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Stacey O’Day Allen County Assessor Kayla Tilley – Chief Deputy Bev Zuber Wayne Twsp Assessor Derek Camp – Chief Deputy 2023 Residential Rental market & assessments ---PAGE BREAK--- Introductions Laura Boltz, Market Data Specialist, Allen County Assessor’s Office – Began working with residential rental assessments in 2004 - Handles all townships except Wayne Township Tammy Smith, Senior Real Estate Deputy, Wayne Township Assessor’s Office – oversees all residential assessments in Wayne Township Caralie Puckett, Real Estate Rental Deputy, handles residential rental assessments in Wayne Township ---PAGE BREAK--- Residential Rental Assessment Chapter 1: Sales verification & Gross Rent Multipliers ---PAGE BREAK--- Trending & Indiana Code Annual Adjustments or “trending” of property values became part of Indiana’s move to a market-based assessment system upon order of the Indiana Supreme Court in 1999. Trending requires assessors to research sales of properties in a particular area over the previous year. Using that information, assessors then estimate the values of other properties in the same area to determine an assessed value. “Department of Local Government Finance Annual Adjustment of Assessed Value Fact Sheet.” “The assessed value should reflect the amount a willing buyer would pay for the property at the time of assessment.” Department of Local Government Finance Annual Adjustment of Assessed Value Fact Sheet. “True tax value may be considered as the price that would induce the owner to sell the real property, and the price at which the buyer would purchase the real property for a continuation of use of the property for its current use.” 2021 Real Property Assessment Manual p2. “Value-in-Use ■The value of property for a specified use. ▼The value a specific property has for a specific use. Synonymous with Use Value and Market Value-in-Use.” 2021 Real Property Assessment Manual p8. ---PAGE BREAK--- Why do we use the Gross Rent Multiplier? Indiana Code 6-1.1-4-39 The gross rent multiplier method is the preferred method of valuing: real property that has at least one and not more than four rental units…” Gross Rent Multiplier (GRM) •GRM = Sales Price / Rent ---PAGE BREAK--- Real World Examples 3/1/23 ---PAGE BREAK--- When we receive a Sales Disclosure: If Page 2 Section D is checked “Yes” for a rental property or Page 3 Section J #3 is not checked “Yes” for Homestead, the buyer will receive a “Residential Rental Questionnaire.” The buyer may receive a phone call from our office to determine the future use of the property as well. If the property is going to be used as a rental, Complete the questionnaire as accurately as possible and file with our office, even if not yet rented. Remember to file a copy of the lease once rented. Let the Assessors’ office know of any issues with the property (condition, repairs, etc.). ---PAGE BREAK--- Sample Sales Disclosure (page 1 & 2) ---PAGE BREAK--- Sample Sales Disclosure (page 3) ---PAGE BREAK--- When we receive a Sales Disclosure: (continued) If the sale was an arms-length transaction with a willing seller and willing buyer, it may be used in formulating future Gross Rent Multipliers if written verification in the form of an active lease is received from the owner. In 2022, 118 sales were considered valid for use in creating the 2023 Gross Rent Multipliers. Also in 2022, 231 sales were considered “valid investment” sales, not yet leased. ---PAGE BREAK--- 2023 Rental Questionnaire Sample: ---PAGE BREAK--- Allen County Rental Sales – 2010 - 2022 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Valid Investment Sales 2 4 38 115 122 115 131 222 66 176 120 142 231 Valid Sales 316 223 204 276 249 231 271 343 243 219 142 52 193 Valid For GRM Use 561 523 531 483 231 226 191 62 152 105 46 162 118 After Foreclosure 80 69 96 64 87 73 76 42 22 20 3 1 Invalid Sales 460 412 391 497 420 415 391 371 242 514 193 220 169 Auditor Tax Sale 254 171 90 57 34 30 15 5 13 Court Ordered /Judgement 11 16 58 30 18 16 14 3 6 2 1 8 Foreclosure Sales 219 196 294 183 76 84 75 24 19 9 3 5 0 200 400 [PHONE REDACTED] 1200 1400 1600 1800 2000 Rental Purchase Method Trends - 2010 through 2022 ---PAGE BREAK--- Allen County Residential Rentals Within Wayne Township, sale price per square foot has increased from $16.28 to $69.17, an over 324% increase, between 2010-2022. 