Archive | Landlord DIY RSS feed for this section

Laminate Floor Water Damage & Mid-Lease Replacement

23 Apr

Since I tout the benefits of rental property, it’s only fair that I also share when things don’t go according to plan. This is totally one of those times.

Last spring a leased washing machine overflowed, destroying the laminate floors in one of our rentals. Our tenants had already contacted the appliance company, who agreed to cover the damage (via their insurance). Now we needed to replace the flooring… while the tenants were still living there.

Water Damaged Laminate Floors

I suspect I could give this scenario to 5 different landlords and I’d get 5 different opinions on next steps. Here’s how it went down for us:

  • It took months for (1) the appliance company to file a claim with their insurance and (2) the insurance company to send an appraiser to inspect the damage. When insurance denied the claim the appliance company decided to pay us directly while they appealed the decision – a darn classy move on their part.
  • We requested two 2 flooring quotes – one for laminate and one for ceramic tile. The less expensive laminate estimate was provided for insurance purposes with the expectation that we’d add some money of our own to replace the floor with tile instead.
  • Movers helped us reallocate the tenants’ belongings to the kitchen, garage, and a rented storage pod. The next day, the flooring company began the process of removing the laminate and installing tile.
  • Meanwhile our tenants camped at a nearby hotel. It annoyingly took a day and a half longer than originally estimated, but at least the flooring company discounted the bill to compensate for the extended hotel stay.
Tile Floor Installed

We paid a little extra (~$300) to have the tiles installed diagonally – looks great!

What an ordeal. Our floor replacement costs:

  • Moving Help – $235
  • Storage Pod – $329
  • Hotel (3 Nights) – $519
  • Tile and Installation – $5,136

$6,219 Total – $4,864 Reimbursement = $1,355 Out-Of-Pocket

Some silver linings:

  • I never particularly cared for that laminate flooring in the first place, but it was already installed when we purchased the property and we couldn’t justify replacing it for aesthetics alone.
  • All things considered, $1,355 is a great deal for new ceramic tile flooring. I dare say we came out ahead, especially since we were probably going to upgrade the flooring to ceramic tile someday.
  • Could we have gone after the tenants to recoup some of these costs? Probably. All-in-all this was a good example of all parties (landlords/tenants/appliance company) being a little flexible to make the best of a bad situation. Any of us could have taken a hard line with demands, but didn’t. Well… except the insurance company.  😈

For the most part I figure surprises like this come with the territory. It was a lot of hassle and uncertainty – but nothing we couldn’t overcome with patience, perseverance, and our rental emergency fund.

Want to be notified of new posts?

Join 186 other subscribers

Don’t Confuse Real Estate Investors with Landlords

16 Feb

Be wary of the excuses people give themselves when dismissing rentals – the reality is not so black and white. Many of the perceived pain points (finding renters, late night phone calls, challenging tenants) are primarily landlord fears, and being a landlord is not the same as being a real estate investor.

Landlord vs Real Estate Investor

Investment properties pose unique challenges and they aren’t for everyone, but discouraging yourself and others from doing something you haven’t even tried because “it’s too much work” is a weak sauce argument. And not necessarily true.

Our Changing Priorities & Responsibilities
In 2011, we were excited to jump into this real estate experiment, prioritized cash flow over convenience, and wanted to keep close tabs on our investment.

Excited Boy with Toolbox

(photo by ocbeejay)

We started out as proper landlords managing everything ourselves:

After our 2nd duplex we were a little burned out, but we still believed in the long-term benefits of investing in real estate. Today we have 3 duplexes (6 units) in addition to our full-time day jobs.

Hire Property Management Company for Rentals

(photo by Nguyen Hung Vu)

It didn’t take long for us to hire a property management company, which delegated the vast majority of our day-to-day hassle. I no longer worry about how to get a plumber to show up on a Sunday or remembering when the next lease comes up for renewal.

Our workload today is about 20% of what it was:

  • Approve the occasional expense or request
  • Bookkeeping
  • Coordinating insurance policies
  • Make ready work

Delegating isn’t an all or nothing proposition either – the work we’ve chosen to do ourselves is generally more predictable and easier to fit into our schedules. Your time vs. money balance might be different than ours.

