Month: December 2021

Year End Property Tax Housecleaning

  • This is a busy time of year for finalizing real estate acquisition before the end of the year.
  • Because property tax appraised values are determined as of December 31, it is best to get the property in good position.
  • Its also important, when purchasing property, to keep the purchase amount out of the news.

Well, there is good news and bad news. The good news is you made it through another year and we are headed into 2022 with excitement of a robust economy and the potential for a great year. The bad news is – we still haven’t conquered this damn COVID. But lets hope that by this time next year we have it all figured out.

Anyway, lately I have been reading several articles about new commercial real estate purchases in Central Texas and they always get me thinking about property taxes. Especially at this time– as we approach one of the most important property tax days of the year.

So that’s what we are going to talk about this week – what to do before the end of the year to put yourself in the best position to keep your property taxes in check for 2022.

So why is the end of the year one of the most important days of the year for property taxes?

Because appraisal districts set the appraised property values as of December 31.

So, for example, your local appraisal district will value your property on December 31, 2021 for the 2022 tax year. Your value is assessed as a snapshot on that date. As a result, you want to make sure you have everything prepared this week to put your property in the best position for a reduced tax appraisal.

That property’s document preparation should include the following:

  • Make sure the ownership is in the property entity’s name;
  • Take photos of any outstanding problems or work that needs to be done at the property;
  • Get estimates for repairs that need to be completed;
  • Have an up to date rent roll as of December 31; and
  • Get your financials prepared for the entire 2021 year.

By having this information ready to go this week, you will be in much better position when it comes time to protest this spring.

Keep that Purchase Price and Deal Information Confidential

There is one more issue that has jumped out at me as I read the purchase articles this week. And that is – too often – someone is quoted in the article saying how much the property was purchased for. This is infuriating to me every time I read it.

As you probably know, Texas is a non-disclosure state. That means that, as a property owner, you are not required to disclose how much a property cost you to purchase. Yet, somehow, the purchase prices are getting out into the public domain. Often CoStar is quoted but they, of course, need to get that information from somewhere. So someone familiar with the deal has to disclose that information.

This is why we STRONGLY recommend having non-disclosure agreements with everyone who works on an acquisition.

Its important to stress to them that any discussion of the purchase price can literally cost you money. Because there is no doubt that the local appraisal district will be aware of what online sites are saying about how much the property cost.

In addition, appraisal districts often search the county property records for deeds of trust to estimate the purchase price. We recommend, therefore, asking your lender to leave the amount of the mortgage off the deed of trust. There is no requirement that it be included. And as long as the amount is listed in the Note, there should be no problems with collection.

This is always a busy week for real estate folks who are trying to get that final deal closed before the new year. But remember – if you take some steps now, you can also help yourself with property taxes come May.

Santa might be causing roof damage

Up on the Rooftop Click Click Click…

  • Roof damage can be caused by a variety of different weather issues – including wind, hail, and other storms.
  • If you think you have roof damage, you should file an insurance claim as soon as possible.
  • And you should also get a trusted advisor (like a lawyer) involved to help you resolve the claim.

Its hard to believe but the holiday season is here. For those who celebrate Christmas, I hope you have a Merry Christmas week. As I prepare to visit my family in Michigan, I have been thinking a lot about Santa. Maybe I need to stop watching those Hallmark Christmas movies.

Anyway, when I was a kid, I first doubted in Santa because I thought there was no way he could reach all of those households all over the world in one night. It seemed impossible. Then I learned about time zones. So obviously it could be done.

Now that I am older, and a homeowner, when I think of Santa, I too often think about him landing on my roof. And all the potential damage that nine reindeer, a huge sleigh, and a large man can do. It could be significant. So that’s what we are going to talk about in today’s blog entry – roof damage.

 

What Can Happen to Your Roof

As most property owners know, Texas roofs are subject to a lot of punishment. There are a lot of ways that a roof can be damaged – beyond just a large, bearded man drunk on cookies and milk with his nine reindeer.

In the summers, the heat from the sun can cause shingles to decay, warp, curl, and crack. And, of course, we have big storms that can bring strong wind and hail that can severely damage roofs. And finally, in some parts of the state, a hurricane can bring excessive wind and rain that damage a roof.

For our friends up north, they have different issues that winter storms can cause – including excess snow and ice buildup. Obviously we never have things like that in Texas. So no need to plan for it at all – right, Texas legislature?

Some of this damage is pretty visible. Large hail sometimes makes a big mark right on the shingles that is easy to recognize. But that is not always the case. Wind and hail damage can often go unnoticed until its too late. Wind, for example, can cause shingles to lift and break the seal. As a result, water could seep into the building under the lifted shingles. And this damage can occur at lower wind speeds that you may think.

As a property owner, therefore, its important to pay attention to the weather and the effect that can have on your roof.

What to do if Potential Roof Damage

So if we do have a storm and you think your commercial or residential roof may be damaged, what should you do?

The first thing you should do is file an insurance claim. Call your insurance broker and get the process started. And make sure to include all of the potential reasons the roof may be damaged – including wind, hail, rain – whatever the cause of the damage is.

