4 important tips for underwriting accurate property taxes

Getting your assumptions right on your proforma is crucial. Having one number off can be the difference between a home run deal and an alligator - costing you big. One of those crucial numbers is property taxes and getting that right isn't always straightforward. In this video, Michael explains how to get it right and properly underwrite your deals. --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions, and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.   Michael: What's going on everyone, Michael Albaum here from Roofstock, Roofstock Academy. And I want to talk to everybody today about how to actually calculate your property taxes.   So anyone who's purchased real estate might know that calculating property taxes, nailing them down with are actually going to be can be really difficult because they're not always gonna say the same from when you purchase the property, now you own it, they could absolutely change. So here are a couple things that I always recommend to do in order to really nail down into your pro forma what your property taxes are going to be.   So first and foremost, number one thing you should do is call the county assessor, make sure that you actually pick up the phone, I know it's kind of crazy in today's modern tech world, but pick up the phone and call the county assessor of whatever county the property you're interested is in. So if I'm interested in a property in Riverside County in California, I'll pick up the phone, call the county assessor and just ask to speak to someone who can tell you about how property taxes are calculated, because the interesting thing is that they vary from county to county, even within the same state. So we could be in California, California has a statewide law that says the property tax is no less than 1% of the property's purchase price. Now, Riverside County might do a little bit different than Yolo County or Alameda County, so you want to understand what those differences are. So figure out where it is you're interested in property, pick up the phone, call the county assessor, now.   They're probably gonna throw a bunch of different terms at you, they might say assessed value, appraised value, market value, purchase value, all of these numbers can be different. And they could also be used differently. And so not only do you want to talk to someone who can walk you through how to calculate how to calculate the property taxes and what values they're using, but actually have them walk you through how to do the math, because it can be really overwhelming very quickly, something to keep in mind is that there are three values that tend to be totally independent of one another one can be the assessed value, that's what the county is using to determine property taxes, your second is your purchase price. That's whatever the fair market determines your property is worth, or you determine its worth, because you bought it for that. And the third one is usually from the insurance company, that's the replacement value. And so these are three values that might never ever align, that's okay. So don't worry that the county is assessing your property way lower than you paid for it. That doesn't mean it's it's worth less than you paid for. And same thing with the insurance company, they tell you, Hey, this is the assessed value are the replacement value of your home and you're like, wait a minute, that's 100 grand less than I paid for it again, don't freak out, you want to understand what number the insurance company is using on a rebuild cost per square foot to get to that number and make sure you're not un