Start Saving Now

Posts Tagged: texas taxes

Obsolescence In Real Property – How Can It Affect My Value?

Posted by & filed under Property Taxes.

Obsolescence in Real Property:

How Can It Affect My Value?

What is Obsolescence?

Obsolescence is defined as “the process of becoming obsolete or outdated and no longer used.” Obsolescence can impact a multifamily property in many ways to lower the property’s value. Both owners and appraisers should be aware of any potential obsolescence at play when evaluating a property’s market value.

Types of Obsolescence

There are three main types of obsolescence that can play a role in a multifamily property’s value: 1) Functional, 2) Economic, and 3) Physical.

Functional Obsolescence 

Functional obsolescence deals with the function of the property and how, generally over time, the property’s original function is not as useful. For example, consider an older building constructed without elevators at a time before modern elevators were common. When the building was new this would have been perfectly normal. However, if that same building still existed today, it would have functional obsolescence because we expect elevators in apartment buildings with 3+ floors.

Economic Obsolescence 

Economic obsolescence is often the most frustrating for an owner because it is always an external force impacting the property outside of that owner’s control. A great, and timely, example of this type of obsolescence is COVID-19 and the impact it had on our economy. Many businesses had to either shut down or suspend activities causing financial hardship on many families. With little cash coming in during the peak pandemic months, families often could not pay their full (or any) rent owed to multifamily property owners. This external impact on the income a property could generate is a textbook example of economic obsolescence.

Physical Obsolescence 

Physical obsolescence is probably the most easily avoidable of the three types of obsolescence. Physical obsolescence is often brought on due to deferred maintenance that causes damage or accelerated deterioration of an asset. A good example of this would be not replacing a roof in a timely fashion, and then having extensive water damage throughout the property years later that would require extensive work to fix. This physical obsolescence lowers the value of the property.

While obsolescence is not always easy to spot, both property owners and the appraiser should be diligent in looking for its impact on a property’s market value.

See How Wayfinder Can Help

Schedule a meeting today!

Can I Appeal My Texas Property Taxes On My Own?

Posted by & filed under Property Taxes.

Can I Appeal my Texas Property on My Own?

You Absolutely Can, But What Are the Pros and Cons?

Texas Believes in Property Rights

Texas believes in property owners’ rights and has set up its system to allow property owners to appeal their own properties. This means you can absolutely appeal on your own. Doing it yourself means you will need to prepare your evidence and be ready to present it to the Central Appraisal District or the Appraisal Review Board. If you are not satisfied with the results at those levels, you can hire an attorney to pursue more in litigation. If your property is small enough, you may even be able to represent yourself in arbitration rather than filing in court and hiring an attorney.

Pros and Cons to Doing It Yourself

Things to consider when deciding to appeal your own property valuations.

Pros

  • You don’t have to pay anyone based on your tax savings
  • You know everything that is happening and you don’t need to rely on someone for an update
  • You care deeply about your property
  • You know the story about what is happening in your market

Cons

  • You are alone in the process and it isn’t your full-time focus
  • Limited or no access to valuations tools that require costly subscriptions
  • Limited market data revolving only around your property
  • Limited time and a need to work on other responsibilities
  • Frustration dealing with slow processes
  • Researching and understanding the nuances of the property tax law.

Hiring an Expert can Ease Your Burden

Appealing on your own has its benefits, but in many cases, the frustration and time spent are not worth the reward. In most cases, it is better to reach out and ask an expert for help. They are able to focus their time on your case and help you achieve great results. The results far outweigh the costs for their services. 

If you have questions or would like to see what an expert could do for you, the specialists at Wayfinder Tax Relief are ready to help.

How Does the Tax Appeal Process Work?

Posted by & filed under Property Taxes.

Notice of Value: The Start of an Appeal

In Texas, property owners are issued annually a Notice of Value from the Central Appraisal District (CAD) where their property is located. These notices of value are the CAD’s determination of a property’s market value and will influence a property’s tax liability in the coming year. Taxpayers have the option to appeal this value if they believe it to be too high. To do this, taxpayers or agents must fill out Form 50-132 from the Comptroller’s Office and file it with the CAD that issued the Notice of Value before the indicated deadline. 

