If you are underwriting a rental in Georgetown, one line item can make or break your deal: special district charges. MUD and PID levies can look small on paper, yet they hit your cash flow every month. You want predictable returns and fewer surprises. This guide shows you what MUDs and PIDs are, how they affect your bottom line, a simple numbers example, and a due diligence checklist you can use before you write an offer. Let’s dive in.
MUDs and PIDs in plain English
What a MUD is
A Municipal Utility District finances infrastructure like water, sewer, drainage, and sometimes amenities by issuing bonds. Those bonds are repaid with an ad valorem tax on properties inside the district, set each year to cover debt and operations. That MUD tax is in addition to county and school taxes. Learn more about how MUD bonds work from this overview of district financing and debt service mechanics on a Texas MUD bond page.
As a district grows, the tax rate can change. Districts can continue levying tax while bonds are outstanding, which is a key underwriting risk to model. See statutory authority for continuing taxation in the Texas Special District statutes.
What a PID is
A Public Improvement District is created by a city or county to fund public improvements with special assessments. These assessments appear on your property tax statement but are not the same as standard ad valorem taxes. If unpaid, a PID assessment can become a foreclosable lien. Williamson County explains how PIDs and assessments work on its Public Improvement Districts page.
Texas law also requires a specific buyer notice when a property lies in a PID. The Texas Real Estate Commission provides the required PID notice addendum.
What this looks like in Georgetown
Several developments in and around Georgetown use MUDs, including Wolf Ranch, Water Oak, Teravista, Saddle Creek, and Crescent Bluff. Rates vary widely by district and year because each district sets its own tax to meet debt service and operations.
- Example of a higher-rate district: West Williamson County MUD No. 2 displayed a total rate around 0.682 per $100 of value for 2024–2025. You can review district details on West Williamson County MUD No. 2’s page.
Always verify current city, county, and school rates when you model a property. For context, recent local reporting shows Georgetown’s adopted city rate around 0.353 per $100 (city rate article), and Georgetown ISD’s rate about 1.0506 per $100 (GISD rate article). County budget and adopted rate information is posted by Williamson County on its budget and tax rate page.
How these charges hit your returns
- Direct hit to NOI. Property taxes and assessments are operating expenses. Higher MUD tax or PID assessments reduce net operating income, which lowers cap rate and cash-on-cash returns.
- Rates can change. A MUD can levy tax while bonds are outstanding and may adjust the rate if it issues additional debt or if taxable values lag. Model this risk using the special district statute as your guide.
- Assessment structure matters. PIDs can be annual, installment, or include maintenance charges. Assessments are shown on the tax bill and can be foreclosable. Get details from the county’s PID information.
An illustrative numbers example
Below is a simplified example using public rates cited in recent local sources. Treat these as illustrative only. Always confirm the current adopted rates for a specific property.
Bottom line: in this Georgetown example, the MUD scenario reduces annual cash flow by about $1,151 and compresses the cap rate by roughly 0.32 percentage points.
Due diligence checklist for Georgetown investors
Use this quick list to keep surprises out of your pro forma.
- Confirm district status by address.
- Search the Williamson County property portal to see districts and special assessments. Start with the county’s property lookup and request the most recent tax bill.
- Pull district disclosure documents.
- For MUDs: SB2 tax rate history, Notice to Purchaser or District Information Form, audited financials, and bond schedules.
- For PIDs: service plan, assessment schedule, and whether maintenance charges apply. Review the TREC PID notice addendum required in Texas.
- Ask about payoff options and collectors.
- Clarify who collects the PID assessment, payoff procedures, and any prepayment penalties or deadlines.
- Model multiple tax scenarios.
- Run current rates, a modest increase in MUD debt service, and a slower build-out case where fewer units share the debt.
- Check comps inside and outside districts.
- Compare sale prices and days on market. Some buyers prefer lower recurring taxes, which can affect resale.
- Confirm lender treatment.
- Ask how your lender will treat PID assessments and MUD taxes in DTI and DSCR.
- Get title clarity.
- Ensure the title company flags any assessment liens and includes all required notices at contract and closing.
Common mistakes and how to avoid them
- Ignoring special districts in the tax line. Always add MUD tax or PID assessment to operating expenses.
- Assuming rates only go down. Districts can issue more bonds and adjust rates. Model increases and stress test taxes by 10 to 25 percent.
- Not reading the PID service plan. Annual versus installment structures have very different cash flow effects.
- Waiting until closing for disclosures. Ask for MUD and PID documents before you go under contract.
Final take
Special district charges are not small change in Georgetown. They can shift your cap rate, cash-on-cash return, and exit price. With the right documents and a conservative model, you can buy with eyes open and protect your cash flow.
If you want a second set of eyes on a Georgetown pro forma or need help sourcing low-volatility options, connect with Sarah McAloon. You will get practical guidance, clear numbers, and a smooth path to your next door.
FAQs
What is a MUD tax in Georgetown and why does it matter to investors?
- A MUD is a special district that funds infrastructure with bonds repaid through an extra ad valorem tax, which adds to your annual expenses and lowers NOI and cap rate. See the bond and tax overview on a Texas MUD site here.
How do I confirm if a Georgetown property is in a MUD or PID?
- Search the Williamson County property portal for the address, review the latest tax bill for district lines, and request district SB2 disclosures or the PID service plan. The county offers a starting point at its property lookup.
Can MUD tax rates change after I buy a rental?
- Yes. Districts can continue levying tax while bonds are outstanding and may adjust rates if they issue new debt or if taxable values lag. Review the special district authority in statute and stress test your underwriting.
What buyer notices are required for PID properties in Texas?
Do PIDs work like normal property taxes in Williamson County?
- No. PID assessments are special charges that appear on tax statements but are not standard ad valorem taxes. They can be foreclosable liens and may have unique payoff rules. Williamson County explains PID mechanics on its PID page.
