Mastering Property Tax Savings with Wes Nichols

Speaker 2 This is Wake Up to Wealth, a podcast dedicated to helping you change the way you think about wealth. And now, here's your host, Brandon Brittingham.

Speaker 2 Hey, what's up, everybody? We are back with another episode of Wake Up to Wealth. And today,

Speaker 2 something... Really exciting.

Speaker 2 We're going to talk about another way to save you money, specifically on property taxes i got my good buddy here wes nichols who happens to be in the boardroom mastermind with me and uh have had the pleasure to be in the room with this guy a few times um definitely knows his shit cold and excited to have him with us today thanks for thanks for being on today brother thanks brian

Speaker 2 so um tell us a little bit about who you are what your company does um because you know until i met you i really didn't know anybody that did what you do and i didn't even know that that this kind of industry existed.

Speaker 2 So fill us in.

Speaker 1 Yeah, best way to describe what we do is we're half-brained attorneys and half-brained appraisers. But the great thing is, is I am not an attorney and I'm not an appraiser.

Speaker 1 We're just really good at arguing value for property tax reduction and consulting taxpayers, property owners.

Speaker 1 on how to navigate the property tax system, how to reduce potential future impacts, as well as reduce current impacts of property taxes. I've got a staff of over 30.

Speaker 1 We represent over $40 billion in assessed values.

Speaker 1 We have offices in California, Seattle, Colorado, Texas, New Mexico, and we're constantly expanding and growing.

Speaker 2 So essentially, I own a big apartment complex, office center.

Speaker 2 You know, I'm going to build something, whatever the case is. I come to you and try to essentially get my assessment argued is that kind of what you do

Speaker 1 correct so right now let's we're doing a lot in say san francisco downtown or la san diego our two asset types that we're seeing the most reductions on are definitely office um

Speaker 1 apartments because cap rates have changed from you know three and a half four to now they're four and a half five and a half caps we're also seeing some uh reductions in hotels most of the reductions right now are based on the debt market and the higher cap rates and the post-COVID environment right now.

Speaker 2 So,

Speaker 2 you know,

Speaker 2 you know,

Speaker 2 why would a municipality or a government agency or whatever, you know, essentially agree with you to say, hey, we'll make this reduction? And what do you think makes you guys good at doing this?

Speaker 2 Like, why does it work?

Speaker 1 It's all based on the data. That's one.
And then two is motivating the assessor to do the right thing.

Speaker 1 So, there are some states or municipalities out there where they won't agree to large reductions, and they basically say, Hey, this is going to impact the local government.

Speaker 1 And I say, Hey, if these taxes aren't lowered, this is going to impact the local government because this is going to drive businesses, this is going to drive investors out of your county and out of your city.

Speaker 1 Um,

Speaker 1 it so we try to have a win-win solution. Uh, that's that's in certain markets.
Certain markets, it's all based on data.

Speaker 1 Like, state of California, certain counties, they're flush with money due to Prop 13.

Speaker 1 Uh, but there's only really five to ten percent of the property taxes, maybe 15, that we can actually get reductions on in California.

Speaker 1 And some of those, like for office buildings, it'd be very sizable. We're seeing values for office properties go back to 1999 or early 2000 values.

Speaker 2 So, you're seeing upwards of 60 million, 60% reductions or more on some of these office properties it's pretty substantial so give me an example like you know one you can think of what like what what's a recent client that you've worked with where you know you gave them a substantial like what did that translate into actual dollars like how much money did you actually save them

Speaker 1 i mean our biggest client that we've ever got a large refund was over three million dollars and that was a hospital uh they were being assessed for 113 million and we got them down 44 million uh that was a couple years back, but we've got cases where, you know, I've got an office park up in the Bay Area where it's assessed for $280 million, and our opinion values is $180 million.

Speaker 1 So that's $100 million right there that would, you know, basically generate over $1.2 million in refunds.

Speaker 1 We've got some quotes out there right now. I mean, there are large reductions right now

Speaker 1 where the refunds could be millions of dollars back to clients. Now that's on the big stuff, but we typically, we don't just say no to everyone.

Speaker 1 We have a lot of properties that are in that $3 to $5 million range where we might be able to get them 15, 20%.

Speaker 1 We might get them back 15, 20 grand. That $15, $20,000 to any investor, that's still.

Speaker 1 So we try to have a wide range approach where, yes, we do the big stuff, but at the same time, you know, my roots are is I want to help the small small person and help them out.