Golden Rule: Choose Properties with Flexibility
When buying a new property, we follow the 1% rule and then plug estimated costs into our balance sheet to vet out any financial deal breakers.

Even if you intend to manage the property yourself, I highly recommend including the cost of hiring a property management company into your cash flow assumptions.

changing priorities of being a real estate investor vs landlord

(photo by R/DV/RS)

Nothing wrong with being a landlord and pocketing the extra cash flow, but 30 years is a long time and priorities can change. You’d be doing yourself a favor to keep your options open by buying a property that can support the costs of hiring a property management company – just in case. This “flexibility insurance” will dramatically increase your odds of having a positive experience with rental properties long-term.

Play your cards right and you can still build substantial assets and realize early retirement without the day-to-day hassle of being a landlord. Rental properties require many hats – but you don’t have to wear them all yourself.

Want to be notified of new posts?

Join 186 other subscribers

Make Ready Checklist with Auto-Populating Fields

12 Jan

There’s no way around it, make ready work is full of details to remember:

  • Will the electricity automatically transfer?
  • Is the trim painted the same color as the wall?
  • Do any fence pickets need replacing?
  • What size are the air filters? How many are needed?
  • Is the drill battery charged?
  • Are any doorstops missing? Light bulbs? Shower curtain rods?

Each misstep is another trip to Home Depot or another loose end to button up later. To complement my grab-and-go kit, I needed a make ready checklist.

Rental Make Ready Checklist

How it Works
The checklist needed to be universal in some ways (light bulbs, lawn care) and property-specific in others (paint colors, window dimensions). I also didn’t want to update 6+ separate documents every time I made an update.

My solution uses an Excel spreadsheet with a drop down list of properties. The drop down selection triggers vlookup formulas that auto-populate the property-specific fields with data from the last tab. Since we have duplexes, our data is separated by unit instead of property.

Rental Make Ready Checklist Drop Down

Once you’ve tackled the initial data input, you simply select the rental property (or unit/apartment) in the upper left-hand corner and print the first 2 tabs. Voila!

Tab 1 – Make Ready “Prep” List
I found myself distinguishing between tasks that happen during vs. immediately before a vacancy. The first tab addresses errands that begin a week or two prior: transferring utilities, charging batteries, pulling together supplies, and ordering discounted gift cards.

Rental Make Ready Checklist Clipboard

I also included a section to remember unit-specific projects that had been saved for another day/vacancy. For example, we provide a fire extinguisher in each of our units, but we haven’t bought a set for our newest property yet.

Tab 2 – Make Ready Checklist
My pièce de résistance. Selecting the property (or unit) in the upper left-hand corner will auto-populate:

  • Air filter quantity & size
  • Wall & trim paint color
  • Date of last dryer duct cleaning
  • Quantity of fire detectors
  • Fire extinguisher expiration year
  • Drip pan quantity, size & brand
  • # of bags of mulch needed
  • All window dimensions

This make ready checklist is COMPLETELY over-engineered – but I love it. ❤

Printable Make Ready Checklist for Rentals

My list intentionally excludes cleaning tasks since we hire that out. I also added some blank spaces for vacancy-specific tasks – like damage, prioritized improvements, and infrequent maintenance items.

Using the Make Ready Checklist
During my last vacancy, I printed a fresh copy each evening so I could translate that day’s notes and reminders into tomorrow’s shopping list and to dos.

The final copy is filed with my property-specific paperwork. Now if the refrigerator shelves go missing, I can reference the last checklist and be certain they were accounted for during the previous vacancy.

Feel free to download the make ready checklist template here. The document is partially-locked to help prevent inadvertent formula breaks, but the more adventurous are welcome to unlock it and customize (there’s no password).

Want to be notified of new posts?

