Bid Accuracy

Our thorough tax modeling produces projections with low margin of errors. This allows our clients to bid with confidence, increase their deal success rate, and gain a strategic competitive advantage.

HOW SLIGHT MARGIN OF ERRORS GREATLY AFFECTS IRR
MARGIN OF ERROR
RESULTS to IRR
MARGIN OF ERROR
RESULTS to IRR

5% deviation in tax projection
accuracy results in 50 BPS to
the IRR

Typical industry margin of errors
are in excess of 10-15%

1. Based on $20M Purchase Price, OM 55%, Hold Period 5 Years, LTV 65%, Fixed Interest Rate 5%, Exit Cap Rate 7%, Deal IRR 17.5%, Deal Profit $8,322,679

Inaccurate tax forecasts will result in inaccurate IRR projections and therefore, will result in poor bidding results. Overestimation of property taxes will lead to underbidding and loss of the deal. The opportunity cost associated with this loss is equal to the deal profits, or in this example, $8,322,649.

Underestimation of property taxes will result in overbidding.  In this example, if the projected taxes are underestimated by 10%, the investor will win the deal, but will have paid $565,271 more for the asset than it is really worth. This puts a great deal of strain on the asset management team on day one to balance the budget and meet investor expectations.

RETC Group was recently acquired by Ryan, a leading global tax services and software provider and the largest Firm in the world dedicated exclusively to business taxes. The combination of RETC and Ryan creates the largest property tax team in the United States with the most local expertise of any provider. RETC’s existing clients will continue to receive the excellent service they have been receiving and will now have access to Ryan’s value-added services and tax-saving strategies across more than 50 global tax disciplines.

Please follow Ryan on LinkedIn to receive updates on our next chapter, and visit ryan.com to learn about all of the comprehensive property tax services now available to you.

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