Jason Hartman starts the show by discussing inflation and why we should be looking at it more closely. He explains why you can’t use old numbers in today’s world and how to adjust for inflation. Later he goes over a CNBC story on the New York housing market. In the interview segment of the show, Jason hosts Keith McIntosh, President of McIntosh & Associates, LLC. They talk about how to protest your property taxes. Keith illustrates how the government gets data wrong all the time and how this affects us in many ways, including our real estate taxes.
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 0:52
Welcome and thank you so much for joining me. This is your host Jason Hartman with Episode 1105 1105 And again, Happy New Year to one and all, all of our listeners in 165 countries worldwide. Happy New Year, I wish you the best of prosperity and health and just a wonderful new year. We are here to help make your new year even better. Be sure to reach out to us, Jason hartman.com. You can go to Jason hartman.com slash ask if you’ve got a question or comment for the show. We read all of them. We don’t necessarily bring them all up on the show. Sometimes we reach out to people individually, and they answer their questions. But if it is interesting to a wide audience, we may we’ll discuss your questions and comments on the show so we appreciate your participating. Also our investment counselors are of course here to help you and our entire team is here to help you with reaching your investment goals in the new year. Hey, if you go to the gym today, I’m sure the parking lot will be packed. It’ll be full. I got my workout in a little earlier. You know how those new year’s resolutions go. Let’s talk about it. Couple of things before we get to our guest today, our guest today we’ll be talking about saving you money. And hey, look, we’re here to talk about saving money and making money. What was it Benjamin Franklin That said, the road to wealth is very simple. Just augment your means or diminish your wants. And of course, we play both sides of that equation as we should. But the most important thing we should do is augment our means in other words, make more money. Nobody ever got rich saving money, but hey, you know, also it’s still true what Ben Franklin said, a penny saved is a penny earned and adjusted for inflation. That’s like $25 saved as $25 earned. Well, I don’t know, really, that’s not an accurate inflation adjustment. But you know, you’ve always got to think that way, adjusting for inflation. We were watching the very famous movie, very cute movie that probably everybody has seen with the Late and gorgeous and whimsical Audrey Hepburn, we were watching that the other night. It’s funny, you know, Audrey Hepburn in the Breakfast at Tiffany’s movie is basically a high class called girl. Right? The the oldest profession. And so they talked in the movie about how a man gave her $50. Right? So, of course, how do I think? Well, the movie was made in 1961 I immediately ran to an inflation calculator to see what $50 is worth today. And as I recall, because see, I can’t watch a movie like a normal person, I gotta adjust everything for inflation. So, I understand the true economic value of what it is they are talking about. And so I think the adjustment if I remember correctly, was like $470. So $50 in 1961 $470 ish today, if I remember correctly, but the point is, always adjust for inflation. Another example of that is in The famous or infamous, depending on how you look at it movie in Inconvenient Truth, which has all sorts of phony little deceptions in it, one of which I guess not the least of which is when al gore talks about insurance claims and how the insurance claims because of the global warming problem, assuming it really is the problem he says it is which I think is somewhat debatable, but regardless of how you view that doesn’t matter. He shows this chart of insurance claims in the film and doesn’t bother adjusting for inflation. So you and I because we are in the know, we may not know everything, but at least we know we got to adjust for inflation. And we also know that the inflation rate is not accurate. It is understated for sure. I want to talk to you a little bit about how homes are getting really really really smart. I’m not talking the Smart Home stuff you know about and I know about you know, having a ring doorbell And, you know, having, like, well, I can’t let her hear me say this Alexa, having Alexa. Yeah, she didn’t hear me. Okay, good. I don’t want Jeff Bezos to know everything I’m saying, right. So anyway, you could have that and you could have, you know, cameras and a nest thermostat or whatever, and make your homes smarter, right, your rental properties can be smarter, all of that stuff. Well, I’m talking about taking smart homes to the next level. Okay. And I’m going to talk about that in a minute. But first, I want to play a little video clip. This was from CNBC. Nothing super revolutionary here. But it was just some stuff about what to watch out for. In the new year course a lot of things have happened that I predicted. I predicted these overvalued cyclical markets slowing and they’re slowing dramatically. I remember having and then have an argument with a New Yorker. Several months ago, I was talking about how maybe it was a year ago actually, time just goes to Quickly, can’t keep track. Everything seems like it was yesterday. Is this just how it happens when you get old? I think it does. Because everything seems like it was just so recent. And it’s really a long time ago, sometimes in perception. But we were talking about this. And, you know, the New Yorker, of course, was talking about how great New York is and how New York will just never go down in value. And real estate in New York is so special. Yes, it’s so special. Nobody else has a market like New York. And you know, isn’t it funny how people are so provincial. It’s just a funny thing. It’s, it’s just a part of human nature, right? What we see what’s around us, we attribute to it this special value that isn’t really there. I remember another New York story, another person going through New York driving with him in the car and he was showing me there’s this development, there’s that development and there’s their business. This over here, they’re building that over there. This place is so incredible. And I said, guess what? I travel all around the country and all around the world. This is what’s going on in every American city.