Join 186 other subscribers

2014 Goal Results & Highlights

22 Dec

Earlier this year I created goals for 2014 to keep me on-track. The results:

✔  Pay Down Mortgage Debt$3,522 applied to mortgage #2
✔  Expand Property Management – done!
✔  Mean Tenants – replaced with pleasant people at market rate
✔  Try Discounted Gift Cards – success!
✔  Another Property – technically, but we weren’t expecting a rental
✔  25 Blog Posts – squeaked in at 27 posts this year, yay!

Having goals was quite motivating – a way to ensure “someday projects” get prioritized. When reflecting on the past year, a few key initiatives stand out:

Buying Duplex #3
Our third purchase last May made three properties in as many years – not too shabby! It was also the second time we saved a down payment for a primary residence and ended up buying a rental property instead.

What can I say, we have a problem. 🙂

rental property living room 3

We stumbled on some legitimately good deals, but also wanted to maximize our advantage as DINKs (dual income no kids) while we could. It’s not hard to see a future where adult responsibilities stall our current momentum.

This acquisition was unique because the cash flow and appraised value were low for the purchase price, but our research suggested it still had potential. After a $200/unit rent increase (both tenants stayed!) and a new sales comp – we were back on track a mere 2 months later.

Series: How We Saved $1,454 on Our Property Taxes
Corey’s victorious quest to protest the tax valuations on two properties, broken into a 4-part series:

  1. Receiving a Notice of Appraised Value
  2. Filing a Notice to Appeal & Requesting Supporting Documentation
  3. Compiling the Evidence
  4. Appraisal District Meeting & Outcome

A good example of a financial skill that should be taught in public education, but usually isn’t. I group it in with preparing your taxes, the effects of compounding interest, and calculating student loan payments before a student chooses a college or major.

Aspirations / Running the Numbers
It’s fun to daydream about the future of our real estate empire. I noodled through hypotheticals like how many properties we’d need to retire and whether it would be faster to finance or buy outright.

day dreaming clouds

(photo by Kevin Dooley)

Turns out we could probably buy 13 leveraged properties faster than 5 paid off ones – all things being equal – while generating the same net income. Realistically, we’ll probably do a combination of both, and now that we’ve topped off our rental savings we’re cooking with pre-payment fire again!

Make Ready Kit + New Additions
I continue to adore our make ready kit, and got the opportunity to try it out in the field during a vacancy in November.

Make Ready Vacancy Kit Additions

Through trial and error, I’ve added to the inventory a bit:

Now the real question is whether to expand to a second bin….

Discounted Gift Cards
For those tempted to give discounted gift cards a try, I’d recommend waiting until just after Christmas. An influx of holiday gifts will likely upset the supply/demand model in your favor. More inventory = better discounts.

Also, a big thank you to those using our Raise and Cardpool links – any referral credits are going straight to our mortgage pre-payment efforts!

Cardpool Referral Credit

Previous Recaps:

“By three methods we may learn wisdom: First, by reflection, which is noblest; Second, by imitation, which is easiest; and Third, by experience, which is the bitterest.”  -Confucius

Want to be notified of new posts?

Join 186 other subscribers

Removing Scuffs & Scratches from Stained Concrete Floors

11 Dec

The ironic thing about concrete floors in rental properties is that tenants might actually be more reckless on them because they assume the surface is indestructible… and they would be wrong.  🙂

Cement Floor Scuffs

During our last vacancy, I needed to address some marks in the floor – probably caused by dragged furniture. They were within the clear top coat, not physically scratched into the concrete itself. Almost like trapped air bubbles.

Being a concrete floor newb, I found a lot of conflicting information online – people suggesting polishes, waxes, or even a complete refinishing of the floor. I eventually stitched together an action plan with the help of my concrete flooring guy and the process ended up being WAY EASIER than I expected it to be.

First Things First – Type of Sealer Matters
Sealants come in several varieties based on the type of sealer (penetrating, acrylic, polyurethane, or epoxy) and distribution method (water-based or solvent-based). The floor in question had an acrylic, solvent-based sealant.

From what I’ve read online, you should NOT use this method on water-based sealers because xylene will compromise a water-based seal.

When in doubt, please test this method in a hidden area first. I’m new to concrete flooring, and I’d hate to inadvertently cause somebody’s floor to melt!

