All Forum Posts by: John Lenhart

What neighborhood will the units be in? Ultimately for that sized property it depends on where the management company specializes with their properties as to whether they can adequately care for it

 So, wow legal in Ohio, do you be aware that some school districts are overly zealous and may try and challenge you on the taxes. If that happens, Do you want to have an appraisal to show the reasons for a lower value. The property may be reassessed tire, but if you have a proper appraisal you can likely get a value  more favorable to you Then to the school board

Spoke to a consultant the other month about this very concept. He is actually located in Dayton too if you are interested pm me and will pass his information along 

There is a lot in that question. What you are describing is a drop down entity transfer. As far as fair goes, that depends on your individual perspective. As far as legal, it depends on the state. In Ohio it is very legal. In Kentucky it is not. Florida has rules to make this hard too. So it depends on the laws of the state where you are buying.

In re to banks financing this type of deal, the answer is yes and no. Yes, banks will finance such a deal in almost all cases, however, to protect their risk, they will underwrite it as if the taxes were paid to the purchase price (Or a %) even if they are reassessed much lower. So, if it can pass the rigorous stress test of the bank and the state does not reassess, it could be a home run.

states are trying to limit the use of this loophole so it is getting harder to use. However, the trick has become quite common in the last 20 years

I would be cautious on something like this. As Timothy pointed out, if there is value the lender will likely bid it up to protect their position. Also, if this were an apartment building, I think the strategy would be better, but the hotel being an operating business, if you take it to foreclosure, chances are that the business (Hotel) will be closed and out of business which diminishes the value of that asset. I am not sure how easy it would be to restart operations after such event but it is also something worth considering. 

 In Ohio every three years they have to do a reevaluation and I believe 2020 is the year for that to happen. However, since they likely already marked your property up to purchase, chances are it probably will not go up again just yet. Unless the purchase price is already considered a polo market bargain,  The valuation will likely not increase. However, that does not mean that the millage Will not increase, and if a school levy or other tax assessment was passed recently, your taxes will go up regardless of valuation

Each state has their own rules on the matter. In Ohio FMV is baked into the statute so there is not much wiggle room for the county assessor on that end

In Ohio, you can still do the entity transfer, with the caveat that the school districts, especially in Franklin Cuyahoga and Summit Counties are aggressive in trying to uncover these transactions. 

You can also do a structured sale where you carve out a chunk of the transaction as personal property. There is no personal property tax in Ohio so anything as personal property does not get assessed for real estate  Valuation

The key in Ohio is structuring the purchase agreement to minimize the tax hit. Overall, Ohio is a property owner friendly state. Although, Franklin, summit and Cuyahoga counties tend to be the most aggressive in Fighting property owners for tax revenue. Hamilton and Macgomery County’s tend to be more laid-back on those matters. Ultimately, the goal is to structure of the purchase agreement in such a way to allow you the maximum leverage to fight any challenge to your increased taxes

While helpful as evidence of value, An appraiser will carry the most weight. You have to remember that the appraisal that you pay for is going to have information that you know about in the county does not when determining true value. The counties tools for appraisal do not take into account the income of the property nor do they take into account the condition of the property, and that is for you to point out with your appraiser.

I know in other counties in Ohio having a true appraisal, Carries much more weight then whatever the county can provide. I also recognize that the school board in Franklin County tends to be overly greedy, and contest things and often times is tough to work with. I don’t have direct experience of this but I’ve heard that in the past