Streamline Property Tax Management for Rentals

The rental market is experiencing significant growth, driven by high interest rates and limited housing inventory, which have made homeownership less attainable. Single-family rentals (SFRs) and build-to-rent (BTR) properties are at the forefront of this trend, presenting opportunities for institutional investors and developers. However, managing property taxes across diverse jurisdictions poses significant challenges. This article explores key trends in the rental market and how LERETA’s innovative tax solutions streamline operations, mitigate risks, and enhance profitability for investors.

Key Takeaways

• Rental Market Surge: Demand for SFRs and BTR properties is rising due to high interest rates and low housing supply.
• Tax Management Challenges: Investors must navigate over 24,000 U.S. taxing jurisdictions, where accuracy and timeliness are critical.
• Automated Solutions: LERETA’s property tax services offer data-driven tools to simplify compliance, reduce delinquencies, and boost efficiency.

The Rising Demand for Single-Family Rentals and Build-to-Rent Properties

The rental market is thriving as prospective homeowners face barriers like elevated interest rates and scarce housing inventory. According to Brian Carmody, Director of Marketing & Communications at LERETA, both apartments and SFRs are seeing robust growth:

• A recent Apartments.com report notes apartment demand has reached a near three-year high.
• SFRs, the second-largest rental housing type in the U.S., serve approximately 14 million households and are projected to grow further.
• The BTR sector is booming, with over 27,000 BTR homes completed in 2023 (a 75% increase from 2022) and 45,000 more under construction in 2024, per RentCafe.

The BTR trend is evolving from small-scale investor projects to institutional investments, with large players acquiring significant portfolios and developing entire rental communities. These communities, popular among families and retirees, offer upscale amenities and a sense of neighborhood stability.

Opportunities and Risks for Investors

The growth in SFRs and BTR properties presents substantial opportunities for institutional investors and developers, but it also introduces operational risks, particularly in property tax management. Key challenges include:

• Scale and Complexity: Managing taxes for thousands of properties across over 24,000 U.S. taxing jurisdictions.
• Accuracy Requirements: Ensuring correct tax amounts and parcel identification to avoid delinquencies or penalties.
• Timeliness: Meeting diverse due dates and navigating varying payment processes, which range from digital platforms to traditional analog methods.
• Profitability Impact: Late or incorrect payments can lead to penalties, eroding returns and affecting investor confidence.

While investors excel at acquiring, renovating, and building rental properties, the intricacies of property tax compliance, reporting, and management often fall outside their core expertise.

The Complexities of Property Tax Management

Effective property tax management is critical for SFR and BTR investors to maintain compliance and profitability. Challenges include:

• Inconsistent Deadlines: Each taxing agency has unique due dates, which can shift due to local regulations or processes.
• Diverse Processes: Agencies vary in how they issue tax bills, accept payments, and handle exceptions, with some transitioning to digital platforms while others remain analog.
• Parcel Identification: Accurate parcel data is essential, especially for BTR projects where properties may span multiple parcels or include non-adjacent elements like parking or amenities.
• Pre-Purchase Due Diligence: Investors need precise tax estimates and delinquency checks before acquiring properties or breaking ground on BTR developments.

Manual processes and inaccurate data increase the risk of missed payments, penalties, and operational inefficiencies, particularly for large portfolios.

LERETA’s Automated Property Tax Solutions

To address these challenges, LERETA developed a data-informed, automated tax reporting and management solution tailored for SFR and BTR investors. Key features include:

1. Comprehensive Tax Reporting

• Provides accurate, real-time tax data from over 24,000 taxing agencies.
• Ensures correct tax amounts and parcel identification to prevent delinquencies.

2. Automated Delinquency Search

• Enables ad-hoc delinquency checks on individual properties, property sets, or entire portfolios.
• Supports pre-purchase due diligence by reviewing live National Tax Certificate data to confirm tax estimates and tax lines.

3. Flexible Payment Options

• Investors can make tax payments themselves using LERETA’s data or opt for LERETA’s full tax servicing, which handles payments for the entire portfolio.
• Turn-key servicing reduces administrative burdens and ensures timely payments.

4. Enhanced Efficiency

• Streamlines tax searches and reporting, saving time and reducing manual errors.
• Minimizes penalties and losses through accurate data and proactive management.

By automating tax processes, LERETA helps investors maximize productivity, ensure compliance, and focus on portfolio growth rather than administrative tasks.

Common Questions About Property Tax Management

How Do Property Taxes Impact Real Estate Investors?

Property taxes directly affect profitability. Accurate and timely payments ensure compliance, avoid penalties, and maintain financial stability. LERETA’s tools provide precise data and automated solutions to streamline tax obligations, reducing risks and enhancing operational efficiency.

What Are the Common Challenges in Property Tax Management for Investors?

Investors face:

• Inconsistent deadlines and reporting requirements across thousands of jurisdictions.
• Evolving payment processes, from digital to analog systems.
• Risks of inaccurate data leading to missed or late payments.
• LERETA simplifies these complexities with automated reporting and accurate tax data, minimizing risks and improving ease of management.

How Can Investors Streamline Property Tax Payments Across Multiple Jurisdictions?

LERETA’s solutions offer:

• Real-time access to tax information.
• Automated reporting and payment capabilities.
• Comprehensive management for large portfolios, ensuring compliance and efficiency nationwide.

Simplifying Property Tax Management with LERETA

As the SFR and BTR markets continue to grow, institutional investors and developers need reliable partners to manage the complexities of property taxes. LERETA’s Total Tax Solutions® deliver:

• Precision and timeliness in tax data and payments.
• Reduced risk of delinquencies and penalties.
• Operational efficiencies that free investors to focus on portfolio expansion.

To learn more about streamlining property tax reporting and management for your rental portfolio, contact LERETA at sales@LERETA.com or visit LERETA’s Total Tax Solutions page.