The Plan – Reset the Sealant with Xylene
Our flooring guy originally suggested using a paint roller and long pole to distribute a thin layer of xylene across the entire floor. For a smaller area, I could try a lint-free rag or a microfiber pad (be sure to wear gloves!). He was very confident, and said it would look as good as a newly-sealed floor.

The Euclid Chemical Company offers a handy “Concrete Cure & Seal Troubleshooting Guide” that provided some insight into how xylene works. From page 4, Instructions for Performing a Solvent Wash:

“Use steady, even strokes to apply the solvent. After a few minutes, the solvent will re-wet the sealer, turning it back to its original liquid form.”

Reminds me how manicurists can fixed a smudged nail by using a swipe of polish remover to “reset” the finish.

Supplies – Available at Home Improvement Stores

Xylene and Other Cement Floor Scatch Removal Supplies

This process has a pretty reasonable and affordable supply list:

  • Xylene (aka Xylol)
  • Microfiber Applicator Pads – I recommend one with grips
  • Disposable Nitrile Gloves
  • Solvent-Resistant Paint Tray
  • Safety Glasses

I already owned a pair of safety glasses, so everything else cost $15-$20.

 Note: solvents are a little more heavy duty than your average water-based paint. Everything on my shopping list was “for solvents” or “solvent-approved” per the packaging. If I were applying xylene to the entire floor, I’d be using a solvent-friendly roller too.

Xylene Application
Thoroughly sweep and mop the floor before you begin. I cheated – we have a cleaning crew come during every make ready, so I intentionally saved this project until after they were finished.

I’d recommend going outside to pour the xylene into the tray. The spout isn’t very forgiving, and I spilled this stuff everywhere on my first try.

I used the microfiber pad to wipe xylene on the floor and the scratches started to disappear before my eyes (we’re talking seconds, not minutes). This stuff is the magic eraser of concrete flooring!

Cement Floor Scuffs Before After

Pretty confident, I left the floor to dry and came back the next day.

Turns out it almost worked too well. If you look closely at the circled area you can make out the wipe marks where I applied the xylene. This was an unintended consequence of re-setting the sealant; the scuffs were gone AND the floor dried to the original high gloss shine – which was now much much shinier than the surrounding floor.

Cement Floor Restore Sealant Shine

Our property management company’s maintenance coordinator helped de-shine the floor with a blue scouring pad (the kind you wash dishes with) buffing in a circular motion. Alternatively, normal wear would eventually dull the shine to match.

Next time I’ll spot treat with the expectation that I’d need to buff 24 hours later, or apply xylene to the entire floor to get the high-gloss shine all over. I might alternate methods depending on how scratched the floor is and how long it’s been since the entire floor has been reset.

Want to be notified of new posts?

Join 186 other subscribers

How We Saved $1,454 on Our Property Taxes, Part 4

24 Nov

The final chapter of our appraisal protest series. Previous posts include: Receiving Our Notice of Appraised Value, Filing a Notice to Appeal and Requesting Supporting Documentation, and Compiling the Evidence.

Corey received a letter assigning him a specific day and time for two back-to-back hearings at the county appraisal district.

Appraisal District Office

In the interest of time, many appraisal districts begin with an informal meeting that attempts to resolve the issue (like a plea bargain before trial). Corey was escorted to the cubicle of an associate appraiser who heard his case.

Appraisal Disctrict Appointment

Duplex #1’s Outcome
For reasons lost to the sands of time, each unit of this property was taxed independently (an owner-occupant probably wanted to claim the homestead exemption on their half). However, there seemed to be some discrepancies related to what had and hadn’t been split between both units. For example, the improvements (building/garage/patio) were split 50%, but the land value was applied in full and effectively counted twice.

The appraiser consulted with her superior, and came back with a proposal to use the average of the 3 sales comps (which were all complete duplexes) to provide a better apples-to-apples valuation. She also began the process to merge those two units under 1 property ID moving forward.

Duplex #2’s Outcome
This objection related to the selection of comparables. The property is on a street with 20 or so identical duplexes, plus 2 “luxury” duplexes that were built on the end several years later – and at a significantly higher cost.

