I'm going to go in & deal with this but wondering if any of you have any information that will help.

Got my notice of appraised value on one of our rentals : a 4-plex. It was high - raised $12K from last year. I went in, had tons of back up & was nice to everybody - definitely not a jerk. They said they'd get back to me.

Well, they did. Got a **CORRECTED** one in the mail today. Value now up another $12K. I called & they said they switched it to an "Income Based" valuation & that they had raised all multifamily this year. Well.... no they didn't until they revised. We are now valued at $24K over last year. No improvements - as a matter of fact, we took in pics of siding that needs replacing, etc.

How do they figure that value? How do they know what we make less expenses, etc?

I don't don't think we could get what they are saying it's worth, they've had us the highest 4-plex in town since we bought it in 2015.

I'm going to have to figure out what income they base things on. Appreciate ideas/advice on my argument?

agnerd said:

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So if you don't generate any income, you pay zero taxes, right?
I'd open with that.

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Not actual, but potential.

Sec. 23.012. INCOME METHOD OF APPRAISAL. (a) If the income method of appraisal is the most appropriate method to use to determine the market value of real property, the chief appraiser shall:

(1) analyze comparable rental data available to the chief appraiser or the potential earnings capacity of the property, or both, to estimate the gross income potential of the property;
(2) analyze comparable operating expense data available to the chief appraiser to estimate the operating expenses of the property;
(3) analyze comparable data available to the chief appraiser to estimate rates of capitalization or rates of discount; and
(4) base projections of future rent or income potential and expenses on reasonably clear and appropriate evidence.
(b) In developing income and expense statements and cash-flow projections, the chief appraiser shall consider:
(1) historical information and trends;
(2) current supply and demand factors affecting those trends; and
(3) anticipated events such as competition from other similar properties under construction.

I'd be curious to see their evidence of all of the above.

They are probably just using market rent data sets and market expense data sets based on age, location, etc.

Seems inefficient but most of the mass valuation methods are.

agnerd said:

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So if you don't generate any income, you pay zero taxes, right?
I'd open with that.

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Then they'd just say they mean the income valuation approach. They'd probably laugh at you and you'd feel like a fool

Quote:

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They are probably just using market rent data sets and market expense data sets based on age, location, etc.

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That's exactly what they are doing. They said the only way for us to get it down would be for us to submit our actual numbers on rent & expenses. Ran those & we come out worse, so $24K up, it is.

edit: In hindsight we never should have gone in, but who ever expects it to go up - no reduction, maybe, but an increase?!? They admitted that's rare - especially after the values have been sent out. Add to that, they changed the whole valuation process on us. Ugh.

You went in the CAD and ran the numbers in front of them? And they increased it?

Yea would not recommend that. They should provided the market rent they used on request.

schwack schwack said:

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I'm going to go in & deal with this but wondering if any of you have any information that will help.

Got my notice of appraised value on one of our rentals : a 4-plex. It was high - raised $12K from last year. I went in, had tons of back up & was nice to everybody - definitely not a jerk. They said they'd get back to me.

Well, they did. Got a **CORRECTED** one in the mail today. Value now up another $12K. I called & they said they switched it to an "Income Based" valuation & that they had raised all multifamily this year. Well.... no they didn't until they revised. We are now valued at $24K over last year. No improvements - as a matter of fact, we took in pics of siding that needs replacing, etc.

How do they figure that value? How do they know what we make less expenses, etc?

I don't don't think we could get what they are saying it's worth, they've had us the highest 4-plex in town since we bought it in 2015.

I'm going to have to figure out what income they base things on. Appreciate ideas/advice on my argument?

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Sell it to a shell company for $1.

Take the HUD in.

???

Profit

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You went in the CAD and ran the numbers in front of them? And they increased it?

Yea would not recommend that. They should provided the market rent they used on request.

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Sorry - I guess that wasn't worded clearly.

We got our first appraisal notice with a raise from last year. We went in with some good photos of damage, some CAD info on like properties valued way less with no raises for over 10 years, etc. They told us they'd review & get back to us. They sent us a **CORRECTED** (their caps, not mine) appraisal sheet with an additional raise. Then we scheduled an appointment & went in to figure out WTH.

We did not run numbers there. We got their worksheet, reviewed how they got to their value THEN came home to run real numbers to see if we'd come out better. They still have us somewhat undervalued & we will not be giving them our actual numbers.

Income approach is just one method. The other two are cost and sales comparison. No one method trumps the other and the task is to choose the method most appropriate.

I would protest and go in front of the ARB. Argue why the income approach is not the best and use data to support other methods. If that approach does not work, then go to court or binding arbitration. You will probably have to engage an appraiser to value the property.

It is a number game for the CADs. They raise the values for everybody and 90% of the folks take it and just pay. The other 10% they fight with.

We have a commercial property that we fought on last year. Went to the ARB and didn't get a satisfactory result but that was expected. When the ARB is handpicked by the appraisal district, what do you expect to happen. Deck is stacked against the taxpayer. I could have went to arbitration but that is a cheaper option so we decided to sue and since I am an attorney I wanted to them to spend money on the case and get upside down on the costs and then eventually we can settle or go to the judge. Our trial is scheduled for late this fall for a matter related to 2020.

Good luck.

I don't know how these people (appraisal board, tax office) sleep at night.

NoahAg said:

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I don't know how these people (appraisal board, tax office) sleep at night.

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Because they're government employees. Stealing from taxpayers gets them off