SIOUX FALLS, SD (KELO) –Property tax assessments are up an average of nearly 15 percent in Minnehaha County this year, that’s after seeing a nearly 19 percent average increase last year.

While it’s a direct impact to every homeowner in the county, as we explain in tonight’s your money matters, the increased property assessments will also end up impacting renters.

“Property taxes are one of the largest one line expense items that an investor or property owner will have on a property,” Nick Gustafson with Bender Commercial Real Estate said.

Bender Commercial is hearing from plenty of their investor clients about their assessed values seeing some major increases this year.

“I think the worst case I’ve heard so far is there’s a 60 unit apartment building that a colleague owns and its up 71 percent, the assessed value,” Gustafson said.

While it doesn’t necessarily mean taxes on the property will go up quite as steep, a bigger tax bill is coming.

What your property assessment could mean for your tax bill (keloland.com)

“We always estimate that roughly two percent of your assessed value is going to be your tax bill,” Gustafson said. “If you’re seeing, lets say a $1 million increase in the property’s valuation, that’s like $20,000. That’s challenging for a property owner to budget, because that’s a $20,000 bill that they weren’t previously expecting to pay.”

For owner occupied commercial properties, that surprise bill will cut into their profits, but for investment properties like apartment buildings…

“The renters are paying for everything, I’m not paying for everything,” Vintage Apartment Rentals owner Rod Schmidt said.

Rod Schmidt has been a landlord in Sioux Falls for 25 years, he says last year his property taxes on this apartment building were about 13 percent of the total expenses needed to operate during this season of inflation.

“Everything was up 19, 20 percent and I just passed it on [to my renters]” Schmidt said. “Carpenters now are getting $60 an hour, plumbers are $100 an hour, electricians are $100 an hour.”

Operating expenses and the value of his properties were up so much, Schmidt decided to get out of the business.

“Everything is getting so expensive now us old guys just can’t do it anymore,” Schmidt said.

He sold three of his four vintage properties at much higher than their assessed value over the past 18 months, a difference he says renters will also end up paying for.

“You sell a building like this one, of course the rents are going to go up,” Schmidt said.

Schmidt says he currently has an offer for nearly three times the assessed value of his last apartment building. That means the new owner will have a higher mortgage to pay, something only increasing rent can make up for.

“I have to get a return on my money, that’s just the way it is,” Schmidt said.

The Minnehaha County Director of equalization says its important to note that property assessments are not a tax bill; whether you’re a commercial or private property owner, you won’t know the impact of the increased values until you get your tax bill.