One of these things is not like the other.

Two of these things are not like the others…

Using photos and year built information, it was pretty easy to convince the appraiser to throw out the outlier and use the average of the rest instead.

Next Steps
If Corey had not come to an agreement with the appraiser, he would have proceeded to a formal hearing with the Appraisal Review Board, a committee of 3 citizens. The results of that hearing could be appealed to district court.

Instead, Corey simply signed a 1-page “Final Agreement and Waiver of Protest” for each property that noted the corrected values.

Appraised Value – Before & After

Property 2013
(B vs A)
Duplex #1 $173,740 $216,948 $179,362 -$37,586
Duplex #2 $131,569 $169,105 $149,488 -$19,617

2014 Estimated Taxes – Before & After

Property Est. Taxes (Before) Est. Taxes (After) Change ($)
Change (%)
Duplex #1 $5,187 $4,288 $899 -17%
Duplex #2 $4,784 $4,229 $555 -12%

Would He Do It Again?
Corey says most definitely. If nothing else, the system simply can’t give too much attention to every little challenge, so they’ll probably cut you a deal to make the issue go away. Perhaps we wouldn’t bother if the appraised value/housing market was fairly stagnant year-over-year.

Since the appraisal process is automated, I think there’s a good chance we’ll see those higher-priced duplexes incorporated into duplex #2’s comps again – that error alone would have cost us a little over $500. We also have duplex #3 to contend with next year.

Want to be notified of new posts?

Join 186 other subscribers

Landlord Efficiencies: Grab-and-Go Make Ready Kit

13 Oct

These days our property management company handles the day-to-day repairs for our tenants, while we still do most of the make ready work. I enjoy tinkering around the properties and fixing things up, particularly when we can work at our own pace while the units are vacant.

What I don’t like is searching our apartment and cluttered storage closet, trying to find (and remember) everything I might possibly need over the next few days. More than once I’ve purchased something I already own because it’s cheaper than making the trip back to our place.

Storage Closet

The hot mess that is our apartment’s storage closet

To that end I decided to create a “Make Ready Kit” – permanently consolidating the most used tools and supplies in one place. I started with this Rubbermaid Clever Store Organizing Tray and 71-quart storage tote.

Rubbermaid Clever Store

Then I pulled together anything regularly used when preparing a unit for tenants – including yard work, touch-up paint, carpet cleaning, fence maintenance, light bulbs, and security deposit accounting. Even that process took the better part of a week because I kept adding forgotten items.

Make Ready Kit Contents

(Click to view full size image)

There are some bulky elements that won’t fit in the bin (broom, step stool, etc.) but I have another idea to address those (coming soon).

Make Ready Kit Contents:

  • fire ant bait
  • small hose extension
  • fertilizer spikes
  • carpet cleaner (spot treatments)
  • carpet cleaner (machine)
  • drip pans
  • paper towels
  • hand towel
  • drill bits
  • exterior screws
  • spackling
  • putty knife
  • paint brush
  • paint stir sticks
  • light bulbs
  • gloves – his and hers


Make Ready Kit Compiled

Everything fits nicely – with room to spare.

The next vacancy isn’t until November, but this has already been an easier solution for grabbing the random tool for an around-the-house project. It would also make a great gift basket for a new landlord or real estate investor.

*If you have a suggestion to improve the kit, please share it in the comments.*

Want to be notified of new posts?

Join 186 other subscribers

How We Saved $1,454 on Our Property Taxes, Part 3

8 Oct

Note: these appraisal protest experiences are Texas-specific (and possibly county-specific) so please be careful applying them to your own district.

Once Corey received our appraised value and filed our notice to protest, it was time to compile any value-supporting data. Below are some places to start, and a notation about whether they corroborate an excessive or unequal protest.


(photo by striatic)

Appraisal District’s Supporting Documentation
We previously sent a letter requesting all documentation the appraisal district intends to introduce at the hearing. Our district provides different reports depending on the reason(s) for protest – so again, check both when you file!

