Episode Details

On today’s show we’re examining a form of apartment distress that can hide in plain sight. One of our team members recently visited , a 500-unit apartment complex in Pflugerville, Texas, just north of Austin.

It is relatively new. Construction began in 2021 and the completed project was turned over in May of 2023. This isn’t a tired 1970s apartment complex suffering from decades of deferred maintenance.

Let’s follow the property through the tax records.

In 2021, while the project was getting underway, the assessed value was about $5.3 million.

In 2022, it increased to $6.8 million.

By 2023, with construction well underway, the assessment had reached $34.8 million.

Then the project was completed.

The following year, the assessed value jumped to $114.4 million.

Think about that.

In a single year, the taxable value increased by nearly $80 million.

The resulting 2024 property tax bill was approximately $2.53 million.

For 2025, the assessment was reduced to $105 million and the tax bill fell to roughly $2.36 million.

Austin experienced extraordinary population and rent growth during the pandemic years. Interest rates were low, cap rates were compressed and developers responded to the demand by building thousands of new apartments.

Eventually that new supply arrived.

Rents softened. Concessions increased. Occupancy became more competitive. At the same time, interest rates increased and multifamily cap rates expanded.

Today, It is advertising one-bedroom apartments starting around $1,100 per month. More importantly, the property has been advertising concessions of up to ten weeks free.

Ten weeks free on a twelve-month lease is nearly a 19% concession.

So we have two very different things happening at the same property.

The tax records say the property was worth $114 million in 2024 and $105 million in 2025.

The rental market is simultaneously forcing ownership to compete for residents using lower rents and substantial concessions.

That raises a simple question.

If you were buying It today using today’s rents, today’s concessions, today’s expenses and today’s cap rates, would the income support a $105 million valuation?

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