Property Tax Question Indianapolis

[Charles Worth]

I have a quick question for anyone that is savvy about property taxes in the Indianapolis (IN) area. I am currently looking at a property in Indianapolis in the Bates Hendricks area that is a 4 bed and 2 bath property. The property looks good but not great on an IRR and COC basis selling at about $60K.

The problem is the property has a tax assessment of $14K and a property tax of $336. By comparison every other house I could find in the area has assessments that are much higher and property taxes that are at around $1k+. My assumption is if I go and buy the property at that price the property taxes would go up significantly. However, the broker says I am incorrect so I wanted to get a real answer from those who have more experience than I do or deal with this every day.

I don't have a ton of room for reduced cash flow on this one so going up to $1K would probably be a problem.

[Mike D'Arrigo]

Your broker is partially correct. The taxes won't go up immediately. Marion County reassess every 2 years but it is not based on the most recent purchase price. It's based on what the assessor deems the values are based on comps and BPO's. Keep in mind that Marion County taxes 2% of the assessed value so if they reassess it at $60,000, the new tax could potentially be $1200 which is fairly typical for the area. Unless the deal can stand on it's own with taxes somewhere in that range, it's probably not a good deal. If you need $336 property taxes to make the ROI you need, I wouldn't count on it. I'm not surprised that it doesn't look great at $60K. I don't know what street it's on but that could be on the high end for the area. How much is the rent?