Houston, TX · Member since 2015 · 16 posts · 6 votes
Good afternoon BiggerPockets!
I am currently looking at a deal in Houston, TX that only cash flows if the property taxes stay where they are today or only go up slightly.
The current tax appraisal is at $110k and the ARV is at $170k. If the appraisal I get to refinance out of the hard money loan comes in at $170k like I want it to, will this also be the new tax appraisal?
If the new taxes are based on the ARV loan appraisal then the deal will no longer cash-flow. Does HCAD (Harris County Appraisal District) have access and use the value of my loan appraisal to determine the tax appraisal value of the home? If so, is it possible to significantly reduce this so that the deal still cash flows?
Multifamily Syndicator · Houston, TX · Member since 2018 · 188 posts · 192 votes
7y
@Monte Mabry
Curious to see what others say with more experience, but I can tell you I personally always run my numbers using my new ARV as my tax appraisal.
For example, if today's appraisal is $100k and the new ARV is $160k, I run my rent numbers on whatever the county's tax rate is (say 2.5%) times my new ARV. It's way too risky to not do that - the appraisal district will eventually catch up, and if you're a buy and hold investor you're risking cash flowing for a year or two until HCAD catches up and now you're breaking even or upside down every month. Bad idea!