All Entries in the "Property Type" Category

Land Values Continue to Fall

Japan vs USA

If you are a land owner, particularly a developer and the holder of inventory please do not be mad at the chart we have provided to the right. We are in no way predicting a “Japan style” real estate meltdown. Our only intention is to draw your attention to the urgent need you and every other vacant land owner regardless of the county, for property tax valuation reduction.

No one disputes the vacant land, particularly residential  and commercial development acreage has dropped substantially in value. The problem exists in trying to deal with the office of the assessor concerning the correct valuation. Let me give you a brief example:

In 2005 a client bought multiple parcels of residential development land along with some commercial for a total price of $24 million in anticipation of the continuation of the residential development market. The parcels range in size from 10 acres to 640 acres.  In 2008 he not only could not sell these properties for a reasonable amount, there were very few other sales other than foreclosures or deed in lieu of foreclosure properties.

In attempting to talk to the assessor’s office concerning these properties our position was simple.  First, there were no comparables within the county so our search necessarily needed to go outside of the county where the property was located. The subject assessor’s office said no. Second, it was necessary to use the sum of the property as a unit of valuation and not the individual pieces. The subject assessor’s office said no again.

The valuation from the subject assessor’s office was to find small pieces of similar properties within the county and then figure dollars per acre and multiply that times the acreage of the subject. We fought this case and eventually obtained for our client a reduction to $16 million.  Savings to this client in the 2008 year alone was over $90,000. We will continue to seek additional reductions on our client’s behalf as the market continues.  When the values begin to a appreciate we will monitor for our client the assessor increases each year, filing appropriate appeals where necessary.

As you can see in this economy the fight to reduce property taxes must be on a level seldom achieved by our competitors. We have learned to think outside the box employing every available strategy allowed by law to reduce your property taxes. If you are looking for an aggressive leading edge company you have found it. Our fee and our contract?  Click here to see them. Otherwise call us now, as the appeals deadline is rapidly approaching, at (909) 867-5000 or fill out the contact form here.

Apartments Show Higher Vacancy, Lower Rents

Apartment Values-Moody

The accompanying chart shows the state of the market relative to apartment prices in the United States. Rest assured there is also a similar chart showing Southern California in a similar trend. To quote MIT who made the chart:

The RCA Database

The commercial property index is based on the RCA database which attempts to collect, on a timely basis, price information for every commercial property transaction in the U.S. over $2,500,000 in value. This represents one of the most extensive and intensively documented national databases of commercial property prices ever developed in the U.S.

The Associates At California Property Tax have known that apartment prices were soft for some time. Still, many of our clients are doing very well with their larger complexes. In spite of their success according to their financials, and using market information as opposed to specific financial information from the subject properties, The Associates were able to find substantial reductions as shown in the chart below:

Just to simplify the reductions, that’s $100 million worth of property, reduced $38,940,208 for an annual tax savings of $412,108! Our clients will save this amount of money each year until the market turns around! Could you use a 39% reduction in your property’s value?

An even more incredible thing is that when we spoke to the client in Property 2 above, he told us he thought the properties were worth maybe a total of $32 million from their assessed value of $36 million. When we analyzed the financial statements we felt that his property was well worth the $36 million should he place the property for sale on the market. But we took the case anyway and began negotiating with the appraiser in the assessor’s office. We approached the value for assessment purposes on the market instead of the subject, with a great deal of success. This “outside the box” thinking saves our clients far more than they expect.

Still not convinced? Why not read our frequently asked questions?  or, simply call us at (909) 867-5000.

California Commercial Property Tax Industrial

Below is an actual case from an Industrial Property Appeal that was won in Hayward, California:

APPEAL #1997

January 25, 1999

APN:               475-xxxxx

USE:                Industrial

LOCATION:   Hayward

AREA:             44,000 Square Feet

The subject property is located in Hayward.  Situated on 1.88 acres the property was built in 1992 of concrete tilt up construction and has 44,000 square feet.

MARKET APPROACH TO VALUE

Six comparable property sales were located in Hayward occurring between December of ‘95 and March of ‘97.  Because of the diversity of several of these properties, care was taken to adjust the sales price to match the subject.  A detail of the characteristics of the comparable properties is located on the next page with comparable number 1 being the most recent and comparable number 6 being the oldest.

COMP #1

Located two blocks from the subject this property was built in 1987 and consists of concrete tilt-up construction.  Sold in…..

COMP #2

Located approximately 7 miles North of the subject this comparable was built in 1981 and is also concrete tilt-up construction.  The property has….

COMP #3

Located approximately 2 blocks from the subject this comparable was built in 1986 of concrete tilt-up construction.  This comparable has…

COMP #4

Located 7 miles North of the subject this property was built in 1975 of concrete tilt-up construction.  This comp has….

COMP #5

Located 2 blocks from the subject this property was built in 1974 of concrete tilt-up construction.  Located on a ….

