You can significantly increase the value of your property by reducing your expenses
As the owner of a multifamily property, you should always be looking for ways to reduce your expenses and increase your return. On our blog we’ve covered some great ways you can do this, by making capital improvements and decreasing delinquencies, but there’s also another way you might not be familiar with.
Real estate taxes are one of the large line items you’re going to encounter on a profit and loss statement for an apartment building. For most multifamily owners, property taxes are one of their larger expenses every year. The good news is there are things you can do to reduce that expense and realize a higher return on your real estate asset.
Our advice: go to the appraiser’s office and appeal the assessed value given to your property. Disputing your assessment is something that many owners don’t think is possible, but it can result in big savings.
Talk to a local real estate broker and tell them what you’re planning to do. They’ll help you put together an analysis of your property, which will include an independent valuation as well as comparable sales that will help to bolster your case.
The appraiser’s office typically appraises properties at around 80% of what they consider to be market value. Presenting an independent valuation and comparable sales analysis can convince the appraiser’s office that your property should be assessed lower than the original assessment, and can have a huge impact on your bottom line.
If you can’t find a real estate broker that can help you, there are independent firms that specialize in this type of property tax objection. They’ll do this on a contingency or fee basis to get your property taxes reduced.
It’s worthwhile putting in the effort to reduce your property taxes—especially in today’s low cap rate environment where the yields are so low. Every dollar you save by lowering your expenses helps to increase your net operating income, and can make a big difference to your bottom line.
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