How much can I trust the county tax appraisal?

14 Replies

Hey Guys,

I'm really new to the game, so i'm trying to figure some stuff out. Help me out! 

I found a 3 bed, 2 bath, 1680 sq ft. double wide trailer on .4 acres for sale for $31,500. The tax office had appraised it this past year at $73,130 and the zillow zestimate shows to be $89k. 

The property is is pretty good condition. The only thing i would have to do (as far as i know at this point) would be fresh paint and  carpet.

When i plug all of this information into the rental calculator here online using 20% down, $7000 (High Estimate) in repair costs, average closing costs, an after repair value of $65k (in my mind a conservative estimate considering it appraises for $73k), and ultimately renting it out for $700 a month, all my numbers look tremendous. I have all my expenses set at averages for the area and have the tenant paying water and electricity. 

I haven't actually went to see the property yet, but based upon these numbers i'm getting a 22% ROI, and $285 of cashflow per month with total cash needed at signing of $15,300. The real kicker is the total initial equity coming in at $39,800!

Now, all of these numbers don't mean jack if the property isn't worth what the tax office says its worth. What do you guys think? Let me know your response.

Thanks! 

Do not use Tax appraisal for ARV. You will be way off. I'm working on a deal that has the tax appraisal at 60K, but the comps pulled put the house at 80K. The tax value is used to calculate how much taxes the home owner pays and can reassessed if the home owner thinks it's too high and wants a lower tax bill. You want a low tax assessment, but a high appraisal.

If you need a starting point, it'll work, but you'll want something more accurate. Pull comparisons or have a real estate agent pull them.

Thanks for your response! 

So i guess my question is this....

What is the most efficient and accurate way to find the ARV? What is the most accurate way to know what a property is worth just as it sits? Is there a place to locate recent appraisals for the property?

Originally posted by @Zach Vaught :

Thanks for your response! 

So i guess my question is this....

What is the most efficient and accurate way to find the ARV? What is the most accurate way to know what a property is worth just as it sits? Is there a place to locate recent appraisals for the property?

If you're not familiar with how to lookup comps for a property, you should find and use a local real estate agent who understands investing. Neither Zillow nor the Assessor's Office are accurate pictures of what the ARV is.

-Christopher

Okay, so i'm assuming that looking up comps is the best way to go about it? Can someone share a step by step of how to go about doing that?

I see now that the tax assessment is not a good indicator. What is? How do i do it? 

Two ways to get comps. Either become a real estate agent and you can have access to the MLS. Or find someone that is a real estate agent that has access to the MLS to pull comps for you. I'm working on my license now, but I have friends who are agents and are happy to pull comps for me.

Thank you guys so much for your input!

Just curious, does the tax appraisal usually run lower than the actual value? Or does it just depends where you are and what the property is? Is there a pretty hard and fast rule concerning it?

Originally posted by @Zach Vaught :

Hey Guys,

I'm really new to the game, so i'm trying to figure some stuff out. Help me out! 

I found a 3 bed, 2 bath, 1680 sq ft. double wide trailer on .4 acres for sale for $31,500. The tax office had appraised it this past year at $73,130 and the zillow zestimate shows to be $89k. 

The property is is pretty good condition. The only thing i would have to do (as far as i know at this point) would be fresh paint and  carpet.

When i plug all of this information into the rental calculator here online using 20% down, $7000 (High Estimate) in repair costs, average closing costs, an after repair value of $65k (in my mind a conservative estimate considering it appraises for $73k), and ultimately renting it out for $700 a month, all my numbers look tremendous. I have all my expenses set at averages for the area and have the tenant paying water and electricity. 

I haven't actually went to see the property yet, but based upon these numbers i'm getting a 22% ROI, and $285 of cashflow per month with total cash needed at signing of $15,300. The real kicker is the total initial equity coming in at $39,800!

Now, all of these numbers don't mean jack if the property isn't worth what the tax office says its worth. What do you guys think? Let me know your response.

Thanks! 

One point to remember is that trailers are NOT real estate improvements and the land under them is often rented, not owned.

Trailers are personal property. Most lenders will treat them as such.

The only real value to them is the land under them if it's owned and not rented. You do sometimes find owned land with a trailer on it, sometimes more than one. Again, the real value is in the land, not any personal property sitting on it.

David J Dachtera

"Success is not a destination. Failure is not an event. Success is a process, failure is a choice."
- DJ Benedict

Originally posted by @Zach Vaught :

Thank you guys so much for your input!

Just curious, does the tax appraisal usually run lower than the actual value? Or does it just depends where you are and what the property is? Is there a pretty hard and fast rule concerning it?

 The tax assessor will usually lag behind in a rising market.  They typically do not want to get challenged.  My house in Collin County is under assessed by 100k at this point.  In Texas, the Assessor's Office does not disclose purchase price.  I would suggest making friends with a local real estate agent as they would be able to run comps.

Mark

Texas is a non disclosure state which renders sites such Zillow worthless.  The Appraisal District cannot be relied on for accuracy as well. I have purchased a property for $50K that was appraised for $100k and a property for $100K that was appraised for 50K and the latter was a better deal. 

A MH home that is with property in considered Real Property in Texas. Unless this is a HUD home, you need to ascertain whether the MH has been moved previously as this is very important for resale. Consult a Realtor in the area as MLS is the only way to get true comps in Texas with few exceptions

what is the age of the mh? Is it a DW? 

There are plenty of properties with mobile homes on owned land. 

We moved an old single wide to our 4 acre home site and built  a 3600 sq ft 2 story house on the land while living in the single wide. We built the house by barter system amongst other contractors for $60k .We later sold the mh and used the $ for carpet in the new house. There are also plenty of mh on owned land or acreage, that has concrete footers to qualify for fha financing..This is what we see often in rural Florida. .

I would agree the tax roll is generally lower.

You should go look at that real good before you purchase..

Check the plumbing real well for leaks. There was a class action some years back on a certain type of mh plumbing line that ended up leaking pretty bad. 

The county appraisal district values are notoriously low (thankfully) because Texas is a non-disclosure state, meaning you do not have to disclose the amount you bought nor sold your home for.   Zillow is completely unreliable and was quite an article last week being shared on social media.  

I would ask a realtor for sales comps that has assisted with mobile home/lot rentals.  If you're getting financing than the appraisal will give you the value.  It might be worth your while to get a 'desktop' appraisal which can cost around $200.