How do assessments and property taxes work?

3 Replies

I am looking to buy a multi family property, however, the price that we would buy it for is ~$150k higher than the assessed value. The numbers still work with decent cash flow numbers. My question is, if we buy the property at a much higher value than the assessed value, how are the property taxes and "Improved Value" of the assessment affected? Will the "improved value" assessment likely increase a large amount, as well as the property taxes or how does that work?

@Lucas Zaichek yes this is a big problem with buying "stabilized" multifamily properties. I recently saw a building locally here in Cicero, IL where the OM had the taxes remaining stable post sale. When I ran the calculations I saw that the tax burden on this 27 unit could potentially jump over 40k! You have to underwrite to a worst case scenario to make sure you will still be ok.