Jason Hartman 7:11
Jason Hartman 7:12
special. Okay. Yeah, I know every, every Peabody and every place wants to think there’s always special. But trust me, every city and every human has pretty much encountered the same things we all have, right? So just funny the way the way people are, but it is the way they are. And so talking about New York, I mean, it is a bloodbath in New York right now. And my prediction is it will get worse. The real estate market there is just suffering greatly. And that is true of pretty much every cyclical market around the country. Now, as I predicted, I was telling you back in 2000, oh gosh, 2013 and 14, and I’ll say, hold me accountable because my timeframe may be slightly off. Just go And find those episodes, go to Jason Hartman calm, use the search feature. And there you go. And I was talking about how these markets are way beyond the point of fundamental value, they will decline now, hey, my prediction was pretty early. But here we are yet at the other end of the spectrum, the linear markets really not declining. Now, in this short video, just remember something that every 1% interest rate increase of on the mortgage rates translates or needs to, I should say needs to translate into about 10% in property value to be at par to be equal, right? So if rates are up, and the prices have not declined by 10%, it’s not as good as it used to be. Now does that mean you shouldn’t buy anything? No, not necessarily. Because, as you see the rents climbing because the prices are climbing And inventory is still very limited in the lower priced investment grade markets that linear markets that make sense. They’re good. And those markets again, like I said on the last episode have not seen the trickle down yet. Maybe it’s coming. I’m not predicting that yet. Because it’s tea tea tea. Yes. Tea tea tea. It’s too early to tell. I don’t know yet. So far, those markets are just very strong. inventory, still very constricted. Because the building environment this time around since the Great Depression, they just haven’t been building for that market that has caused this major construction in inventory. And it’s still with us, still with us. So listen to this little clip. And here we go.
stories on cnbc.com. Right now is about the New York City real estate market, having a bit of a real pullback, in terms of the overall market. How do you see certain markets In the US fearing versus others, or is this a general feeling of a pullback overall and housing in 2019? I think that it’s a general pullback and obviously different markets might experience it differently. New York is a high price market. So there are the additional issues of the changes in the tax code last year having a influence on high priced homes there. Dan is right mortgage rates.
Jason Hartman 10:21
Of course, that refers to the republican or Trump tax plan and the salt, the state and local tax issue that hit the high priced markets much more severely, you know, that really matters. If you’re a successful, whatever kind of person a financial person in New York City. Wow, your tax bill just got a heck of a lot higher, because of the lack of deductions on those state and local taxes now being limited to $10,000 a year
actually rise in 2019, as they did in 2018. Maybe not as much as we thought you know the news from Chairman Powell there will be Fewer rate increases is effectively good for the for the housing market. And but the challenge is the reason why rates are going up is because the economy is strong and you know, that counteracts the, the Bennett, the the affordability crunch of mortgage rates. So, you know, it’s a tug of war between the good economy and rising wages and why rates are rising, it means that housing markets can at least withstand or deal with a more normalized rate environment that we expect so So Mark, you bring up an interesting point about that tug of war. If we are to look at the US housing economy, if we were to look at the housing stocks, and all the building products companies out there, they didn’t tell a very good story in 2018. Does this mean that the real estate market is not the best indicator for the US economy? No, I don’t think so. I mean, it certainly interacts or reacts to the US economy. The good thing about housing is everybody needs it, and you can’t outsource it. And so
Jason Hartman 11:55
I love that everybody needs it and you can outsource it. For us as real estate investors, right? They’re very, very good for us. Everybody needs it universal need, and you can’t outsource it. Now look at what’s going on with the stock market compared to our nice stable income properties. Today, the Dow slid again very severely. It’s just crazy what’s going on out there in the financial markets, cryptocurrencies down the tubes, stocks down the tubes, good old income property holding up very nicely. Not the cyclical, high end real estate markets, those are going down the tubes, just like I said, they would years ago, but our good little stable income properties doing very, very nicely.
