Underwriting a seller's tax bill as if it will stay flat after sale is a common and expensive mistake

Take a small multifamily operator moving into a first single-family purchase, expecting it to be the easy deal. House at 231k, 4/2, 1,600 square feet, built 1994, decent school zone in a growing county, rent 1,975 with a tenant who pays reliably on the first. Fourteen months later the property has not once cleared its own expenses. The hole sits entirely on the expense side. The seller had owned since 2003 with a homestead cap on the assessment, so the last tax bill on record read 2,640. Typing that number into the model with a 4 percent growth assumption and moving on is the mistake: the county reassesses at sale price the following year and removes the cap, and the new bill lands at 5,410, a 2,770 annual gap that was never budgeted. The second piece is smaller but compounds it. An insurance quote bound on a roof an inspector called seven to ten years remaining gets non-renewed at the next term when the carrier's aerial imagery flags granule loss, and the replacement policy runs 480 dollars higher with a requirement that the roof be replaced within 24 months. Altogether roughly 3,250 dollars a year of expense that never made it into the pro forma, against an NOI modeled at roughly 11,900, turns a 4.9 percent unlevered yield into 3.5, and the property runs modestly negative after debt service depending on what breaks. The fix worth carrying forward: pull the assessor's own page and reunderwrite taxes at full sale price under the non-owner-occupied rate before making an offer, since reassessment mechanics vary meaningfully by state and county and experience in one asset class does not automatically transfer to another. On roofs, remaining life under ten years belongs in year one of the pro forma as a planned replacement, not sitting in a reserve line hoping not to be needed.