Comparable Sales Report (Excessive)

126 Street 118 Street 200 Street 100 Street
Year Built 2006 2006 2006 2011
TotValue $169,105 $169,105 $169,105 $162,618
Value/Sq Ft $48.87 $48.87 $48.87 $48.87
Sale Date 1/22/13 1/8/13 7/31/13
Sale Price $150,000 $143,000 $182,000
Adjusted Price $153,060 $145,917 $191,252
Indicated Value $153,060

The comparable sales report included 3 other properties sold recently, then made square footage, year built, and sale date adjustments to estimate the market value of our property. Notice that property #2’s indicated value is significantly less than the $161,105 appraisal, and that comp #3 is a considerable outlier in sales price relative to the other properties.

Equity Comparable Report (Unequal)

126 Street 112 Street 112 Street 112 Street
Sq Ft 2006 2007 2007 2006
Year Built 3,460 3,460 3,460 3,184
Appr Value $169,105 $170,607 $170,607 $169,105

Each equity comparable report gave us the appraised value of 10 similar properties relative to our own property’s appraised value.

3rd Party Sales Comps (Excessive)
Request comparables from a real estate agent or property management company, or search online listings ( filters by past sales). Our realtor provided a “Market Analysis Summary” with ~10 similar sales for each property:

Address Unit Mix
Sold Price
Sold Date
212 Street Dr 3/2 3,460 $129,000 3/5/12
112 Street Dr 3/2 3,460 $138,000 6/8/12
220 Street Dr 3/2 3,460 $136,000 7/13/12
200 Street Dr 3/2 3,460 $143,000 1/11/13
118 Street Dr 3/2 3,460 $150,000 1/31/13

The ultimate goal of the appraisal process is to determine the value of the property on Jan 1st of the current year. Properties sold within 24 months of that date can be considered (36 months is allowed if there are limited comparables). This means we’re interested in sales from 2012 and 2013, but the most recent comps have more weight when determining the Jan 1st value.

Appraisal District Website (Unequal)
There is a wealth of information on the appraisal district’s website, included the appraised value of every property in your neighborhood. If you find similar properties with significantly lower appraisals (perhaps they are homesteads – which means the rate of increase is capped at 10% per year), they could support an argument that your property has not been equally appraised.

Appraisal District Property Results

While you’re there, verify the information the appraisal district has about your property. Pay extra attention to the square footage and number of bedrooms and bathrooms – it’s possible the appraisal district used inaccurate information to calculate the appraised value.

Recent Settlement Statements (Excessive)
We didn’t know this at the time, but we could have also used our HUD-1 Settlement Statement to support a lower market value since property #2 was purchased in the previous year.

If you have used any other data sources when protesting an appraised value, please share them for others in the comments below.

Next post – Corey’s meeting with the appraisal district

Want to be notified of new posts?

Join 186 other subscribers

How We Saved $1,454 on Our Property Taxes, Part 2

22 Sep

Earlier this year, Corey successfully protested the tax valuation of our investment properties – this series shares his experiences and lessons learned along the way. The information below is definitely Texas-specific, and possibly county-specific, so please take caution when applying it to your local area.

Step 1 – File a Notice to Protest
After reviewing our tax appraisal notice, we needed to schedule a hearing with the Appraisal Review Board. Form 50-132 requested owner information, property details, asked us to declare the reason(s) for our protest.

Notice-of-Protest-Reasons Checked v2

Our reasons would determine what evidence could be presented at the hearing. We wanted to get our hands on the appraisal district’s documentation first, but we couldn’t do that until after the protest form was filed. The solution: check both over market value and value is unequal to give us the most flexibility later.

Make a notation if you’d prefer an evening/weekend slot (if available). Be sure to make a copy of the completed form before you turn it in – you’ll need it in Step 2.

Tip: protesting multiple properties in the same appraisal district?
File Form 50-131 to schedule the hearings on the same day.

Step 2 – Request the Appraisal District’s Evidence
Next, we sent a separate letter (template below) requesting the documentation the chief appraiser will use at the hearing to justify our valuation. This provides 2 HUGE advantages for the property owner:

  1. At least 2 weeks to review the appraisal district’s rationale for the valuation, and prepare any counter-arguments.
  1. The evidence the appraisal district can introduce at the hearing is now restricted to only those materials.