What we’re struggling really with is, as Diana mentioned, a lack of supply that the home builders, you know, can with challenges help to solve being the reason there are not a lot that many home sales is so many existing homeowners today are sitting on mortgage rates at three and a half or 4%. And don’t want to move on So you don’t get that supply of homes for sale. Even though there’s a great story of a strong tale when demand among millennial first time homebuyers would love to buy something, if only it was for sale.
Jason Hartman 13:12
Now that is very significant. And we’ve talked about this on prior episodes. Of course, we’ve got this situation now we’re not only is inventory in the first time buyer, the entry level, the lower price market, the investment grade markets that we like the linear markets, it’s constructed because since the Great Recession, Home Builders haven’t been building for that market, because construction costs have increased so much, and various other reasons. And then you’ve got this other issue of now, we’ve had been in this environment of negative interest rates and some would argue that we’re still in a negative interest rate environment meaning real inflation rates are actually higher than interest rates. Now, real inflation rate of course, is not the same as the official or published inflation rate. It’s the real rate. And many things we could discuss for the next two hours on that issue, but will forgo that. But suffice it to say that interest rates have been artificially low. Right? We all will probably agree with that. And with that artificially low interest rate, I want you to look at that and compare that to the shows the episodes where I’ve discussed rent control, rent control is artificially low rent. And what does it do? It creates stagnation. When I interviewed one of our video editors on the show, he and his wife live in San Francisco, they live in a rent controlled house that they rented back in the mid 90s. And he was on the show, Patrick was on the show talking about this. And their rent is only something like I don’t know what’s around like 20 $400 a month, yet the value of the property in which they live. was like 1,000,005 million six. So think of how bad that rent to value ratio is there. That’s a terrible deal for the landlord. And so do you think other landlords are going to enter the market and say, hey, let’s go buy some rental property in San Francisco because I can spend $1.6 million and get a measly terrible 20 $400 a month? No, of course, there’s going to be no new rental supply because the market has been just subverted by stupid government policy. Right. But not only that, the other effect is just like the artificially low mortgage rates, which now many homeowners have locked in. They purchased over the last few years. They locked in these artificially low rates for three decades. And now they’re sitting there just like Patrick and his wife and their rent controlled apartment. They’re thinking, yeah, we’d like to move, but we’re only paying, you know, 3% interest How can we beat that if we go and sell, we’re automatically going to be forced to refinance to a much higher rate mortgage. So we gotta wait till the price of that move up home comes down a lot to offset that interest rate, that higher interest rate that we’re going to have to pay. So artificially low mortgage rates could be likened to rent control. And when I say artificially low, this is sort of a subject economists talk about, of what’s called the natural rate, right? There is a natural interest rate that a marketplace a free marketplace without all this intervention from governments and central banks would eventually appear. It would be through the process that we also talk about, of price discovery, see money, interest rates, just like anything else, have a price right money has a price, and there can’t be any good price discovery when you’ve got government Central Bank interfering sarva time. Okay, we got to get to our guests. So let’s just wrap up this video.