Informal Meetings and Appraisal Review Board Hearings

Following a successful filing of an appeal, the taxpayer is then able to meet informally with the CAD and attempt to reach a settlement. Reach out to your local CAD if you have filed a protest and ask for a time to meet informally. Most cases settle at this informal stage. If a settlement cannot be agreed upon with the CAD informally, the taxpayer and the CAD will then go before an Appraisal Review Board (ARB) for a hearing on the dispute. Both sides will present their case in a 15-minute hearing, and the Board will issue a decision.

Post ARB Hearing Options

Following an ARB hearing, taxpayers have yet another option to seek tax relief. If a taxpayer is not satisfied with their property’s value after an ARB hearing, the taxpayer may file a lawsuit against the CAD in court. However, it is important to note, litigation is only available to those that have “exhausted their administrative remedies” before filing to court. This means that a taxpayer can only file a lawsuit concerning their noticed value if they have filed an appeal and had an ARB hearing as stated above. Of important note, certain properties also qualify for arbitration with the CAD. This can be quicker and cheaper than litigation but requires certain, specific factors exist before taxpayers may seek relief in this manner. Please consult a Texas property tax expert in determining if your property qualifies for arbitration.

This process happens every year and many property owners have little understanding of this process and their rights. If you are a multifamily property owner in Texas, please reach out to one of our specialists so that we can help navigate you through this process and get you the tax relief you need.

See How Wayfinder Can Help and call us today!

Schedule a Call

How Can I Prepare For a Site Visit?

Posted by & filed under General, Property Taxes.

How can I Prepare for a Site Visit?

The Importance of Site Visits

It is truly impossible to overestimate the importance of site visits. For a tax agent to adequately represent a property, they need to have firsthand extensive knowledge of the asset. Without this knowledge, a property owner can never receive top-tier representation. As a property owner, there are a few preparations you should make before your site visit with your tax agent.

Step 1: Inform Your Staff of the Visit

For a site visit to go smoothly and effectively, the staff at the property needs to be aware of the tax agent’s visit. Moreover, the staff responsible for meeting with the agent must be knowledgeable and completely honest. A good agent asks hard questions for managers/owners to answer, and they need truthful responses. If the property is slipping off its foundation, the agent needs to know. If the property has plumbing issues every other day that require water to be shut off to the property, the agent needs to know. If the property has extensive water damage from leaky roofs, the agent needs to know! Your agent needs to know all the good and bad with your property so they can adequately fight for a fair valuation.

Step 2: Provide Financial Information

Next, be sure to prepare and provide your agent with the profit and loss statement for the property as well as unit statistics/rent rolls. As multifamily properties are income-producing, the ability of a property to produce income plays a significant part in its valuation.

Step 3: Be Prepared to Show a Vacant Room

So they can see what a unit looks like, be prepared to take your agent to a vacant unit. A good agent will want to examine the condition of the unit, its flooring material, countertops, appliances, and everything in between. All this information can play a crucial role in valuing your property. Note, however, that you need to show your agent a unit that is representative of the majority of the other units at the property. For example, if 90% of the units at the property have granite countertops, do not show your agent the unit with a Formica countertop.

And that’s it. Preparing for your site visit is quite simple and should make your visit that much quicker/effective. By following these simple steps to prepare for your visit with your agent, you are setting your appeal up for success.

See How Wayfinder Can Help

Schedule a Call today!

How Much Can My Texas Multifamily Property Value Increase?

Posted by & filed under Property Taxes.

How Much Can My Texas Multifamily Property Value Increase?

Taxable Value Equals Market Value

In Texas, Central Appraisal Districts (CADs) are tasked with valuing property within their jurisdiction for taxation purposes. This taxable value is 100% of its “Market Value” in Texas, which is essentially what the property would sell for in an open and fair market. CADs use recent listed sales, income production documents, and cost documents to value these properties at a level they believe would entice sellers and buyers in the market to come to the table. As a result, when something happens in the market that will significantly affect the sale price of these assets, taxable values should respond accordingly.

No Limit to Increase in Value

Unfortunately for those owners that like to work with set values, there is no limit to the increase or decrease of a property’s taxable value from one year to another. All that is required of the CAD is to find the market value of the properties it values as of the valuation date, regardless of previous years values. Resultantly, some Texas jurisdictions have recently seen their property values increase over 100% in one year following a boom in real estate values on the open market. Buyers and sellers are trading these properties at higher numbers, so the taxable values have followed suit. While this may provide little comfort to the owner that saw their taxable value jump significantly last year, this is the reality of ad valorem taxation on real estate within Texas. Taxable values can and do jump up significantly. The only partial limit to increased tax burden for property owners is that the Texas legislature does put restrictions on increasing tax rates annually.

