The Hidden Cash Flow Killer Most Rental Owners Don’t Consider

The Hidden Cash Flow Killer Most Rental Owners Don’t Consider

1 min read
Matt Faircloth

Matt Faircloth, co-founder and president of the DeRosa Group, is a seasoned real estate investor. The DeRosa Group, based in historic Trenton, N.J., is a developer and owner of commercial and residential property with a mission to “transform lives through real estate.” DeRosa creates partnerships to finance select real estate investments and has a proven track record of providing safe, profitable investment opportunities to their clients.

Matt, along with his wife Liz, started investing in real estate in 2004 with the purchase of a duplex outside of Philadelphia with a $30,000 private loan. They founded DeRosa Group in 2005 and have since grown the company to hundreds of units in residential and commercial assets throughout the East Coast. Under Matt’s leadership, DeRosa has completed tens of millions in real estate transactions involving private capital, including fix and flips, single family home rentals, mixed-use buildings, apartment buildings, and office buildings.

Matt is an active contributor to the BiggerPockets Blog and has been featured on the BiggerPockets Podcast three times (show #88, #203, and #289). He also regularly contributes to BiggerPockets’ Facebook Live sessions and teaches free educational webinars for the BiggerPockets Community.

Matt authored the Amazon Best Seller Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money. The book is a comprehensive roadmap for investors looking to inject more private capital into their real estate investing business and is a must-read for anyone looking to grow their business by using private lenders and equity investors. Kirkus, the No. 1 trade review publication for books, had this to say about Raising Private Capital: “In this impressively accessible introduction to a complex subject, Faircloth covers every aspect of private funding, presuming little knowledge on the part of the reader.”

Matt and his wife Liz live in New Hope, Penn., with their two children.

Matt earned a B.S. in Industrial and Systems Engineering with a minor in Business from Virginia Tech. (Go, Hokies!)

DeRosa Group’s YouTube channel

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When you consider the reasons your cash flow gets pulled down, you are likely to think about the usual suspects. Maybe your thoughts go to unit vacancy or utilities. These are valid concerns, of course, and these elements play a major part in keeping your properties performing well. But there is another factor that most investors take for granted, and that’s your real estate tax assessment. You may not have even heard of a tax assessment, but in most states, you have one—and you should know what it is.

Related: How to Reduce Your Property Tax Assessment

The Effects of a Too-High Tax Assessment

Your tax assessment is your local town or county’s value of your property. They use that number to calculate your contribution to everything from road costs to your local schools. You may not have heard it explained this way, but I’m talking about your real estate taxes. Most states use the method I explain in the video. (Some don’t, and if yours doesn’t, I would like to hear all about it in the comment field below.) If your tax assessment is too high, you are being charged too much in real estate taxes and may not even know it. Knowing how this number is calculated will enable you to challenge your assessment if it’s too high. Most counties do reassessments every 5 to 10 years. I’ve heard of landlords having their taxes double after getting reassessed, which can happen if you don’t take the right actions to make sure you get a fair valuation.

Be sure to watch this video, where I provide a deep dive into the “nuts and bolts” of what you need to know about real estate tax assessments.

If you have some stories to share about real estate taxes or if your town does it differently than I describe in the video, I want to hear from you!

Be sure to leave a comment.