What will be the primary drivers of that housing trade of that housing market in 2019? Is it going to be interest rates? Is it going to be the the supply demand imbalance? What do you think is going to be the primary factor that’s going to be the biggest influence over housing next year, the supply and demand balance is definitely the one that I’m focused on for next year rates will rise to maybe mid fives, but that’s not a high rate environment from a historical housing perspective. The bigger challenge is really that that that availability supply, existing homeowners today are sitting in their homes on average for 10 years, and that’s up significantly from prior to the boom or even three or four years ago. And the longer that people want to stay in their homes. They are the primary provider of most of the homes for sale out there in the United States. The more the key challenge really gets to how do we build more new and affordable homes to solve the supply problem, so Mark, we,
Jason Hartman 18:01
and that is one big challenge, okay to build more new affordable homes, it’s just not happening. So if you’ve been following our plan, or you’re going to start following our plan, hopefully that we’ve outlined on the, you know, last 15 years of this podcast, you will see how valuable that asset is that you own and control now, because it’s just not being replaced. There isn’t much, if any, I mean, it’s almost none. It’s like non existent, virtually supply of new properties in these low entry level prices that make these perfect rental properties. So congratulations to those of you who’ve been following the plan and look forward to many great years to come. And he he just basically is saying that right here, this natural interest rate hasn’t existed in a long time. By the way, just as an aside, with these people sitting on these low rate mortgage That they got over the last several years and not being willing to move because they don’t want to give those great mortgages up. Guess what else that means? That means good news for the home improvement industry, for the remodeling industry, for the contractors out there who will add a bedroom or a family room or a second story to a house. Because a lot of these people now what they’ll do, instead of moving is they’ll just expand their home or improve their home in some way, and just sit there and stay in the same home because they don’t want to give up that rent controlled house or that artificially low interest rate mortgage. Same idea either way.
certain key markets, like you pointed out in New York City also places like Southern California, right are feeling a bit more of that pullback. What is it about me we know those markets I told you that was coming but what is it about the rest of the United States housing market that perhaps should be a little bit more tempered with regard to expectations, both to the upside and downside? We’re not seeing this. The kinds of declines in real estate in certain other parts of the country that we are on the coastal parts of the Northeast are the
Jason Hartman 20:05
so he’s referring to, of course, the linear markets, the ones we like and recommend. We’re not seeing the price declines. But you’re definitely seeing those in the cyclical markets on the coast and South Florida, and you know, all these high priced markets that never made any sense. So those are the ones in trouble.
So Western western coast, the United States, right, right. It’s that the high priced markets are high price because one they’re sought after. So there’s a lot of demand for housing. And in many cases, they’re highly restricted in terms of the availability of housing. That’s not necessarily the case in many of the other markets in the United States. Houston is a perfect example, fourth largest city in the United States, tons of homebuilding. Lots of expansion, Texas in general. And so, you know, it really gets down to not just where people want to live, but sort of the availability of the housing stock there and the ability to build new new stock in those markets really makes the difference before we did you notice that was like a politician answer. He didn’t really So the question he kind of answered his own question, okay.
Jason Hartman 21:02
Just a little small point there that’s nothing new. It happens all the time in the news media but I just found that interesting.
Go Mark if I’m
if I am a homebuyer, what’s the best time of year next year to target that given your view on interest rates and affordability and housing demand? I’d say probably early spring, there’s not a lot of inventory for sale typically in the winter months, particularly in cold parts of the United States. But we know the rates will be rising further into the year so you know, let’s let’s target March is a good time to get out there and start looking to buy
Jason Hartman 21:33
and that’s more for general homebuyers, but have somewhat of an impact on the investors as well. Okay, hey, don’t have time to talk about the super smart home so we’ll try and cover that on the next episode. But let’s get to our guests make sure you register for meet the Masters Jason Hartman comm slash masters tickets have been selling like hotcakes. funny little inside joke about hotcakes. Yes. They’ve been selling like God. hotcakes, and they’ve been going fast. So get your tickets for meet the masters of income property coming up in just a few months in Southern California. And we will look forward to seeing you there. Let’s go to our guest and talk about saving you some money. It’s my pleasure to welcome Keith Macintosh. He is president of Macintosh and Associates real estate tax consulting, and founder of home tax savings. com. Many of you have asked over the many years we’ve been doing this and helping people build nationwide portfolios about the best way to appeal property tax assessments. And it has been very difficult to find a source a firm a vendor that can do this nationally. So we’re going to dive into that topic today and help you save money on property taxes. We are in a highly appreciated market in virtually every place in the country. This can definitely save you so money if you can get those assessments down a little bit, Keith, welcome. How are you?
Keith McIntosh 23:04
Thank you. I’m great, Jason, and thank you for inviting me. Looking forward to this podcast. It’s actually my first podcast, so Okay.
Jason Hartman 23:14
I’m a newbie, Good stuff, good stuff. It’s just a conversation. So no big deal. Okay, so, Keith, you’re in Washington DC, give us the very high level view of property tax assessments, and how they work and how someone may want to dispute what the assessor says their property is worth in order to save money on property taxes.