Get Help With Unexpected Expenses

Because of this reality, many owners feel stress and uncertainty when taxable values come out every year, and the importance of a strong tax advocate cannot be overstated. Owners face unexpected tax expenses often in Texas, and the ability to offset some if not all of this increased expense can make a big impact on the communities these owners serve. If your multifamily property tax bill has increased in the past few years, please reach out to a specialist today for help in getting a fair market value of your property.

See How Wayfinder Can Help

Schedule a call today!

Why Should My Agent Visit My Multifamily Property?

Posted by & filed under General, Property Taxes.

Why Should My Agent Visit My Property?

The Impact of Understanding an Asset

As a multifamily property owner, do you or your company often purchase new properties without seeing the asset in question? Most likely, that sounds like a terrible idea to you. Understanding what it is that you are buying and going to operate is a pivotal component to owning and managing a multifamily property. Due diligence is required to not only understand the risks of an asset but also the benefits. You cannot fully understand the impact a property will have on your portfolio without visiting that property, walking its grounds, and analyzing its condition through your own eyes.

The Impact of Understanding an Asset

The same can be said about the property valuation of an asset. Tax agents are asked to step in and help frustrated owners secure a fair market value of their properties. Owners are often rightfully worried about over taxation and rely on their agents to be their advocates. But, just like a prospective property buyer, how can a tax agent accurately understand the risks and benefits associated with a property without visiting it? They cannot. The understanding of an asset accompanied by a site visit cannot be duplicated through google images and satellite views of the property. It comes from feeling, touching, and seeing the asset firsthand. This lack of ability or unwillingness to visit properties that agents represent ultimately ends up hurting the taxpayers these agents swore to protect.

Advantage Over Taxing Jurisdictions

In addition to providing a better understanding of a property to a tax agent, site visits allow a bit of an advantage to agents and taxpayers when dealing with Central Appraisal Districts (CADs). CADs are often understaffed and overburdened to produce accurate values of the properties within their taxing jurisdiction every year. This means that CADs rely heavily on “mass appraisal techniques” to meet their offices’ responsibility to taxpayers. The problem with this approach is that CADs are unable to get into many details when dealing with a specific property. That is where an advantage for the taxpayer presents itself. The county may not know that your property had five downed units this past year, or that a natural disaster destroyed a portion of the property or any other number of events/characteristics that affect the asset. These are likely not reflected in the valuation. It is the duty of the tax agent to know those issues and present them to the CAD for revaluing the asset. Without those site visits, agents are willfully abandoning an additional tool they have to help their clients.

Evaluate Your Current Agent

If you have never seen your agent at your properties, it is time you demand it from them. The communities you serve and have built deserve to not have resources taken from them due to over-taxation. Challenge your agent to put you and your communities’ best interest first by requiring they visit your properties today.

See How Wayfinder Can Help

Schedule a call with us today!

How can the Right Property Tax Agent Simplify My Life?

Posted by & filed under General, Property Taxes.

How can the Right Property Tax Agent Simplify My Life?

Increased Results, Decreased Stress

Extending Your Reach

Tax agents may seem like they are a dime a dozen, but if you want a tax agent to simplify your life, you need to dig a little deeper.  Tax agents come from a wide array of firms, experiences, locations, reputations, and client experiences.  It is important to ask yourself what you are looking for in an agent?  Do you want someone you have to constantly check on to make sure they are meeting the deadlines?  Do you want to feel like they are just another person you must supervise?  Or maybe, your agent cuts you out entirely, doesn’t give you updates until you beg enough, and then only tells you about their successes while leaving out all your other properties. 

 From my experience, that is not usually what a client wants but it is often what they get when they hire the average tax agent.  It is easy to see why an agent who cuts you out or needs your constant monitoring would not simplify your life.  It could even seem like more work to hire an agent, after all, if you need to monitor everything why not do it yourself? 

 If you feel burned out from previous agents, I’m sorry to hear that.  An agent should extend your reach.  Allowing you to do more with your limited time.  The right agent figures out a customized plan with you for how and when you want reports so that you don’t need to ask.  They don’t make last-minute requests, causing you to drop everything to answer in time.  And they certainly don’t need you to remind them of deadlines.  If anything, it should be the reverse where you are being reminded by them because you are so confident they have your back that you can move on with other responsibilities.