We would be provided different documents depending on whether we protested market value (comparable sales report) or unequal appraisal (equity comparable report) – another reason to check both boxes when you file!

Next Appraisal Protest Post: Compiling Your Evidence

[Month DD, YYYY]

Via Hand Delivery
[Name], Chief Appraiser
[Name] County Appraisal District
[City], [ST] [Zip Code]

Re: Request for property appraisal information at [Property Address], [City], [State] [Zip Code] (account #) Property [#]

Dear Sir/Madam:

Enclosed please find the Property Tax – Notice of Protest Form 50-132 regarding the above described improved real property.

Additionally, pursuant to section 41.461 of the Texas Property Tax Code, please provide a copy of the data, schedules, formulas and all other information the chief appraiser plans to introduce at the hearing to establish any matter at issue.

It is my understanding that information, “not made available to the protesting party at least 14 days before the scheduled or postponed hearing may not be used as evidence in the hearing,” according to 41.67(d) of the Texas Property Tax Code.

Please notify me when a copy of the above referenced information is available and I will make arrangements to pick it up and remit payment for it.




Want to be notified of new posts?

Join 186 other subscribers

How We Saved $1,454 on Our Property Taxes, Part 1

12 Aug

Earlier this year, Corey successfully protested the valuation of our investment properties – this series shares his experiences and lessons learned along the way. The information below is definitely Texas-specific, and possibly county-specific, so please take caution when applying it to your local area.

A Rising Tide Floats all Boats – And Taxes
The official “Notice of Appraised Value” is sent by the Texas County Appraisal District (TCAD) in April or May of each year. You’ll only receive a mailed notice if the valuation has increased, but you have the right to protest regardless.

Pro Tip: keep your “owner address” updated with TCAD to ensure you receive these notices. You can verify the address on file and find
address correction forms at the appraisal district’s website.

This year, both of our duplexes were slated for significant increases:

Property 2013
Duplex #1 $173,740 $216,948 +25% $5,187
Duplex #2 $131,569 $161,105 +22% $4,784

With the local real estate market heating up, we weren’t surprised to see an increase – but a hike that steep warranted a closer look.

Always Challenge Your Tax Appraisal
Too often, homeowners are intimidated or don’t want the hassle of disputing their tax valuation. In truth, we get complacent because most of us don’t feel the sting of writing a giant tax check once a year (that’s intentional by the way – hiding the total cost by using “3 easy payments” is an age old marketing trick).


(photo by rxb)

Knowing what we know now – we could easily make that the argument that you should protest your valuation every year, regardless of the amount.

Reasons include:

  • You won’t know what the appraisal district is basing your valuation on until you begin the protest process and request the supporting documentation. Like us, you may find they used an inappropriate comparable or based their analysis on inaccurate data. At the very least, make sure the comps check out and then decide whether to proceed from there.
  • Consider the immense scope of an appraisal district’s responsibility. Hundreds of thousands of properties with unique qualities are being assessed annually – best case there is a considerable opportunity for honest mistakes. Like many instances in real estate investing (and life) – nobody is going to look out for your best interest like you will.
  • Texas has no state income tax, and a heavy reliance on property and sales tax revenue. Our notice even tried to compare the 2009 valuation (the height of our area’s bubble) to the proposed 2014 value in an attempt to distract from the significant year-over-year increases. Make no mistake – they have a duty to be fair, but they also really want your money.
  • Give some thought to the potential ROI of your time – Corey’s 2-3 hours of work netted him the equivalent of $485-$727 an hour of after-tax income.
  • Now assume that $1,454 is applied as a pre-payment on our mortgage – we’d save another $2945 in unpaid interest for a total savings of $4,399. This bumps up the ROI to $1,466-$2,200 an hour of after-tax income.

Just remember: there’s a significant potential for savings, you only get what you ask for, and they’re not going to penalize you for trying. 🙂

Coming Soon: Filing your protest, early strategy, and documentation requests.

Want to be notified of new posts?

Join 186 other subscribers