Keith McIntosh 23:37
Yeah, absolutely. So here’s the deal, when most jurisdictions assessed property annually, some do 357 years but most do it annually. And for commercial and residential property, and when they do it, they’re using mass appraisal techniques. So clearly, their resource constraint, they’re not able to individually value each piece of property and their respective jurisdiction. So they go to Mass appraising, and they have various programs and methodologies for doing this. And they’re, you know, fraught with errors. And until you can really get in and make sure that that jurisdiction understands your property and uniqueness of your property, you’re just going to continue to be assessed at whatever the numbers they come up with. And so there’s a process to challenge that value, typically on an annual basis, and they’re very short windows of opportunity. So, essentially, an assessment will come out, you will have, you know, 3045 days to file an appeal. If you don’t appeal then that assessment stays for your upcoming tax here. But if you do appeal, you have basically three opportunities. The first level appeal is typically, again, you’ll get your assessment, you’ll file a form back to the jurors stiction indicating the fact that you want to challenge this assessed value. And the first level of appeal starts with an assessor, you’ll either have a phone hearing or sit down. And you’ll have the opportunity to share with that assessor your opinion of value for your home and be able to share intricate details about the condition or the market surrounding your property and things of that nature or the tenancy in the building. But you have to have a sort of a well established sort of value position, meaning you’re not going in there with just pictures, you’re going in there with data which is comparable data, comparable home sales, or if you have a commercial property, you’re looking at rents achievable rents and actual vacancy, but on the homes, you’ll go in with comps you’re going with pictures, as much detail as you can bring the market the condition of the home and you’ll end up with nothing Right there, but you’ll get a decision at from that first level of peel. And you know, you may get a reduction at that level, or if the assessor deems that their value is justified, you’ll have another opportunity. And that’s typically with a tax appeal board. And these boards are made up of appointees that sort of arbitrate between the state assessment office and the taxpayer. And you will present your case to that that board and the assessor will present its case to that board evaluation division, and that board will make a determination. And if you are still aggrieved after the Board’s decision, you can take it to Tax Court, which is more expensive proposition. Typically, you know, most commercial property owners go this route, but on the residential side and be rapid, economic sorry, yeah, the economics aren’t worth it. Right. Okay, man attack dollars we’re talking about Okay, so, Keith,
Jason Hartman 26:57
a couple questions. You’re talking In a very traditional way, if you will, and what I mean by that is you say things like, you go in there, and I want to just unpack that and make sure the listeners really know what that means. Okay, so do you actually have a live hearing? Like where you show up in person? And do this? Or do you fill out a form and attach a, you know, a comparative market analysis, maybe from a local realtor, or you look on online and look at some comps and say, hey, look, my property is a piece of junk, it’s not worth anything. So lower my taxes, you know, it’s sort of the opposite if you’re in right opposite role of when you’re a seller, you want to say your property’s worth the most of course, right? What are the mechanics of that?
Keith McIntosh 27:43
Sure, the mechanics are when you get your new assessment. So you’ll get a letter in the mail from the jurisdiction, basically saying your new value for tax here night 2019 will be you know, $200,000 and you have the opportunity to Challenges value by either submitting a written presentation, or you can request an in person hearing. And those forms, you’ll typically, my suggestion is that you do it in person because that’s, you know, it’s more personal, you’ll get a chance to meet the assessor who developed the value for you. So you have the option Perfect. Okay, so the
Jason Hartman 28:23
reality of the vast majority of people listening, though, are that they’re not going to be able to do it in person, because, you know, they’re building nationwide portfolios of property. And even if they were local to their properties, you know, if they, they lived in in one city and the property was in that same city, who has the time. I mean, you know, if you’re a small fish and you got lots of time on your hands, and, you know, you’re sort of living in the regular world. Yeah, I get it. But for most people, they just don’t have the time to do this. So you offer a solution for that. Right. That’s what your company does. Yeah.
Keith McIntosh 28:57
Jason Hartman 28:58
Okay. So I want to talk about that. Of course in here, what you do and how you handle that process and how much it costs and so forth. But the first stage is the appeals board, right?
Keith McIntosh 29:11
First stage is the assessor level. And then the second stage is the appeal board. Okay. And but you didn’t you say Tax Court? Yeah, that’s the third stage there again, there.