COMP #6

Located 4 blocks from the subject this property was built in 1987 of concrete tilt-up construction.  This comp has….

ADJUSTMENTS

Using these comparables we have adjusted sales prices from $34 to $42 per square foot.  We have chosen the average of $37.50 per square foot as fair market value for the 1997 lien date.

3/97 FAIR MARKET VALUE VIA THE MARKET APPROACH

$37.50 X         44,000 SQ.FT.            =          $1,650,000

1997 FAIR MARKET VALUE VIA

THE MARKET APPROACH        $1,650,000

INCOME APPROACH TO VALUE

Rents for industrial property in the area are shown on the comparable detail on page 2…. The Comp on 4001 Whipple was new construction and the owner was offering a $3.50/sq.ft. Tenant Improvement allowance.  As is shown above, rents were in the range of .30 to .39 per square foot Net.  For the purpose of our value determination we have used $ .36/sq.ft. as economic rent.

44,000 sq.ft.     X         .36       = $15,840        X         12        =$190,080

$190,080

VACANCY     5%       9,504

180,576

EXPENSES     5%       9,029

NET INCOME      $171,547

CAP RATE      10.2

$171,547 \ 10.2           =          $1,681,835

3/97 FAIR MARKET VALUE VIA THE

INCOME APPROACH         $1,681,835

RECONCILIATION

MARKET APPROACH $1,650,000

INCOME APPROACH $1,681,835

FULL CASH VALUE $1,665,000

Commercial Property Values Decline

Down 49%

If you own real property in the state of California then you know commercial property values are falling. Further, you know your California property tax  value has not.  This was a headline in late September relating to the commercial property market:

Moody’s: US commercial real estate prices resume steep declines in July

New York, September 21, 2009 — Commercial real estate prices as measured by Moody’s/REAL Commercial Property Price Indices (CPPI) renewed its steep declines and low transaction volume in July, Moody’s Investors Service reports. The CPPI was down 5.1% from June after having declined by only 1% the prior month. It is now 30.8% below what it was a year earlier and 38.7% below the peak measured in October of 2007.

We suspect that you are well aware of these factors and, in fact are here because of them. No one knows the direction of the market for the future but one thing we know for sure: property tax values in California for commercial real property is high while values are dropping. Take a look at some of the recent reductions we have achieved on different kinds of real property in the commercial California property tax market:

That is $412,108 in annual property tax savings for our Clients in the 2009 tax year. That’s $412,108 that the California state government will not get. And that is $412,108 that will go to the bottom-line for our commercial property Clients. It should be noted that several of these Clients told us when we took these properties last year that there was nothing there relative to a decrease in the assessed value. But we know that the assessed value that we work with and the fair market value that our clients know are two different things.

In California, in the commercial real property market the times are tough.  We believe they are going to get tougher.  Never in our experience has there been a greater need to reduce the expenses in the bottom line of every company in California.  California Property Tax Associates can definitely help. But only if you act.

Act now and call us at (888) 678-9TAX.

California Commercial Property Tax-Residential

"THIS ASSESSMENT REDUCTION FILING SERVICE IS NOT ASSOCIATED WITH ANY
GOVERNMENT AGENCY. IF YOU DISAGREE WITH THE ASSESSED VALUE OF YOUR
PROPERTY, YOU HAVE THE RIGHT TO AN INFORMAL ASSESSMENT REVIEW, AT NO
COST, BY CONTACTING THE ASSESSOR'S OFFICE DIRECTLY. IF YOU AND THE
ASSESSOR CANNOT AGREE TO THE VALUE OF THE PROPERTY OR IF YOU DO NOT
WISH TO CONTACT THE ASSESSOR YOU CAN OBTAIN AND FILE AN APPLICATION
FOR CHANGED ASSESSMENT WITH THE COUNTY BOARD OF EQUALIZATION OR
ASSESSMENT APPEALS BOARD ON YOUR OWN BEHALF. AN APPEALS BOARD HAS THE
AUTHORITY TO RAISE PROPERTY VALUES (BUT IN NO CASE HIGHER THAN THE
PROPOSITION 13 PROTECTED VALUE) AS WELL AS TO LOWER PROPERTY VALUES."

The above disclaimer is required by AB 992.  Only in America…(is California in America?)

By now everyone in California in every county concedes that we are in the midst of  a real estate crisis.  never has reducing the California property tax assessment for your home or rental house been more important.  To understand this reduction in residential home values in the Los Angeles area graphically, please look at the following chart: While the chart only speaks to the Los Angeles area it is representative of the areas throughout California. While many homes have received reductions in assessed value from county assessors, many have not. And of those which have, many, many have not received deep enough reductions.  California Property Tax Associates has fought successfully to reduce these values to their absolute lowest level possible under the law for years. We are aggressive and we dominate the market! If your residential home or rental house has never received a reduction or has received a reduction that you don't think was sufficient, please call us now at 909-867-5000 or fill out the simple form today.

Comments or questions are welcome.

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