March 2010 Newsletter - muscatinelandlords.orgmuscatinelandlords.org/March 2010 Newsletter.pdf ·...

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Newsletter MUSCATINE LANDLORD ASSOCIATION, INC. March 2010 Since 1995 Our next Meeting is Monday, March 15, 7 PM at 211 Walnut Street —Trinity Church (across from First National Bank) corner of Walnut & 2nd Streets. Our guest speaker will be Ken Rogers, Senior Health and Housing Inspector for Muscatine. We will have refreshments and door prizes. Please invite fellow landlords who are not members to come to our meeting to see what we have to offer! Legislative Report The governor has signed SF 2300 into law. As with the Iowa Supreme Court War Eagle Properties ruling on November 20, 2009, this legislation will cause some confusion with the Landlord Lord Tenant Law until everyone has a chance to understand on to apply it and in- terpret it. This legislation does present an opportu- nity to provide some education to our mem- bership on what it means to us. A legislative objective will be to change the number of days before the mail to be con- sidered good service from 4 to 3 days in the next session. Another issue that we may not be aware of yet, is that our property tax bills will be going up. The state legislature will not be fully fund- ing the schools, counties, and other programs, therefore, your local schools and counties will be passing their expenditures to all the prop- erty owners in the form of hire property taxes. Make sure you appeal your property tax as- sessments when they don’t reflect the fair market value of your property. A top concern for all of our chapters is increasing membership. We need to be think- ing of creative ways to attract new landlords to our chapters. How can we reach out to the new generation of landlords and property managements in our local areas? Do they know we exist? Are we clearly communicat- ing the benefits of being members? As I asked at our last board meeting, we need to highlight our accomplishments and remind our membership what we are doing on their behalf. Please forward your accomplish- ments so we can help sell the benefits of membership. Recently, Bob Smith and I were having a debate regarding how effective Craigslist (www.CraigsList.com ) for marketing for new membership because no one uses Craigslist. Craigslist is an online classified ad site that is FREE. After finishing our debate earlier this week, I posted an ad on the site that resulted in over 60 direct ad-to-website visits, 25 con- tact forms submitted, 5 scheduled appoint- ments and 1 property rented within 24 hours. My cost was about 5 minutes of my time to post the ad. Any guess on how many new landlords maybe using Craigslist to market their proper- ties? My point is that we should not be over- looking opportunities to market our chapters especially when we do it for FREE. A Note from the LLIA President By Keith Smith

Transcript of March 2010 Newsletter - muscatinelandlords.orgmuscatinelandlords.org/March 2010 Newsletter.pdf ·...

Page 1: March 2010 Newsletter - muscatinelandlords.orgmuscatinelandlords.org/March 2010 Newsletter.pdf · March 2010 Since 1995 Our next Meeting is Monday, March 15, 7 PM at 211 Walnut Street

Newsletter

MUSCATINE LANDLORD ASSOCIATION, INC.

March 2010

Since 1995

Our next Meeting is Monday, March 15, 7 PM at 211 Walnut Street —Trinity Church (across from First National Bank) corner of Walnut & 2nd Streets. Our guest speaker will be Ken Rogers, Senior Health and Housing Inspector for Muscatine. We will have refreshments and door prizes. Please invite fellow landlords who are not members to come to our meeting to see what we have to offer!

Legislative Report

The governor has signed SF 2300 into law. As with the Iowa Supreme Court War Eagle Properties ruling on November 20, 2009, this legislation will cause some confusion with the Landlord Lord Tenant Law until everyone has a chance to understand on to apply it and in-

terpret it.

This legislation does present an opportu-nity to provide some education to our mem-

bership on what it means to us.

A legislative objective will be to change the number of days before the mail to be con-

sidered good service from 4 to 3 days in the

next session.

Another issue that we may not be aware of yet, is that our property tax bills will be going up. The state legislature will not be fully fund-ing the schools, counties, and other programs, therefore, your local schools and counties will be passing their expenditures to all the prop-erty owners in the form of hire property taxes. Make sure you appeal your property tax as-sessments when they don’t reflect the fair

market value of your property.

A top concern for all of our chapters is increasing membership. We need to be think-ing of creative ways to attract new landlords to our chapters. How can we reach out to the new generation of landlords and property managements in our local areas? Do they know we exist? Are we clearly communicat-

ing the benefits of being members?

As I asked at our last board meeting, we need to highlight our accomplishments and remind our membership what we are doing on their behalf. Please forward your accomplish-ments so we can help sell the benefits of

membership.

Recently, Bob Smith and I were having a

debate regarding how effective Craigslist (www.CraigsList.com) for marketing for new membership because no one uses Craigslist. Craigslist is an online classified ad site that is FREE. After finishing our debate earlier this week, I posted an ad on the site that resulted in over 60 direct ad-to-website visits, 25 con-tact forms submitted, 5 scheduled appoint-ments and 1 property rented within 24 hours. My cost was about 5 minutes of my time to

post the ad.

Any guess on how many new landlords maybe using Craigslist to market their proper-ties? My point is that we should not be over-looking opportunities to market our chapters

especially when we do it for FREE.

A Note from the LLIA President By Keith Smith

Page 2: March 2010 Newsletter - muscatinelandlords.orgmuscatinelandlords.org/March 2010 Newsletter.pdf · March 2010 Since 1995 Our next Meeting is Monday, March 15, 7 PM at 211 Walnut Street

Page 2 NEWSLETTER No one can lose what is already past, nor what is yet to come.