Keith McIntosh 29:21
You got it.
Jason Hartman 29:22
So that third board tax, so Tax Court would only be done on really expensive properties where, you know, you could be talking about 10s of thousands or maybe even hundreds of thousands of dollars in tax savings. And I’m just curious, is that the same Tax Court that you go to for IRS disputes?
Keith McIntosh 29:39
No, this is state and local taxes. IRS is federal taxes either state and local property tax,
Jason Hartman 29:46
right. But it is at the same kind of formality where you’re literally filing a lawsuit. You gotta have a lawyer and
Keith McIntosh 29:53
all that the court level
Jason Hartman 29:54
Yeah. Okay, that’s probably not gonna work for for anybody. Yeah, got it. Okay. How do you do this for people? You know, say someone owns a dozen properties or, you know, two dozen properties, there may be in three to five markets around the US. That’s the typical plan. We suggest that they diversify in at least three markets, but not more than five, what you do for them, and how does it work? They get their tax bill and they say, hey, I want to reduce this tax bill.
Keith McIntosh 30:22
What do they do next? what we do for clients, you know, I’ve been in the business 25 years and run a commercial tax practice, and we handle commercial property tax appeals for owners around the country. But when I go into the hearings in my market, DC, Maryland, Virginia, I’d run into homeowners, small investors who who want to challenge those values. And so what I decided was that we needed sort of a national platform that uses big data that can help you know that small investor with multiple properties in multiple jurisdictions challenge their values without too much heartache. So we developed Home tax savings.com. And essentially what that does is allows the investor homeowner to come in, type in their home address, put their assessment and our analytics run comparables and we run analytics on those comparables online. And we come back to you with a recommendation to appeal or not appeal based on our algorithms. And so if we identify appeal opportunity, we charge you for that all the comparable data that you’ll need to submit to the jurisdiction with adjustments along with all the requisite appeal forms that are required by that jurisdiction. And so if you have, you know, five or six properties or you know, different jurisdictions, I’d say, the process for each property takes about 10 to 15 minutes, okay, and so you’ll have all the documentation you’ll need to put in the mail and file to the jurisdiction.
Jason Hartman 31:56
Okay, so basically, you provide the data And then the individual property owner males it in themselves to the jurisdiction, right? Or of course, they could appear in person. Now, you know, why is your quote Big Data unquote, better than the county assessors big data? I mean, isn’t that the same data? Or, you know, is your assessment going to come in lower than theirs or your opinion about?
Keith McIntosh 32:23
Well, their analytics are run on a very broad sort of, number of properties. Whereas our analytical data really zeroes in on, you know, what occurred within a few blocks or within a half a mile of your property, because you can have pockets of neighborhoods that are appreciating faster than others, and those are sort of included in your assessment and our data, really, we do have the same sale comparables sometimes, but we’re looking at those comparables and we’re making adjustments against our property versus their operates that they used. So there, there’s our broad economic data and ours are individualized. We have five comparables, we’re going to generate for you with adjustments to each of those comparables based on size, number of bathrooms, condition, and that sort of data. So it’s a much more finely tuned analysis of your your property than the jurisdiction typically provides. Okay?
Jason Hartman 33:27
How much does it cost?
Keith McIntosh 33:29
There’s no charge currently for the review. And we think there’s value there for the owner just to understand whether or not they’re paying their fair share in taxes. Once we complete that review, if we identify the disparity between our value in the assessment, and it’s going to be greater than 5%, typically, jurisdictions won’t allow an appeal unless it’s more than 5% of the assessed value. So if you’re within that range, it’s not likely that you’re going to appeal and so the charge is about $60 up to $99, depending on the level of savings we can generate. So if we’re, you know, $2,000 or more, the document the all the documentation comes, it’s a little costlier at about $99. So it’s $60, you’re getting the report, you’re getting all your requisite appeal forms automatically filled out and ready for you to submit to the jurisdiction.
Jason Hartman 34:26
Okay, so the simple answer is 60 to $99. Is that correct? Correct. Okay, and then a percentage of the savings?
Keith McIntosh 34:33
Well, we don’t charge a percentage of the savings. So this is for the homeowner to do themselves. You know, they go online, they put in their address, they generate the report, they download the files, print the files and put them in the mail. Got it.
