Properties built or operated specifically as student housing projects are often referred to as purpose-built properties. Student housing solutions in college areas are conventional, market-rate apartments which can also be known as student competitive apartments. Student accommodation across the globe – but specifically in the USA – are increasingly more expensive to both buy and live in. assessors commonly derive a market value using one of more of the three classic approaches to value: cost, income or sales comparison.
Taxpayers should outline the factors they considered in purchasing their property such as special financial considerations. Students should be quick to point out the differences between the two property types. For example, competitive apartments are valued by the square foot while purpose-built housing is valued by unit or bed. Owners should always emphasis the occupancy levels and fluctuation differences between competitive apartments and purpose built property, which may have a low occupancy during the summer months when school lets out. Pointing out the influence of the on-campus housing supply on the performance of an off-campus purpose built project.
Competitive properties usually include more studio and one to two bedroom apartments while purpose built properties have more three and four bedroom units. Competitive complexes rent by the apartment, while purpose built properties rent by the bed. Rental rates and costs of utilities and other amenities can often dramatically differ between the two property types. Finding an appropriate tax attorney los angeles is the best thing you can do as a landlord to ensure you are working within the law. In an income approach, tax assessors typically use market driven rent, vacancy and expense factors to arrive at a net operating income figure that is then capitalised using a market driven rate. The most common mistake made using this approach is applying competitive market data in their analysis rather than purpose built market factors. Combined with increased demand for beds that accompanies accelerating enrolment at the largest universities, these healthy fundamentals will encourage tax and property assessors to boost property tax assessments. In many cases, tax assessors will produce inflated valuations that cannot possibly be supported by market data or realistic operating scenarios.
Finally, be mindful of how a property’s distance from campus affects rental rates. There is typically a direct correlation between proximity and higher rent levels, leasing velocity and occupancy for purpose built properties. The correlation isn’t as strong as student competitive prices here so be very careful of this. Even if the tax assessor is using correct data from comparable properties, owners should endeavour to challenge market factors in the assessor’s analysis. An operating statement can help distinguish the owner’s property from projects that lead to higher assessments. Pointing out specific income and expense items can show trends in rental rates, occupancy and expenses that differ from the market trends alleged by the assessor.
Even in a strong market, student housing owners should constantly monitor their property tax assessments and have the courage to combat assessments derived from sales or income data.