RE Taxes in Indy are bad for business!

[Sean McCluskey]

Hey BP,

I'm finishing up my first BRRRR deal in Indianapolis, and I have a great team in place. BUT, I'm thinking about moving to a different market.

Indianapolis has a special real estate tax equal to 2% of appraised value for non owner occupied homes. Owner occupied is 1% of appraisal.

This 2% of appraisal can make the RE tax on a B-Class, $140k ARV 1% rule home equal 2 full months of rent ($2800)! Then you add on 1 month for PM leasing fee, the PM's % of rents on other months, repairs, mortgage, etc. and the cash flow is greatly reduced as a result.

My question for you all: why not invest in a market with lower real estate taxes? Like certain markets in Alabama and Louisiana where RE taxes are closer to 0.50% of appraised value.

For the same $140k ARV, 1% rule home, that would mean real estate taxes of $700, a $2100 savings! Even 1% would be a $1,400 savings, all of which would end up as cash flow on the bottom line.

Multiply that by a portfolio of 30-40 rental properties and you're talking about an extra $42,000-56,000 of cash flow per year!

Convince me not to change markets!