2021-2022 saw an increase of 19.46%. The remaining Townships have seen increases as well, $48.51 to $128.74 per square foot, an increase of 165.39% in twelve years. 2021-2022 saw an increase of 25.39%. *data pulled from InCama yearly valuation 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 County $48.51 $47.36 $49.55 $55.78 $54.23 $52.85 $60.76 $67.07 $76.56 $62.52 $100.29 $102.67 $128.74 Wayne $16.28 $19.89 $22.22 $23.91 $24.81 $26.75 $29.02 $40.09 $52.24 $39.30 $51.10 $57.90 $69.17 $0.00 $20.00 $40.00 $60.00 $80.00 $100.00 $120.00 $140.00 Price per Square Foot Per Square Foot Average Acquisition Cost 2010-2022 ---PAGE BREAK--- Calculate Median GRM from Sales 1. List all valid rental sales 2. Separate based on Neighborhood, House Type, etc. to maintain similarity. 3. Divide sale price by actual rent = GRM. 4. Find the median GRM. Twsp Sales Classification RptRent Sale Date Sale Price GRM Aboite Valid For GRM 1,200 10/08/2022 127,900 106.58 Marion Valid For GRM 1,000 04/25/2022 99,000 99.00 Perry Valid For GRM 1,050 09/13/2022 102,000 97.14 St Joseph Valid For GRM 1,200 05/15/2022 120,000 100.00 Wayne Valid For GRM 1,000 12/06/2022 111,000 111.00 Wayne Valid For GRM 1,000 09/24/2022 87,000 87.00 Wayne Valid For GRM 1,200 12/31/2022 122,000 101.67 Aboite Valid For GRM 1,500 06/29/2022 159,000 106.00 Aboite Valid For GRM 1,550 02/04/2022 152,000 98.06 Aboite Valid For GRM 1,400 06/01/2022 147,500 105.36 Wayne Valid For GRM 1,450 10/09/2022 145,500 100.34 Wayne Valid For GRM 1,600 05/25/2022 162,000 101.25 Wayne Valid For GRM 1,200 05/29/2022 132,000 110.00 Wayne Valid For GRM 1,100 08/31/2022 112,000 101.82 Wayne Valid For GRM 900 09/12/2022 105,000 116.67 Wayne Valid For GRM 1,500 06/30/2022 153,000 102.00 Aboite Valid For GRM 1,250 09/30/2022 145,000 116.00 Wayne Valid For GRM 955 06/15/2022 94,000 98.43 Wayne Valid For GRM 500 10/22/2022 49,500 99.00 Median GRM: 102.00 ---PAGE BREAK--- Allen County GRM’s Each year, verified rental sales and rents are used to determine the annual GRMs used for applying the income approach to all verified residential rental properties. As sale prices have increased at a faster pace than rent, the GRM’s have increased as well. When necessary, new GRMs have been added to ensure fair and accurate assessments. ---PAGE BREAK--- Residential Rental Assessment Chapter 2: Establishing Market Rent ---PAGE BREAK--- Allen County Average Rent In 2012, with the amendment to IC 6-1.1-4-39, taxpayers were requested to submit either a copy of the current lease or a copy of the most recent applicable schedule (Schedule E or Form 8825) to provide formal verification that the parcel is being used as a rental property. The lease/tax schedules provide verification of actual market rents. This information is requested in writing: • Each year a parcel comes under re-assessment (once every four years) . • Each sale not indicated for Homestead deduction. • Each time a parcel is appealed if over eighteen months since most current lease has elapsed. • Each time there is a change in rent amount (voluntary). ---PAGE BREAK--- Rental Questionnaire: An online form is available on our website, allowing you to complete and attach electronic copies of leases and/or Federal tax forms to complete the verification process. www.allencounty.us/rental-properties ---PAGE BREAK--- 2023 Rental Questionnaire updates: Simplified format Separate 3–4-unit form Specifically asks whether this is a short- term rental Includes a reminder about attaching a lease or appropriate Federal form Specifically asks about condition issues and asks for documentation ---PAGE BREAK--- 2023 Rental Questionnaire Sample: ---PAGE BREAK--- Chapter Two cont. – Calculating Market Rent 1. List all valid rents 2. Separate based on Neighborhood, House Type, etc. to maintain similarity. 3. Calculate median rent for the market Township Class Cond Sq Ft Building Style Rpt Rent Wayne Twsp 510 A 908 Convential 1,1/2 story 1100 Wayne Twsp 510 A 872 Convential 1,1/2 story 850 Wayne Twsp 510 A 700 Convential 1,1/2 story 850 Wayne Twsp 510 A 855 Convential 1,1/2 story 900 Wayne Twsp 510 A 982 Convential 1,1/2 story 1000 Wayne Twsp 510 A 1019 Convential 1,1/2 story 1000 Wayne Twsp 510 A 884 Convential 1,1/2 story 955 Wayne Twsp 510 A 900 Convential 1,1/2 story 950 Median Rent 1000 ---PAGE BREAK--- Allen County Average Rent Rents have increased each year. From 2012 thru 2019, the increases have been an average of 1.19% per year. For 2020 thru 2022, rents are increasing at a higher rate of 3.76% per year. Aboite Township is seeing the highest increase, at 4.87%. Adams Twsp has seen the next highest with an annual increase of 4.4%. Washington Twsp has seen the lowest increase for 2023 - .75%. **data provided by owners through written verification – lease and/or Federal filings. 