Experience

The right tax agent will also simplify your life by having experience in your property type.  They will be a specialist, not a jack-of-all-trades.  They will know the best valuation approaches for your property and market and will use them to secure you the best possible reductions.  A large part of experience comes from visiting your properties and the local market.  Actual boots on the ground, asking the right questions and documenting the right facts.  If your agent is too overburdened to visit your property, then they are missing a critical piece of the valuation puzzle.  They may secure you a reduction, but it’s like slinging mud against the wall to see what sticks.  

Results

The right specialist tax agent will deliver you the best results possible.  Does that always mean a reduction? No, an agent can’t guarantee a result.  But, if they have done everything they should be doing, they will come to you and let you know the results with confidence.  Knowing they left no stone unturned, and no argument omitted.  The results of a specialist in your property type are usually better than the average agent and that can give you confidence when you report the results. 

A tax agent may not simplify your life, but the right specialized tax agent will.  If you are tired of begging for reports, supervising your agent, or only getting part of the story, it sounds like it may be the perfect time to reevaluate your agent and find the right one to simplify your life!  

Start Saving Now!

How Much Does a Tax Agent Cost?

Posted by & filed under General.

Great Agents are Always Free!

No Risk to You

In multifamily property tax appeals, great tax agents work for a percentage of the tax savings.  This means that unless they are successful in reducing your property valuation, you won’t pay them anything.  This takes the risk off you as the owner and places the burden on the tax agent to perform.  As long as a tax agent is working on contingency, you will always come out ahead. 

Great tax agents take a personal interest in you and your property. They visit it every year and build relationships with those at the property and the Central Appraisal District. The results you experience are much better and lasting than those of a volume agent.

The Cost of a Bad Agent

A bad agent can cost you more than just the current year tax savings, they can cost you your reputation, which could impact future deals and tax savings. Just because an agent is working on a contingency fee does not mean they are getting you the best results. They may even be getting you small reductions every year, but if they are only taking those small reductions because they are too busy to know your property, you may be losing out on thousands in tax savings. 

A bad agent may save you $10,000 a year on a single property, but a great agent may save you $20,000.  If the great agent’s fee is 30% instead of the lower 20%, you will still net $14,000 rather than $8,000 each year by choosing the better, higher fee agent.  If they were to average those same results over the next 10 years, you would net $140,000 in tax savings vs. only $80,000.  All of that savings is on one property.  Imagine if you had 10, 50, or 100 properties; the difference in those results add up quickly.

Don’t Shortchange Yourself

Unfortunately, too many multifamily owners unknowingly undervalue themselves and undercut their success. They think they want the cheapest agent believing it will save them money on fees. The cheap agents are sly and promise them all sorts of things to get the deal, but the client quickly finds out that it was a smoke show to get them to buy.  The deliverables are less shiny than advertised, the results are subpar, and appeals are being churned out of a volume machine, with little human interaction or judgment.   

Quality representation takes time and personal attention. Multifamily owners with the mindset of long-term success choose agents that specialize in their property type. They choose to pay a higher contingency fee to ensure their properties are visited annually and treated individually.  There is a lot of money on the line in property taxes.  It is, after all, usually the number one expense for the Texas multifamily property. Successful owners choose quality over quantity.  They don’t want to be a number, unable to speak to a live person when they have questions. The value is in the relationship with their agent, and knowing their agent truly cares about their properties gives them peace of mind.  And peace of mind is something we could all use more of in the world today.

Start Saving Now & Call us today!

The Hidden Dangers of Fee Caps

Posted by & filed under General.

The Hidden Dangers of Fee Caps

A Capped Agent Becomes a Complacent Agent

Cost vs Results

As a prudent multifamily owner, managing costs is very important. If you hire a roofer, you will want to know and approve the contract cost upfront. Property tax agents sometimes present a tempting offer to cap fees, but there is a hidden dark side when you play that game. You may worry about how much a tax agent without a fee cap will cost, and that is a valid concern. From experience, I have seen that capping an agent far outweighs the benefit to the client.  I would like to pull back the curtain for just a moment and help you glimpse the danger lurking in such a deal.   

