Property Taxes Went Thru The Roof

[Lindsey Mannix]

Hi there, I have been under contract to purchase my first investment property for a few weeks now. Today, I just received my property tax estimate from my lender and it went from $1000 to $3400/year. I'd like opinions on if this is a deal I should move forward with. Here are all of the details:

$159030 purchase price

$31806 down (20%)

3.5% interest rate on 30 year loan

$5500 estimated closing costs, including about $2200 of that to buy down the rate

$858/year for insurance

$2300-3400/year for taxes (the large swing will depend on when/if the property is reassessed - currently it's at $106k which is the $2300/year rate and $3400/year would be if they reassessed at $159030 (my purchase price)

I believe I can rent it for $1475/month, vacancies are low in my area but I am priced higher than most of my competition.

I've got about $2k in it already between earnest money (won't get back most likely), inspections, appraisal, etc. Thoughts on moving forward or let it go???

Thank you,

Lindsey

[Aaron K.]

Based on the tax rate I'm guessing TX, PA, or NJ but if it were me I would have started evaluating with the tax rate applied to whatever purchase price.  It still doesn't seem like the most awful deal in the world and you'd be facing the same situation with other properties in your area as well.  I'd probably stick with it.