Jason Hartman 34:46
So that’s it. It’s $62. Okay, that’s great. Now, so it’s a totally automated service. I’m guessing there’s no human only automate No. Okay. Because most of the companies that do this are localized. They Don’t do it nationwide. Are you in every market?
Keith McIntosh 35:03
No, we are. There are thousands of taxing jurisdictions across the US. And so we are in about 12 states right now. And with in the next few months, we’ll be in 20 states and working our way around the country. I’d say by the end of next year, we should have, you know, 90% of the states covered, but not all of the counties, you know, in some counties are, you know, two 300 counties with that require different appeal forms and, and so we’re building all along the way. So if you go to our site, and you put in your address, and we’re not covered, you’re in our database, and we’ll be reaching back out. Yeah, right. Yes. be notified. Okay.
Jason Hartman 35:44
So in addition to providing you basically provided sounds like comparable data, and they don’t provide the forms for each specific jurisdiction, right, right. Yeah, isn’t it? You know, I always say, when it comes to real estate investing for the, you know, middle An upper middle class person, right? You’ve got to embrace the fragmentation. That’s my line. I’ve said it many times. And the reason is, you know, it’s such a hassle that all these jurisdictions are different. They have different forms and different processes. But that’s the thing that makes it hard for the big wall street institutional investors to come into our market and eat our lunch. Because, and they are dabbling in it a little bit. Obviously, we’ve seen huge companies like invitation homes and so forth with you know, thousands and thousands and thousands of homes. But largely, this is still a market that belongs to mom and pop investors, thank God because the return on investment is so high, even if you’re overpaying on your property taxes, right? But, but it is fragmented, so I say invest in at least three markets, not more than five. So you know, once you do this a couple of times, you know, you’ll kind of get it and it can be automated now. Do you offer a Non automated service as well or is that just really expensive for someone that’s going to save? You know, a few hundred bucks a year?
Keith McIntosh 37:07
Well, you know, on my commercial business I’ve been I have appeals pretty much across the US pretty much in every state. And I represent, for instance, with the US Postal Service and all of the post office branches that they leave. They have to pay taxes on those branches. At state local,
Jason Hartman 37:24
I pay taxes on the lease. Right
Keith McIntosh 37:27
on the leased properties. Yeah, not the own prop. No, whoa, wait a second.
Keith McIntosh 37:31
Isn’t it fascinating,
Jason Hartman 37:32
dear listeners, that the government has to dispute taxes against the government.
Keith McIntosh 37:40
I mean, the government.
Jason Hartman 37:43
I get it, but and the post office isn’t exactly the government either anymore, but you know what I mean, right. We all know. The irony is just amazing.
Keith McIntosh 37:52
Yeah. Okay, go ahead. Well, a number of years back, you know, I had met with Fannie Mae director, the financial crisis and I said, Guys, you know, there’s a millions of properties that you’ve taken back and were assessed and we can appeal wall. And they love the idea. And then at the end of the day, they said, Well, you know what, this is taking money away from the States, we should probably shouldn’t be doing
Jason Hartman 38:17
it, that probably would be a pretty bad press release. If, if, though, if all those taxing jurisdictions said, hey, look, here’s this pseudo governmental agency, Fannie Mae, right. Right, you know, and then Freddie Mac, I’m sure did the same thing saying, Look, they’re trying to cheat the municipalities. But it’s not really a matter of cheating. I mean, it’s just a matter of getting the value, right. And, you know, our legal system is built on the adversarial process, you know, one side thinks one thing, and the other side thinks the other thing and, you know, I’ve learned maturing in business over many years that there’s two sides to every story. Okay, you know, there really are. So you got to tell your side if you want to have a chance at saving on your taxes. Do you have any metrics that you can share with the listeners for the typical savings? In disputing? I mean, and by the way, before you even answer that question, if you can, this is a moving target. Because, you know, depends on the market cycle if it’s a highly appreciated market, or a declining market, usually in the declining markets where you’re really going to want to get ambitious about disputing, I would guess, but correct me if I’m wrong.
