Factoring in tax increases into deal analysis?

[Nate LaBlance]

Hi all, I wondering how to factor in tax increases into my deal analysis. I don't know if there is much more you can do besides look at what taxes on a property were in the past?

I purchased a duplex a little less than a year ago. I have been living in one side and renting out the other unit. I had positive cash flow until just this past month when my escrow account was reviewed. Due to tax increases, my escrow account has a shortage. So now on top of the tax increase, and having to pay back the shortage over the next 12-months, I no longer have positive cash flow. 

So my question is, do I just have keep a separate reserve fund strictly for tax increases or is there a way to factor the increase into my deal analysis? I'm just worried that in 12-months, once the shortage is paid off, taxes will have increased again and I'll continually be paying a shortage year after year. Obviously, with the property I'm in now, I don't think there is much I can do besides weather the storm. But just looking to see what some strategies are that my help with future deals.

Any advice or past experience would be much appreciated. 

[Bill B.]

You would only factor tax increases if you were also factoring in insurance and rent increases as well as loan paydown. Year 1 should be your worst year for the entire time you own the property. Rents should increase, more than insurance and property taxes combined, EASILY. If not, look at a different market.