Speaker 1 Or maybe a mom and pop where they did a transfer or a change in ownership and it messed up their reassessment and they got bad legal advice. Where I could go in and fix that for them.

Speaker 1 So I look at it and go, I'm here to help everyone. And if I have that context and have that attitude, you know, everything will fall in line.

Speaker 2 Yeah. So for someone who's listening to this and

Speaker 2 doesn't understand, like, so do you go actually into the municipality, present them the data, argue with them? Does this go to court? Like, how does, how does this, how does this process work?

Speaker 1 So what you do is you file an appeal.

Speaker 1 Certain states, certain jurisdictions, you have to turn in your evaluation. So like, here's a copy of the evaluation that we do here.
And really what this is, is a mini condensed appraisal.

Speaker 1 So most appraisals, 70% of it's fluff where it talks about the flood zone, the demographics, et cetera. This goes straight to the heart of, here's the property.
Here's what's good about it.

Speaker 1 Here's what's bad bad about it, here's the financials, here are the market rents or the data that would support the value or what we think it would sell for as of a certain period of time, and this is the data that we have to support that opinion of value.

Speaker 1 And so, how you work is, is you go in, you present this, the assessor county has an opportunity to cross-examine you, they try to poke holes in your cases, then they go, and then that's where I get to go and poke holes in their cases and show that they really don't know what they're talking about.

Speaker 1 And you do closing arguments and rebuttals. And depending on the board, you'll get a very favorable decision.
And sometimes you don't get as good a decision as you want.

Speaker 1 So that's how the process works. You know, certain jurisdictions we're able to do via like WebEx or Zoom.

Speaker 1 You know, some are in person. So, but, you know, with the post-COVID, it's been nice.
We can do a lot of stuff remote. It's been very helpful.

Speaker 2 So, in your experience, for real estate investors who are listening to this out there, I mean, do you find that, you know,

Speaker 2 in a good amount of cases of stuff that you're looking at, that

Speaker 2 the valuations from a tax perspective are overvalued and there's typically some savings, if not significant savings to most investors you're talking to?

Speaker 1 Yeah, the states and areas where we see where they're the most egregious, you definitely have state of Texas. The state of Texas, as you know, doesn't have income tax.

Speaker 1 So how they tax is a property tax. So not only is their tax rate one of the highest, so it's like 3%, but it's a reappraisable every year.

Speaker 1 And how they come up with a value is they use a computer model. And so with the state of Texas, you just have to beat it.
The other thing that's great about Texas is they are an equalization state.

Speaker 1 So what that means is, is let's say your neighbor across the street has a similar model as you and they're being assessed less than what you are.

Speaker 1 Well, in the state of Texas, you can say, even though your value might be correct, you can say, I want what he has, and they will lower it to his value.

Speaker 1 So when we do Texas, we look at it from two perspectives:

Speaker 1 what your competitors are doing, are being assessed at, and

Speaker 1 what we can win on the market level. So we do that.
The other states that are really egregious are Illinois, has extremely high tax rates and extremely burson.

Speaker 1 A lot of the New England states, such as New Jersey,

Speaker 1 we're also seeing a lot of work in Florida because of the pricing increases.

Speaker 1 The states where we don't see much work is Arizona because they have like a limited value in Oregon.

Speaker 1 But mostly where we're doing most of our work would be, I would say state of Washington, California.

Speaker 1 We're doing a few in Utah and Colorado and Texas are the big ones

Speaker 1 right now.

Speaker 2 Yeah, that's interesting.

Speaker 2 And the other thing about Texas is, you know, I learned this from buying property in there. When you buy a property, you don't know what your tax rate's going to be.

Speaker 2 A lot of

Speaker 2 cases, a lot of times when you buy a property, they tell you what your taxes are going to be after you've settled, which I think is pretty wild.

Speaker 1 Or in some states like Massachusetts and New England, they have a set budget.

Speaker 1 So you might get the value lowered, but they just raise your rate to get the number, the taxes that they wanted in the first place.

Speaker 1 So it they will get their money. Uh, but yeah, Texas is you need to be forecasting what uh increases, even though you bought it, um, unfortunately.

Speaker 1 I mean, there are parts of Texas that, like, office and whatnot, that have been hurt, have been that should be on decline.

Speaker 1 Uh, but Texas is um, you know, ground zero for property tax as well as the state of Illinois.

