Thursday, May 17, 2012

What to Consider About Property Taxes During Underwriting via MHNonline.com

According to Real Capital Analytics, the volume of trades in multifamily is currently the highest it’s been since 2007. In the same vein, assets are trading at cap rates that are at the lowest level since 2007. Class A assets are regularly trading in the 5 percent range and even lower in the CBD’s of major metropolitan areas. As cap rates reach a stabilized level, owners will have to singularly rely on property performance to increase the asset value. For acquirers, the emphasis on accurate underwriting becomes even more critical.

Of all the major asset classes, multifamily properties are the ones most consistently seeing increases in value validated by the trade volume and cap rates. For this reason, they have become a target for the local budget-starved taxing entities. In many parts of the country, apartment owners are starting to feel the pinch. Those that did not budget properly are experiencing negative variances and taxes that offset any increases in revenue.

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