Real Estate Tax Forecasting: A Whale of a Problem

In the exciting, (almost) never boring world of property tax consulting, nothing speaks more highly of your skill, analytical capability, and industry insight than ACCURATELY forecasting real estate taxes. In survey after survey, real estate owners and operators always point to forecasting as their white whale. Captaining the Pequod Excel, chasing that evasive trophy, often to be met with disappointment at the unattainable.  As it turns out, catching the tax projection whale simply required a bigger fish finder.

Using smart tech and good data, a number of companies have helped clarify future outlooks as they relate to rents, expenses, value growth, and other important real estate metrics. But property tax outlooks were the one area that we hadn’t quite solved for as an industry – until now.

In school, and across academic real estate programs, you are taught that real estate taxes are a fixed expense. (To continue our metaphor, that’s a whale that quit swimming.) And while it is true that unless you are exempt, you can always expect to pay real estate taxes, the notion that real estate taxes are a baseline estimate that grows at a constant rate over years oversimplifies, if not inaccurately frames, the characteristics of that particular operating expense.

In fact, real estate taxes fluctuate for a myriad of reasons. (And whales keep swimming.) Market fundamentals change, assessment methodologies change, real estate tax rates change, non-ad valorem fees on the tax bill fluctuate… the list goes on.

At Cavalry, we believe the primary reasons our industry has not focused on this all-too-important task is because it’s kind of boring; it isn’t where most consultants make their money; and it’s hard

But that’s where need meets opportunity. The market NEEDED better clarity, because real estate taxes are THE biggest annual operating expense for real estate owners. Solving this problem fills a need and creates value for the industry.

We’ve worked hard to fill that gap. Using data and modeling, we’ve created the fish finder that lets us accurately pinpoint the location of the whale (i.e., your tax projections) now AND in the future.  And “pinpoint” is the key word in the previous sentence, as our real estate tax forecasting for clients performed in 2021 achieved 98% accuracy.

Want to capture your own white whale (and more effectively mitigate investment risk)? Hop on the good ship Cavalry – we’ve got room.