Speaker 2 So, uh, one thing of being in rooms with you,

Speaker 2 you know, I just think this is good for listeners to know is that

Speaker 2 you actually really enjoy arguing

Speaker 2 over getting lower taxes for people.

Speaker 1 I am one of the luckiest mans in the world. Like I have an amazing wife, amazing kids, but one thing that makes me lucky is I very passionate and love what I do.

Speaker 1 If the assessor's office offers me a good, good option, I will take and sell a case with them. but if they make me go to court with them

Speaker 1 I will do whatever it takes to win

Speaker 1 and what that means is is I will ask the tough questions I will be over prepared whatever it takes because yes I love to win but more importantly I hate to lose and I when I lose a case and it sometimes happened but rarely my wife's like why are you so upset did you lose a case and I'll be upset for like a couple days and and it's not because of what I did It's it's because of the board or the decision that was done because I know I'm right, or at least I think I'm right.

Speaker 1 Maybe I'm too right. But at the end of the day,

Speaker 1 I think where it comes down to is one of my clients was talking to me on the phone this week. And she goes, you know, what you do is very righteous.
It's very, you're helping a lot of people out.

Speaker 1 And I, and I, and I always thought like, hey, I'm helping the wealthy get wealthier or whatnot. But we do help a lot of, I would say, small business owners or small homeowners.
And it really hit me.

Speaker 1 I I was like, yeah, I guess I am making a difference in people's lives is when I can get them back that refund. I can get them back, you know, that money and lower their property taxes.
And

Speaker 1 that helps them dramatically. You know, I know in the past that I have saved properties where that refund helped them make the mortgage or got them out of foreclosure.

Speaker 1 So.

Speaker 1 Yeah, it is. So that's what keeps me passionate about that is I know what we do matters.
I I know what I do matters. And so I need to make sure that what I'm doing, I have my A game.

Speaker 1 And part of that is just having the right attitude and passion for what I do.

Speaker 2 So I always think it's interesting,

Speaker 2 right? How did you get, how did you get started in this? Because it's, you know, it's not necessarily an industry where you just everybody wakes up and says, I want to go argue taxes.

Speaker 2 So like what brought you into this?

Speaker 1 I have the crazy story. So it was 2008.
I was, my background was in commercial. So basically, I was a loan, loan originator.

Speaker 1 And that's where I learned how to evaluate commercial real estate, learn how to appraise properties.

Speaker 1 And I was right around the Lehman collapse, and I knew it was going to be bad. And I said to a coworker of mine, I said, hey, I feel sorry for the teachers and sheriffs.

Speaker 1 They're going to get laid out because the property tax revenue is going to be way down. He goes, I was a banker in St.
Louis and I knew this firm.

Speaker 1 They lowered property taxes and they had a lot of money in their bank account. I'm like, that's a thing.
So I get on internet, I Google.

Speaker 1 And at the time, there were a few large nationwide firms out there and the websites came up and you saw some of the success stories. I'm like, okay, well, most contingency attorneys charge 33%.

Speaker 1 I was like, holy crap, there's money in this. And I'm looking at this going, I can do this.
You know,

Speaker 1 I can sell and pick up clients and whatnot. And, you know, part of it was a good thing.

Speaker 1 I was dumb enough not to know what I know and not to know that it can take, you know, two plus years before you start making any money and you have to have the infrastructure in the place and you have to have some knowledge.

Speaker 1 But, you know, I just kind of bootstrapped it and did it. Next thing I know, I've got a lot of clients.
I just keep growing, I got employees.

Speaker 1 And then we just every year we keep getting better, you know, from an operational standpoint, a sales and marketing standpoint.

Speaker 1 evaluation standpoint. And every year you get better.
You get, you enjoy what you do and you just get better.

Speaker 1 And so, you know, we went from having just a couple employees to now having 30 to now, you know,

Speaker 1 in 2017, I think we filed $3 billion.

Speaker 1 2021, we filed 21 billion. Last year, 30 billion.
This year, 40 billion. So it's like, now it's like, wow.

Speaker 1 see what's possible here. If you have the right vision, you have the right team, you can, there's a, it's unlimited what you can accomplish.

Speaker 2 So when you hear, you know, it's, what's remarkable is one of the things I love about this show is I get to, I get, I get to talk to people like you that, that have these great rises,

Speaker 2 you know, in their companies. You know, there's probably a lot of things that you could share, but what do you think

Speaker 2 one of the biggest lessons you've learned of going from following 3 billion, you know, to 40 billion? I mean, that's

Speaker 2 a stark difference, right?