Many owners ask, “Should I file a property tax appeal?” If your property is not valued by the tax authorities at its market value, the answer is definitely “yes.” Most savvy owners evalu-ate this decision by a two-step process: They consider the prac-tical aspects of the decision and develop an understanding of the differences between market value for property tax purposes compared with market value for investment purposes. It's cru-cial that an owner talk with a tax consultant or property tax

lawyer when making this decision.

Owners need to discuss the procedures for appeal with a tax specialist in the state in which the property is located. This is a key point because laws vary on a state-by-state basis. These discussions provide an understanding of the possibility of suc-

cess based on the particular state's procedures.

The next step is to evaluate the economics of an appeal by comparing potential tax savings with anticipated costs. Prop-erty tax administrative appeals are typically performed on a flat fee or a contingency fee basis, while services for court appeals are usually provided according to an hourly fee or a contin-

gency fee.

The owner then needs to turn to the political realities of the appeal, including the likely response of the tax authorities, the publicity generated by the appeal and the owner's goals for the

appeal.

Finally, an evaluation of the other resources that will be committed to the proceeding should be conducted, including the time that employees will need to dedicate to the appeal and

the documents required for the taxing authorities.

Determining ‘Tax value’ In conjunction with the practical side of the decision, an

owner should understand the definition of market value for property tax purposes vs. other purposes, and the practical ele-

ments that may make an owner hesitant to file an appeal.

Market value for property tax purposes is much different than the market value in an owner's “real” world. Owners typi-cally evaluate market value based on the actual cash flow gen-erated by the property. However, market value for property taxes is more hypothetical. It evaluates the property based on

the potential market rent and vacancy of the property rather

than the actual cash flow.

In addition, market value for property taxes does not include business value aspects of the income stream attributable to the property. Business value is generally found in such properties as hotels, retail centers and health care facilities. For example, a hotel flag may generate income for the property but that in-come is considered business value rather than real estate value

and is not subject to taxation.

Making a Final Decision There are several concerns that may make an owner hesitant

to appeal. In financing, refinancing and due diligence, apprais-als are regularly conducted. These appraisals are usually not

based on market value for property tax purposes.

Thus, an owner should not automatically rule out an appeal because of the existence of these non-property tax appraisals,

which are higher than the tax authorities' value.

An owner should not avoid an appeal simply because the recent purchase price is above the taxable value. There are many factors that may make the use of a sales price for prop-erty tax purposes inappropriate. These important considerations include a purchase based on actual cash flow rather than market value, as well as deals involving special financing considera-

tions.

The decision to appeal should not be based solely on the prior year's operating statement. Tax authorities often use the past year's operating statement and capitalize the net operating income to arrive at a value. In a declining market, this will rarely reflect market conditions as of the valuation date. An owner should base his market valuation determination on the

market rent and occupancy conditions as of the valuation date.

For most owners evaluating whether to appeal, the ace in the hole is a knowledgeable tax professional who can give a proper perspective on all the issues regarding a property. With this in mind, a property tax challenge may become an

“appealing decision.”

Jim Popp is a partner at the Austin, Texas-based law firm of Popp & Ikard, the

Texas member of the American Property Tax Counsel.

Knowing When To Appeal a Tax Bill

By Jim Popp

Looking Ahead

Apr. 19 Gangs/Graffiti—Jeff Jirak, Investigative Lieutenant, Muscatine Police Dept.

May 17 Community Action

June 21 Jaime Bryant, Muscatine Journal

Oct. 15 & 16 State Convention, Dubuque, IA

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MARCH 2010 Page 3 If a person is good for making excuses they are seldom good for anything else.

Our Vendor Associate Members Appreciate Your Patronage

Muscatine County Taxes

to Increase In the past two weeks, the Council shaved 2.6 percent off of

earlier estimates for a proposed property tax increase. The pro-

posed increase stands at $15.77 per $1,000 of assessed valuation,

a 22 cent increase from this year's rate of $15.55.

At a meeting on Feb. 16, Mandsager proposed and the Coun-

cil accepted a 2 percent utility franchise fee for electric and gas,

which could generate an additional $180,000 for the city. Mand-

sager said citizens can keep costs low through energy conserva-

tion.

The utility franchise fee has a projected start date of July 1,

Mandsager said, with payments to begin by the end of October.

There was also mention of inspection costs increasing from

$45 to $60 for 1-4 units and from $30 to $45 for 5+ units.

A public hearing on the proposed budget for

fiscal 2010-11 has been set for 7 p.m., Thursday,

March 11 in the council chambers at City Hall.

Page 4: March 2010 Newsletter - muscatinelandlords.orgmuscatinelandlords.org/March 2010 Newsletter.pdf · March 2010 Since 1995 Our next Meeting is Monday, March 15, 7 PM at 211 Walnut Street

2010 Board of Directors And Officers

President position is open!

Bernie Bartholow, Vice President

Gerry Bermel, Treasurer

Mike Allenbaugh, Membership

Diana Wilson, State Rep/Newsletter

Terry Mealy

Secretary position is open!

To participate for the purpose of mutual benefit in

an interchange of information and education.

P.O. Box 1632 Muscatine, IA 52761

MUSCATINE LANDLORD ASSOCIATION, INC.

E-mail: [email protected]

www.muscatinelandlords.org Please note we are now meeting at 211 Walnut Street(Trinity Epis-copal Church) — across from First National Bank on the corner of

2nd and Walnut. ADDRESS SERVICE REQUESTED