Real Estate Tax Assumptions + Cap Rates in Dallas TX

[Luke Stone]

Hello all,

I'm wondering what assumptions you use for real estate taxes you use when acquiring a new multifamily property? I'm particularly interested in the DFW area since taxes are such a large expense in this area. Do many of you see tax appraisals increased to near your purchase price t get year or two after acquisition.

I look properties that are being sold at 6-6.5% cap rates, but those cap rates are calculated based on current taxes. Once you apply new tax assessed values at the purchase price the cap rate goes through the floor. I have a lot of problems getting deals to pencil out, even though many of them seem decently priced on price/sf comparable basis, $75-$90/sf. Am I just being too tough on taxes? Maybe to a lesser extent insurance?

Thanks all