Speaker 2 And that's what we all hope for as an entrepreneur to see that rise.

Speaker 2 What do you think is one of the best lessons you could share with our audience?

Speaker 1 I think having a team and a process

Speaker 1 is that. The other is having a vision and just sticking to that vision.
Like, this is our, every year that we've set out, we set a goal. And every year I've hit that goal.

Speaker 1 And it's amazing what goal setting can do of I'm going to do X

Speaker 1 and this is what we're going to do. And just say, come hell to high water.

Speaker 1 And so it's just having that grit and that context of no matter what, this is happening.

Speaker 2 So

Speaker 2 Wes, by the way, is a sponsor of the show. And

Speaker 2 he's frankly the only guy in the industry that he's in that I know and trust.

Speaker 2 So people that are out there listening to this, you know, who should reach out to you for help when it comes to their property taxes?

Speaker 1 i i think anyone should

Speaker 1 if you hire us or hire someone else the the key fact is is majority of people don't file an appeal

Speaker 1 and the main reasons why people don't file an appeal is they're afraid of retribution from the government which that's not the case

Speaker 1 The other is, is they get too busy and get distracted. The other reason is they think they're too busy and it's going to take a lot of their time.

Speaker 1 If that's the case, go hire an expert. At least worst case scenario, have someone review it.
And most people in the industry charge a contingency fee. So you don't pay them unless they win.

Speaker 1 Okay, so there's, in our case here, you don't owe us anything until we win. And then from there, they would owe a fee after the fact.
So with that being said, it doesn't hurt.

Speaker 1 You just have to, like anything in life or anything in business, you have to be aware. You have to know your numbers.
You have to know what's going on.

Speaker 1 And so the key is, is when you get a notice or you get a tax bill, make sure someone's reviewing it. Make sure an expert's reviewing it.

Speaker 1 That's the biggest key of advice is just don't be falling asleep at the wheel. Make sure you're paying attention to it.

Speaker 2 Yeah.

Speaker 2 And I mean, I will tell you that just in my personal experience, not necessarily even using a firm, you know, we filed appeal on our taxes before just on single family residences on different things that we've done, we've done.

Speaker 2 Not all of them were successful, but we were successful many many times and i mean that's say that that over scale that added up and it made the difference to our bottom line for sure

Speaker 1 yeah

Speaker 1 and and most states you file the appeal you win and then that reduces the future tax bill uh state of california is different you file the appeal you pay the taxes and then you get a refund um

Speaker 2 but each each state's a little different but the key is is being aware having a tax professional look at it got it um so you guys we will drop all of wes's episode uh information on this episode to get in touch with his company here and on other episodes so if you need help in the things that he's talking about on tax assessments we'll give you all the ways to get in touch with him um kind of wrapping up here we always ask everybody the same question We call this show Waking Up to Wealth.

Speaker 2 I bring people on the show like you to talk about money and different avenues and niches of money that people aren't aware of, right?

Speaker 2 To case in point, I didn't know there was people out there like you that existed until I met you in boardroom. But waking up to wealth is different for everybody.

Speaker 2 I'd love to know your definition of what waking up to wealth means to you.

Speaker 1 Waking up to wealth is from that movie quote, you're in a position to fuck you. You know, you've got your house, you got a home warranty, it's fully paid off, and you got cash in the bank.

Speaker 1 i mean i think getting to a place to where you can choose to say yes or no to the work rather than the work saying being you having to be forced to say yes or no to the work um

Speaker 1 when you wake up on a monday you get to choose whether if you what you want to do that's wealth to me is having personal freedom and choice of you can travel whenever you want, you can go whenever you want.

Speaker 1 That to me is wealth.

Speaker 2 Hey, that's a good enough answer to me. I like that one, especially the first sentence.
So I just want to say again, thank you.

Speaker 2 Thank you for being a sponsor to the show. You guys know, you know, we vet everybody.

Speaker 2 We don't let somebody come on and be a sponsor of a show if we don't absolutely trust them and believe in their product. This guy can save you some money.

Speaker 2 I can tell you, I've been in rooms with him. He's, if you want anyone that's going to argue for your behalf to put money in your pocket, he's the guy.

Speaker 2 Hey, thank you so much for taking the time to be on the show with us today, brother. I appreciate you.

Speaker 1 Thanks, Brad.

Speaker 2 Thanks so much for tuning into this episode of Wake Up to Wealth. We sure do appreciate it.
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Speaker 2 Until next time.