Compensated based on success

Property tax agents are typically compensated based on their success. This means that you always come out ahead if you are paying them a fee. When there is no cap, excellent agents do their best to examine every angle and opportunity to reduce your property taxes.  They know that the better they represent you, the higher your savings and their fee. 

On the flip side, you may see agents with a contingency fee plus a cap.  This means that no matter how good they do, they will only receive the maximum cap amount.  Agents under such a deal know exactly the amount of reduction they need to hit the cap and the temptation is to do just enough to hit the cap.  Anything above that they are doing for free.  The true danger to you, as a multifamily owner, is that you don’t get the lowest value and tax bill.  You only get it low enough for your agent to max out their cap.  Thousands of dollars of additional tax savings may be readily on the table, but since there is no upside to a capped agent, they aren’t asking for it.  You ultimately lose tremendous tax savings, which usually far outweighs the cost of removing the cap.

agent with fee cap vs agent without fee cap

You become a volume client

Another danger with using caps with your property tax agent is that you become a volume client.  There is hardly any incentive for them to visit and know your property.  They can likely secure the reduction necessary to hit the cap with minimal effort.  Your property is just one of the thousands that churned out with little thought about the property itself. Getting an update on your property will likely be difficult if you can get one at all. Volume clients usually hear from their agents a few times a year.  Does the following communication sound familiar?

 1. When they need something signed by you.

2. When they need information, usually last minute.

3. When you get their invoice. 

Be Unique

Your company and properties are unique and important to you.  Hire an agent who treats them that way.  The agents who give excellent service don’t have fee caps, and you wouldn’t want them to.  I want you to have confidence you are getting the best representation possible.  We have put together an agent checklist that helps you evaluate your current agent.  It is valued at $1,000, but I want to gift it to you and my expense today so you can make sure you are prepared for the 2022 Texas appeal season.  I hope you will take advantage of reviewing your agent and securing your maximum tax savings next year.

Start Saving Now

Can a Tax Agent Really Get a Bigger Reduction Than I Can on my Own?

Posted by & filed under General, Property Taxes.

Can your tax agent get you bigger reductions than you can on your own?

If not, it’s time to reevaluate your agent

Property Specific Knowledge

Knowing the subject property is one of the first rules in valuation.  As an owner or property manager, you likely have visited your property and know the difficulties it is facing.  This is critical to determining an accurate value.  For an agent to secure a greater reduction than you, they should know the property as well as, or better than the owner.  This can only be achieved through site visits where the agent puts boots on the ground.  First-hand knowledge by a dedicated agent allows them to find valuation issues that even a very diligent owner may overlook.  Online maps, street views, and satellite pictures can never replace a real visit.

Valuation Knowledge and Time

The next critical step is knowing standard valuation methods, and which ones are most appropriate for your property type.  For Texas multifamily, the income approach is usually the best method for determining value.  In the case of new construction, cost would be more appropriate.  As an owner, if you have experience with the approaches and the time to research market income conditions, you might do fine appealing on your own.  However, if like most owners, you have dozens of other important issues demanding your attention, it may be difficult to devote the necessary time and resources to a valuation appeal.  Your time would be far better spent doing that which only you can do and utilizing a professional specialized in Texas multifamily property taxes.  

 The right property tax agent has the time and resources to focus on your valuation appeal.  They have extensive experience in the approaches and market.  By utilizing a dedicated agent, you can free up your time to accomplish your vital priorities and still secure results.  Thereby increasing your productive output, without becoming overwhelmed.

Relationship with the Central Appraisal District

As a final point, it is critical to remember that relationships matter.  If you plan on owning the property for any length of time or want to keep doing business in the county, you should consider your relationship with the Central Appraisal District (CAD).  They are trying to do their best with their limited time and resources.  Approaching them with an aggressive attitude usually will result in the same behavior right back.  When both sides begin by entrenching themselves in their position, it is hard to make progress.  Unfortunately, some agents take this approach. Not only does is it hurt your potential valuation, but it can also harm your company’s reputation in the county.  Whether you appeal on your own or seek a tax agent’s help, find those who are good at building bridges.

How Can I Reevaluate My Agent?

If you have an agent but wonder if they are getting you the best results, use the Tax Agent Checklist to evaluate your agent today.  The insights you will gain from these 10 easy questions will help you determine if your agent can really get you a bigger reduction than you can on your own.  You shouldn’t have to go it alone or settle for mediocre help.  With something as important as your property taxes, you should Experience Excellence.

Arrow Icon