential lenders." since you want to conduct business with a LLC (which I'm of the camp you don't really need to), contact commercial lenders, i.e. "non-residential" lenders, for loans for your LLC.

As its discussed many times on BP, just investing in your personal name in residential properties is fine.  Keep the property in good repair, have insurance, and perhaps an umbrella liability policy.  If you'd like to chat, send me a direct message.  Good luck.