Projecting Future Property Taxes

[Jeffrey Morrisey]

Hi BP,

I have a question about estimating future property taxes. I’m looking to invest in small multi family buy and holds. My area (Buffalo Ny) has had home prices skyrocket over the past few years, as many other areas have. The issue is many of the houses were last assessed 10+ years ago. So, a house listed now for $210,000 May have an assessed value of $70,000 and property taxes of $3,000.

Now, buying the house won’t necessarily trigger a reassessment, but I know of cases where it has. Even so, eventually the house will be reassessed at the higher value.

I’ve been using a straight multiple to try and project taxes.

210,000 / 70,000 = 3 3 x 3,000 = 9,000 in property taxes.

I can’t figure out if I’m being to cautious here. I haven’t found any articles, or posts about projecting property tax increases. But, Buffalo can’t be the only area that’s experiencing this issue.

So, I’m wondering what you are doing! Are other buy and hold investors trying to project out property taxes? Using the current taxes? Or, using some average to try and split the difference?

Any advice you have would be greatly appreciated!

Jeff