In this RED Podcast Legacy Series episode, Ferd Niemann explains how to underwrite property taxes and how to get the most, or should we say the least, out of your tax bill. Enjoy!

HIGHLIGHTS:

0:00 – Intro

0:58 – It’s important to do a good job with property tax projections

1:53 – Property tax appraisers have values lower than the current market value

2:59 – Property tax assessors don’t want to raise the property value and annoy voters

3:33 – There’s a risk when you purchase a property that your taxes are increased

4:11 – Ferd looks at the current market value in accordance with what the assessor tells him

4:26 – Looking at the purchase price

6:19 – Ferd’s formula for calculating tax dollars

9:08 – Know your jurisdiction to calculate your paying

9:48 – How probable will a tax increase will be?

15:34 – You should underwrite some percentage of increase

15:54 – Strategies to mitigate the risk

16:51 – Allocate some of the purchase price to non real estate items

17:59 – Try to flag the sale as invalid by throwing something unusual into the contract

20:05 – Buy the LLC membership units

21:25 – Another risk is bankability

21:51 – Get mutual or buyer indemnification provision pre-closing

24:12 – There are going to be extra filings for tax returns

RESOURCES:

Underwriting Property Taxes Checklist