Deal Junkies, Is This a Good Deal or Not?

Question

Analytical junkies,

I'm looking at buying a house in a working class part of Houston, Galena Park, at a significant discount to market value but I have a reservation about a disturbing trend in its tax appraisal values.  For some reason, the tax appraisal value has been declining by 8% consistently over the last 5 years.  But if you look at the comps, the market still looks hot.  Days on Market is low and the rentals look strong.  It seems like this would be a good rental property but why would the appraisal value keep dropping?  What could be some reasons for this?  Do you think the trend would continue?

Jason

Michael Dang · Answer

@Jason Fang Did you every invest in the Galena Park property?  If so, how it going?  I'm interested in this area as well.

Andres Jaramillo · Answer

Hi @Jason Fang

Yes tax doesn't indicate that the value is going down. I agree with Ross if the property is deteriorating that could be why.

Good luck,

Andres J.

Eric Tait · Answer

Also the owner could be using a tax protest service like many of us do here in the area.  Tax appraisals are not really a good indication of value. Sales comps are.  If you trust your sales comps and you inspect the property and it is fine, go ahead with your analysis and ignore the tax appraised value.

Ross Schneider · Answer

@Jason Fang Can you see the % improved from the tax appraiser? If the property has been deteriorating, that could be why the value is declining.