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 ABOITE TOWNSHIP $1,053 $1,179 $1,193 $1,224 $1,241 $1,248 $1,259 $1,292 $1,336 $1,325 $1,390 ADAMS TOWNSHIP $694 $708 $711 $712 $714 $733 $731 $743 $771 $784 $818 PERRY TOWNSHIP $1,046 $1,018 $1,017 $1,010 $1,023 $1,043 $1,079 $1,147 $1,213 $1,237 $1,292 ST. JOSEPH TOWNSHIP $838 $846 $843 $848 $894 $921 $936 $949 $980 $1,023 $1,065 WASHINGTON TOWNSHIP $757 $835 $834 $829 $825 $830 $842 $845 $904 $949 $957 WAYNE TOWNSHIP $649 $642 $657 $664 $673 $673 $681 $693 $721 $742 $768 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 Rent Average Rent 2012-2022 ---PAGE BREAK--- Top 5 Highest Advertised Rentals: 2/2/23 ---PAGE BREAK--- Top 5 Lowest Advertised Rentals: 2/2/23 ---PAGE BREAK--- The Journey of a Residential Rental Assessment Chapter 3: establishing Assessed value ---PAGE BREAK--- Chapter Three cont. – Establishing Assessed Value All Rentals are priced with the Cost Approach (Reproduction minus Depreciation and trended) and the Income Approach. The most appropriate method is used. Cost Approach = $110,000 Income Approach Market Rent $1,000 Gross Rent Multiplier = 102.00 $1,000 * 102.00 = $102,000 The Income Approach is the most appropriate of the two values. For 2023, the property will be assessed $102,000. ---PAGE BREAK--- Chapter Three cont. – Notification to Owners If an assessed value increases, a Form 11 Notification of Assessment will be mailed to the owner and all notices will be available online. Appeal Deadline – The deadline for filing an appeal depends on two issues: date of notification and when ownership takes place. If a Form 11 is mailed to the current owner before May 1, appeals must be filed by June 15th of the current year. If mailed after, the deadline is June 15th of the year tax statements are mailed. If no Form 11 is issued, the deadline is June 15th of the year tax statements are mailed. If the property sells after a Form 11 has been issued, the deadline is June 15th of the year tax statements are mailed. ---PAGE BREAK--- The Journey of a Residential Rental Assessment Chapter 4: Appealing Assessed Value ---PAGE BREAK--- Chapter Four cont. – Filing an Appeal Our example property was purchased for $94,000 and is assessed for $102,000. The owner decides to file an appeal. Here are the steps for a smooth process: Contact the Assessor’s office to discuss the issue. Visit www.allencountyassessor.org and review the information. File an appeal Form 130, available online or in person. Any information, such as current lease, condition information, pictures, appraisal, etc. may be filed at the same time as the appeal. This will help make the process smoother with fewer delays. ---PAGE BREAK--- Chapter Four cont. – Appeal Steps Our example property was purchased for $94,000 and is assessed for $102,000. The owner decides to file an appeal. Here are the steps for a smooth process: Visit www.allencountyassessor.org and view the “Appeal Tracker” to review an appeal’s current status. A postcard notifying you that your appeal has been received will be mailed including contact information. You may receive a letter requesting an updated lease if one is not currently on file. Taxpayers are also contacted by phone or email, depending on preference. Field visits may be scheduled to determine the condition of the property. Sales Comparison Reports will be run to determine value under the ‘Sales Approach.’ ---PAGE BREAK--- Resources for Owners/Investors: Our offices may be contacted at any time for questions regarding the use of the Income Approach. Internet website: www.allencounty.us General Information Comparable Online Multiple Property Search Public Access Tax Information Online Property Record Card Search Appeal Information Appeal Forms Appeal dates and Appeal Tracker PTABOA Information Rental Information Online Forms Rental Calculators GRM information Contact Information