Keith McIntosh 39:24
Well, you know, and in the markets that are increasing, you have assessment jurisdictions are being very aggressive and maybe sometimes too aggressive, and their valuation so you want to appeal and look at those values ended the declining market tends to be the same way that they’re looking at losses and revenue, their school districts are losing tax revenue. And so they’re trying to hold on to the values that were there prior to the decline. So in either circumstances, it’s when the markets not really moving at all is when you know, there’s not much to do but it’s going up, it’s going down. You should be filing a And appeal. We’re just looking at it. Right.
Jason Hartman 40:02
Yeah, absolutely. Any any metrics? How much do people
Keith McIntosh 40:05
yeah, 10% is usually what we end up if, you know, when we look at if we actually file an appeal on staff, and we do this for for clients around the country with multiple properties, and we do the appeals for them using our network of providers. And so if you had, let’s say, 10 properties and four jurisdictions, and the economics made sense for us to look at that portfolio, we would handle that for you, we would charge a percentage of the savings, and we would engage our local consultants because we have a network of providers around the country. So we would engage our local consultants to take that appeal through the process, we would take a percentage of the savings, but typically we find if we file an appeal 90% of the time, we’re going to get some relief. 90% of the time, if we file an appeal, we’re going to get
Jason Hartman 40:58
relief. Okay, so you’re gonna get Something just for asking, it sounds like 90% of the time, but it may not be enough to have made it worth it like you may you spend, you know, $99 with your company, you spend some time doing it. And by the way, I want to ask you, how much time does it take the user to do it? And then you’ll think, Hey, you know, I save 200 bucks, what do you do, but I would think that there’s a bit of a kind of a processional effect here. In other words, if you get the assessment down lower, then maybe the in the following years they build on that old assessment, is that true? Or maybe you don’t know.
Keith McIntosh 41:36
No, absolutely true. I mean, and that’s what we tell our users. Basically, you get it down this year, it’s likely that you’re following years assessments going to start with a lower basis. And absolutely, and it’s something that you really do have to focus on. Now. Our system basically will recommend filing only when we find at least 500 No more discrepancy between our value and the assessed value. So you’re not going to pay the $60 to file with the potential of only saving, you know, $100 or $200 at the limit at at least 200 on the lower value homes and you know, $100 on the on the higher value home. So there are mechanisms built into our system that deal with that. Good,
Jason Hartman 42:26
good. How long have you had the automated system going? I know you’ve been in the business a long time as a probably a very expensive Washington, DC consultant for big deals and big commercial properties. But how long have you had this automated system going?
Keith McIntosh 42:39
We just started launched it last spring. And so it’s we’re coming up on one year. It’s really this is really our first year. We’re learning more about our art that have issues and we’re we’re fine tuning all along the way.
Jason Hartman 42:53
Yeah. How many assessments have you done so far?
Keith McIntosh 42:55
We’ve done about 120. so far. I mean, properties that had, you know, appeal potential. And so our goal is to sort of get a social media campaign going yard campaign. It’s very expensive to market individually. And so we just need to get the word out to owners investors that this is something they should be looking at annually on their portfolios or other crop
Jason Hartman 43:19
circles. Do you have a competitor that does the nationwide or I mean, you’re not
Keith McIntosh 43:23
wide yet. But you know, where they only want that one now.
Jason Hartman 43:28
That’s what we have looked and looked and there are lots of them that do it locally. But we have that’s why I wanted to get you on the show, Keith, because we have not been able to find anyone that does it more than locally, at least so far. So yeah, good, good stuff. Are there any questions? I didn’t ask you anything you just want to share with the audience?
Keith McIntosh 43:47
No, I think we covered most of what I wanted to touch on. I mean, the idea that you know, starting with getting the habit of looking at it because a lot of times you know, property taxes are paid through your escrows you know, you get the notice of assessment in the mail, you have not paying attention to it because you know, the taxes are being paid out of escrow. And it’s not immediately coming out of your pocket and pay attention because you’re still paying them. Yeah. Yeah, you’re still paying them. And so that’s the deal. You know, they’re only 5% of homeowners that actually file appeals on their property obsessed.
Jason Hartman 44:22
Wow. That’s a tiny number, isn’t it?
Keith McIntosh 44:25
I need number. And so we’re trying to change that paradigm.
Jason Hartman 44:30
Good, good stuff. All right, Keith. The website home tax savings. com. Thanks again for joining us.
Keith McIntosh 44:36
Thank you Jason. Appreciate it.
Jason Hartman 44:40
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