Kevin

I began this journey almost one year ago on March 31, 2013.  It started when I received my property reappraisal letters from our local property assessor.  Here in Tennessee, property assessors have to reappraise all properties every four years to adjust values due to fluctuations in the real estate market.

Due to the continuing weakness of the real estate market following the collapse of the bubble in 2008/2009, I was expecting an overall decline in value.  Imagine my surprise and shock when the property assessor actually proposed an overall $500,000 increase in value!

No way was that going to stand!  The assessor was just plain wrong and I was not going to take a $15,000+ hit in property taxes every year because if it.  I challenged the property assessor on many of my reappraised values and I wrote about that process here, here and here.

How did all of that it come out?

It came out well.  That $500,000 increase was reversed and worked out to an approximately $5,000 decline in overall value.  You can fight city hall sometimes!

So what have I learned by going through this?

• Be Prepared – You have to sharpen your pencil and do your homework to justify your opinion of a property’s value.  You cannot just walk in and say the value should be X without justification.  I saw many do this and just get turned away.  Being prepared means you have to use solid comps of actual sales in the immediate area of similar properties.  If you do not have access to some sort of property sales database, get one.  Also, ask the assessor what comps they used to justify their value.  It is public record, they have to tell you.  Knowing their data can give you a real leg up later on.

• Take Pictures – Take lots of them.  Take pictures of the property inside and out, adjacent properties, the street view, whatever you think might help your case.  Make copies and hand them out at your hearings.  They really do help explain your position.

• The Process Will be Frustrating at Times – There will be many layers to go through.  Hearings with this person, meetings with that person, collecting data, phone calls, etc.  You will get frustrated at the bureaucracy.  Keep the goal in mind.

• Stick to Your Guns – You are a real estate investor; you know what the value of your property is.  After all, we investors have to know what the values are or we would go bankrupt.  Plus, after you have done your homework, you have the data to back you up.  Don’t take any deals.  Stick with it.

• Persistence Pays Off – Throughout the appeal process, the assessor’s office tried to make deals (which makes me wonder about their original appraisal in the first place but that is another story).  Sometimes they would see things my way and we would agree.  Other times they would suggest meeting me halfway.  No way!  Keep going forward.  Eventually they will often come around.  I only had to take one property all the way through the process (where I won!) so be persistent.

• It Will Take a While – Remember, I started this process almost one year ago. My last update was on June 23, 2013.  I just finished everything up last week.  They are in no hurry to give you a tax refund and there is nothing you can do to speed the process up.  Just be patient and ready when your time comes. 

Let me wrap this post up by saying that this process was not difficult and I think anyone can do it.  Give it a shot next time you buy a property that you think your local assessor has overvalued.  Finally, let me give a plug to the staff at the assessor’s office.  They were at all times cordial, helpful and never adversarial.  I do appreciate that. 

The answer to that question is maybe.  It will depend on what you as the landlord do once you hire a manager.

To many a tired landlord, hiring a property manager seems like the way to go.  No more phone calls, no more showings, no more tenants, no more, no more, no more.  And while hiring a property manager or someone to help you manage has many advantages and benefits, it also opens the door to a whole new set of problems and responsibilities.

When you are managing your properties yourself, you were on the front line.  You see what works and what did not.  You were able to make necessary changes quickly.  You were in your business. 

Things change with a manager.   You will not be as up close and personal.  You will delegate many of your responsibilities to the manager.  But I caution you not to delegate everything to the manager.  You must now work on your business instead of in it.

Now is the time for you to develop systems for the nuts and bolts of your business.  Systems to screen and approve tenants.  Systems to handle maintenance requests.  Systems to collect and deposit rent payments.  Systems to make your business successful.  Only with well scrutinized systems, can you begin to trust others with your business.

These systems need to keep you, the landlord, in the loop.  You simply cannot walk away or abdicate all of your responsibility.  If you do, it is too easy to lose.  People can embezzle your rents, like this property manager did, or they can ease up on rental standards causing  a slow erosion of your tenant base.  You simply have to manage your manager.

So yes, property managers are perhaps part of the answer to some of your landlording problems.  But smarter landlords stay involved.  They work on their business and build systems that will foster growth.

If you are just beginning to think about building systems for your business, the best place for you to start by far is the E-Myth by Michael Gerber.  Check it out!

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