Dealing with high property taxes

[Jake Hobson]

Hi Bigger Pockets!

      This is my first post, so be gentle.  I wanted to reach out and see if anyone has any advice about investing (buy and hold) in areas with high property taxes.  My specific situation; I'm military and we're moving to San Antonio, TX in a few months.  We're looking to kick off our investment portfolio by purchasing a home to live in for two years and then rent out.  Almost all of the reasonably priced homes have zero to negative cash flow as a result of the high property taxes in the area ($6k per year for ~$250k home).  Any advice on dealing specifically with these high taxes?  Thanks in advance for the replies!

-Jake

[Andrew K.]

@Jake Hobson welcome to BP! Also, welcome to San Antonio!

I’m also AD military and bought a home here. My place is basically a live-in flip and I’ll roll the proceeds into my next purchase. I won’t keep this place as a rental and the price to rent ratio doesn’t support cash flow.

I recommend purchasing a home that meets a couple criteria (above and beyond your family’s needs):

- cosmetically dated (needs new paint, carpet, light fixtures, etc).

- No major repairs, assuming you're using a VA loan.

The idea is to do a live-in flip, doing much of the work yourself overtime.

Note, TX allows for a homestead exemption on your primary residence—thus lowering your property taxes. Just have to fill out the form and apply. This exemption is supposed to lapse when the property is no longer your primary, however I consistently see the exemption applied to formerly owner occupied properties.

There does seem to be a cottage industry here regarding protesting property taxes. You can do this yourself or hire a service. I don’t have first hand experience with this yet.

Not sure your family situation, but schools was also a major factor for me. San Antonio is a large city, but your school choices are somewhat limited (in my opinion). If this is a factor you’ll quickly narrow down areas to look.

Have you considered house hacking? Would be a great option if you can squeeze your family in to a place!

Feel free to send me a message and we can talk about the area more. Heck, I’ll even drive by a place if you want. I’m glad to help and any reason to look at houses is a good one!

Best of luck and keep us posted!

-Andrew