Multifamily playbook
Multifamily property tax appeals grounded in the rent roll, not the listing site
Multifamily assessments tend to follow asking rents. Assessors and their data vendors collect advertised rents and apply a submarket vacancy and expense ratio, which misses the gap between what a community advertises and what it collects. In submarkets absorbing new supply, concessions, loss-to-lease and bad debt widen that gap quickly.
ATALI ELECTRIC reads the certified rent roll unit by unit and reconciles it to the trailing twelve months of collections. It measures loss-to-lease, concessions, economic vacancy and bad debt separately, normalizes payroll, turnover and insurance against market levels, and reserves for replacements per unit. The result is a pro forma an assessor's multifamily analyst recognizes, backed by per-unit sales and an equity grid of competing communities.
Where assessors get multifamily wrong
- 01Asking rents treated as collected rentsAdvertised rents are the top of the range. In-place leases, renewals signed below market and units held for renovation all sit beneath them, and the difference compounds across hundreds of units.
- 02Concessions ignoredWeeks of free rent on new leases and renewal incentives reduce effective rent for the life of the lease. A model built on face rent overstates income by the full concession amount.
- 03Physical occupancy confused with economic occupancyOccupied units are not the same as paying units. Bad debt, delinquent tenants awaiting eviction, down units, models and employee units all reduce collections below what a physical occupancy figure implies.
- 04Expense ratios from a different marketBlanket expense ratios understate insurance premiums, payroll and turnover costs for older communities. Actual costs that sit in line with market data belong in the pro forma.
- 05Other income capitalized at face valueUtility reimbursements offset a utility expense and are not profit. Application, late and termination fees fluctuate and are frequently counted at a peak year instead of a normalized level.
How the three approaches weigh in
Income
PrimaryDirect capitalization of normalized collections, with per-unit and gross rent multiplier checks against the sales evidence.
Sales Comparison
SupportingPrice per unit and per sq ft adjusted for vintage, unit mix, amenities and condition. Sales priced on value-add renovation plans or assumed below-market debt are adjusted or excluded.
Equity Uniformity
SupportingAssessed value per unit and per sq ft of competing communities of similar vintage, class and density.
Cost
Rarely usedConsidered only for new construction in lease-up, where absorption costs and entrepreneurial incentive have to be addressed.
How the income engine normalizes a multifamily P&L
| P&L line | Treatment |
|---|---|
| Gross potential rent | Market rent by unit type from the rent roll and a competing community survey; leases in place carried at contract rent. |
| Loss-to-lease | Measured as the gap between market rent and in-place rent across the rent roll and deducted from potential rent. |
| Concessions | Free rent and move-in specials amortized over the lease term and deducted to reach effective rent. |
| Vacancy, non-revenue units and bad debt | Economic vacancy derived from collections; model, employee and down units removed from revenue; bad debt taken from write-off history. |
| Other income | Utility reimbursements matched to the utility expense they offset; fee income carried at a trailing average. |
| Operating expenses and reserves | Payroll, insurance, repairs and turnover carried at actual where supported by market data; a replacement reserve per unit added and unit renovation capital removed. |
| Real estate taxes, debt service and depreciation | Removed from expenses; taxes are recognized through the loaded cap rate. |
The notice's $55.4 million fair market value relied on advertised rents and a stabilized expense ratio, missing six weeks of free rent on new leases, a 4.8% loss-to-lease and bad debt running at 3.5% of collections. Rebuilding income from the rent roll and trailing twelve months yields about $3.20 million of NOI before taxes; at a 6.85% loaded rate (5.25% base plus about 1.60%, which is Atlanta's combined millage of roughly 39 to 40 mills applied to Georgia's 40% assessment ratio) it indicates $46.7 million. The $8.7 million reduction saves about $139,200 a year.
Evidence checklist
- Certified rent roll on the valuation date with market rent, lease rent, concessions and lease dates
- Trailing twelve-month and three-year operating statements
- Leasing activity report showing move-ins, move-outs, renewals and concessions granted
- Aged receivables and bad debt write-off report
- Insurance renewal and payroll schedules
- Capital expenditure history and unit renovation schedule
- Rent survey of competing communities
- Assessment notice and the property record card
Multifamily appeal questions
Why does the county's value not match my rent roll?
Mass appraisal models usually start from advertised rents and a submarket vacancy rate, not a certified rent roll. Loss-to-lease, concessions, non-revenue units and bad debt all sit between those advertised figures and actual collections, and the binder shows each gap with the rent roll lines that support it.
How are concessions treated in the income approach?
Concessions are amortized over the lease term and deducted from rent to reach effective rent. If concessions are burning off as the submarket absorbs new supply, the engine shows both the valuation-date level and the trend so the board sees what a buyer would have underwritten on that date.
Do recent apartment sales in my submarket hurt my appeal?
Not necessarily. Many multifamily sales are priced on renovation upside, assumed financing or portfolio allocations. The sales grid documents those conditions and adjusts or excludes the sales, and the income approach usually carries the most weight for stabilized communities.
Should utility reimbursement income be included?
Yes, but only alongside the utility expense it offsets. Counting reimbursements as income while the assessor's expense ratio ignores the matching utility cost overstates NOI.
Stop overpaying commercial property tax on a flawed mass appraisal.
Upload an assessment notice. ATALI ELECTRIC returns a valuation audit and comp analysis in about two minutes.