Let’s get a drink

Same drink, different bar. That’s one way I like to describe the difference between traditional real estate investment valuation and real estate tax appeals.

The reason I like that metaphor is that I’ve long sought to be the kind of tax guy you can have a drink with – and a real estate conversation – and not worry about falling asleep at the bar. How do I do it? I work hard to understand the business of real estate in addition to the nuances of real estate tax.  

I have worked with more than my fair share of tax consultants who understand the tax appeal “process” quite well, but they don’t understand real estate very well. That context and knowledge is massively important and allows you to see the bigger picture – all to the benefit of the clients and property owners you represent.

Throughout my career, I have built teams and practices around the notion that we are real estate professionals that specialize in property tax as opposed to property tax professionals that specialize in real estate. That description may seem nuanced but the spirit and subsequent practice of it is immensely important.

As a team this mantra allows us to look at our real estate tax work as both tactical AND strategic. We immerse ourselves in the business goals of a client and their portfolio, understanding their real estate interests through the eyes of an industry participant. An insider. The approach is also important because it allows us to align our tax work with the goals of the client organization.

For example: A merchant developer who builds to sell versus hold may be less interested in appealing taxes and more interested in certainty around budgeting for taxes during development and prior to sale. That developer may also need more detailed and sophisticated real estate tax analyses to support the disposition of the property.

Often, a buyer of a development will make certain assumptions about real estate taxes upon stabilization of that asset that can greatly reduce the NOI. They may overestimate real estate taxes because they are less knowledgeable about the impact of ground up development assessments and the cadence of assessment growth pre/post stabilization. Our team supports the client developer by providing evidence and support to both buyer and seller for a more accurate real estate tax assumption, often leading to a higher projected value and higher level of comfort on downstream risk that can all lead to a potentially higher sale price, and thus a benefit to our client.

There are numerous other examples. But the real reason is because no one walks into a real estate networking happy hour and wants to hear about the latest retail cap rate adjustment in D.C.’s Office of Tax and Revenue Pertinent Data Book. But they do like to hear how the changing nature of retail leasing in the Georgetown sub-market is creating a hidden opportunity to reduce tax assessments and can give some brokers the upper hand when attracting new prospective tenants. Those kinds of nuggets are worthy of another round.