Real Estate Taxes

[Karen DiNapoli]

Newbie here! Just getting started on learning about how to invest in real estate. My long term goal is to buy and hold several properties. I'm starting to research different areas to invest in. I have to go out of state because I live in Los Angeles and real estate here is absolutely ridiculous. Anyway, the 2 cities I am interested happen to be in states with HIGH property taxes. They are in the top 5 highest in the nation.  I was wondering if I should avoid cities with such high property taxes. 

Thanks for your input!

[Dave Van Horn]

Hi @Karen DiNapoli

Good question.

In my opinion: it's all about the cash flow, not necessarily about the taxes or the other expenses.

So for example, I live in the Philadelphia area and in West Philadelphia the taxes are lower than they would be in the county outside the city where I normally invest. So why don't I invest there?

For one, the rent is lower. Also there isn't as much appreciation in the area, it takes longer to evict (MUCH longer), and they have lien-able water and gas - so if someone skips out on the bill, it's on me as the property owner.

My point is, high taxes are just one consideration but not an end all be all. As long as the numbers work in terms of expenses vs. cashflow than you should be a-okay.

Also, another thing to consider is sewer and trash. Are these part of the taxes? Because that can make a difference as well.

Hope this gets you unstuck.

Best,

Dave