Rental Property Investor · Dayville, CT · Member since 2016 · 5 posts · 0 votes
Hello all,
Here is the situation:
Our town just increased taxes on commercial properties significantly. $5,500 more per year on a 16 unit property. The property contains four buildings all with 4 units. Townhouse style units with 2 bedrooms, 1.5 baths. There has been very little done as far as updates. Rents haven't been increased in the last 3-4 years. (which is another topic which will be addressed later). NOI has not increased in 3-4 years. The town is assessing the building at an astronomical amount now. They are valuing each apartment around $100k. More realistically each apartment has a market value of $70k. The property is in fair condition and not good as they are using in their assessment. Meeting with the town on Thursday to present my case to hopefully spare me from the tax increase. Any tips or information in regards to this situation would be greatly appreciated. Thanks in advance!
Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes
9y
@Joe Rivers multifamily properties are usually evaluated by county tax assessor sin two possible ways:
1) a Recent sale price. If you bought recently and found a way to know your purchase price, they will use a number very close to the price you paid.
2) income based approach. This would be better for you because you can bring your books and show them the NOI is not as high as they think and the actual Calu is lower. Make sure to use a reasonable cap rate in the math
Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
9y
I agree with income based. Also stress that this will only hurt the tenants because you will have to raise their rents a corresponding amount accompanied with a letter outlining who at city hall is responsible with he and his superiors direct line. I doubt he wants 16 calls to his boss from concerned citizens.
Real Estate Agent · Plano, TX · Member since 2015 · 734 posts · 511 votes
9y
Not sure I'd take the threatening approach out of the gate.
Keep it in your back pocket until they object you before you tell a city employee that you will tell the tenants who in city hall is to blame for the raise in rents ;-)