As a property owner, you want to file the claim as soon as you know about the potential damage. Your insurance policy likely has a claim that basically says if you do not inform the insurance company immediately, it may be prejudiced and that can reduce the amount of your recovery. As a result, you want to let it know as soon as you think there may be potential roof damage.

We also recommend that you get someone to help you with the claim as soon as possible. There are good insurance companies out there and some of them will treat you fine. But insurance companies do not make money by fully paying out claims. As a result, you want to get a lawyer or an appraiser on your side to help you make sure the insurance company is treating your fairly.

Your lawyer can also help you decide what is the best approach to take from there. Once your insurance company makes its offer, your lawyer can help you decide whether to:

  • Accept the offer;
  • Go to appraisal; or
  • File a lawsuit.

So if you think you may have roof damage to your commercial or residential building, contact your broker and get that insurance claim filed asap. And if it was Santa that caused it, well you will probably have to find a different law firm to sue him.

Article References

Housing Affordability Week in Austin Came and Went

  • The Austin City Council met last week to discuss potential solutions to Austin’s housing affordability crisis.
  • Its previous solution – an overhaul of the Land Development Code – has been blocked by a court order.
  • The City Council sent a number of potential solutions to the City Manager for further study.

Last week, the Austin City Council took up an old topic it had mostly been avoiding since COVID began. It declared last week the Austin Housing Affordability and Supply Week. And the highlight of the week was a meeting of the City Council on Wednesday to discuss possible solutions to Austin’s affordability issues.

As I am sure you know, this is a very big topic in Austin and around the country. Many cities around the country have an affordability crisis and few greater than Austin – where the median housing prices have increased tremendously over the last 18 months.

On Wednesday, the City Council floated a lot of proposals. But what was discussed? And are they on the way to solving Austin’s affordability issues? Well that’s why you have to read below.

Also – as you read – I want to give a special thank you to Jack Craver for his comprehensive coverage of the City Council meetings – and all other things Austin politics. If you do not subscribe to his daily email, I encourage you to do so.

Recap of Austin Issues

As you probably recall, the Austin City Council has tried to help housing affordability in the past. Back in 2019 and 2020, City Council was in the process of passing a comprehensive overhaul of the land development code. The changes were aimed at allowing more dense housing to be built – especially along specially designated transit corridors.

But some local residents filed a lawsuit challenging the changes. And they won. The District Court ruled that the land development code overhaul violated Texas law by not giving individual property owners the right to protest it. Austin has appealed that ruling but, for the time being, the LDC overhaul is on ice.

Since then, there has been some talk from the City Council that it could try to do a piecemeal change of the Code for certain neighborhoods that could definitely use higher density housing. Unfortunately, as you can imagine, this would be very difficult and be very time consuming.

So under that backdrop, the City Council met last week to discuss possible solutions.

Possible Solutions Discussed

Prior to the meeting, Mayor Adler had made it clear that he wanted the discussion to focus on areas the Council could find agreement. As a result, it seemed likely that the Council was going to avoid many of the difficult solutions that could potentially provide the most benefit to resolving the affordability crisis.

But the Council did discuss the following potential solutions:

  • More housing in commercial areas – From a high level, this appeared to be a pretty popular topic. Most of the councilmembers appeared to support the premise. Of course, the devil is always in the details and so when there is an actual vote on ways to achieve this goal, we will see if there is actual consensus. But for now, the Council seems to want to do this. And doing so could provide up to 46,324 residential units, according to a 2018 Planning Commission report.
  • Accessory Dwelling Units – There was discussion on two ADU proposals: a) allowing some of them to be converted into houses; and b) allowing the current single family houses that are not zoned for ADUs to build one. There was pushback by at least one councilmember on the latter proposal.
  • Compatibility – In many areas of Austin, regardless of what the zoning rules allow for the property, the property owner cannot build higher than the surrounding neighborhood. So many commercial properties that back up to residential properties are limited to two story growth. There was talk about changing this rule but it, predictably, got pushback from some Councilmembers.
  • Incentives for companies to build housing for employees – A couple of months ago, I wrote an article on whether we would see the return of the company town. Well, the Austin City Council may help its return. It discussed providing incentives for companies to build housing for their employees.

Where Do We Go Now?

As you can see there were lots of potential proposals discussed. Unfortunately, nothing was put to a vote and enacted. As a result, while there was lots of talk about potential solutions, nothing was decided. The Council asked City Manager Spencer Cronk to study these proposals.

In addition, the best solution was not discussed. And that is the overhaul of the land development code to allow more dense building throughout the City. Obviously this is tied up in the Courts right now, but the City Council should be preparing for both the eventual resolution of the lawsuit and contingency plans for if its appeal fails.

The bottom line is that to solve Austin’s affordability problem, we need more housing. And the best way to provide that housing is to increase the density. Hopefully in the near future, the City Council will figure out a way to allow for that needed increase.

 

To boost housing supply, Council to allow residential use in commercial zones