Texas REI - Property Taxes

[Jon Gorham]

Hello BP community,

I’m looking into buy & hold properties in the Dallas Ft. Worth area, but I’m concerned about the high property taxes in Texas. Can anyone tell me about the “basic homestead exemption”? I’d like to find out if Texas is a good state for buy & hold, or if the property taxes would wash out most of my cash flow. 

Thanks,

Jon

[Cory S.]

There is a reason I don't buy and hold in my home state of Texas. (7 generations).

My residential home, in the suburbs of Austin, Texas is about 1,700 SQ FT built in 1993 valued at $230,000

Property Taxes over the years on this property

1999 - $363

2000 - $413 +

2001 - $511+

2002 - $668 +

2003 - $1,371 +

2004 - $1,361 - 

2005 - $1,336 -

2006 - $1,479 +

2007 - $1,613 +

2008 - $3,350 + big jump 

2009 - $3,389 +

2010 - $3,478 +

2011 - $3,508 +

2012 - $3,314 -

2013 - $3,486 +

2014 - $3,831 +

2015 - $4,055 +

2016 - $4,433 +

2017 - $4,850 +

2018 - Will be crossing the $5,000 + mark on the estimated tax. (Got a new roof)

Population Growth = School Growth (New Schools)

Schools that look like Taj Mahals, with football stadiums that rival colleges with score boards to match. 

North of Austin, Texas in the suburbs where I live

(Population)

Cedar Park, Texas 42,000 in 2008, now 77,000 in 2018

Leander, Texas 23,000 in 2008, now 50,000 in 2018

People with homes paid off feel like they are back to paying mortgages with what they have to set aside for taxes.

Getting to where you don't want to add to your curb appeal.

Everybody is moving here, but everyone can't afford the housing with the taxes here, so developers build tons of new apartment building (they are everywhere) But then the rents are through the roof trying to keep up in covering the taxes every new year, cash flow is the pits.

This effects the demographics in the school districts as starter families can't buy in at these prices so elementary schools shrink while middle and high schools boom with more established families coming in with older kids. 

Here is what I pay outside of Texas

ALABAMA PROPERTY - $697 (cash flow $402 on a $905 rent) Pay 8% on PM

2 GEORGIA PROPERTIES - $810 (Dallas GA) (Cash Flow $251 on a $1,015 rent) ; $1762 (East Point GA) (Cash flow $500 on a $1,425 rent) 9% on both for PM

I see the GA taxes going up in the Atlanta area as it continues to boom. (If Amazon comes in major boom) That $810 is going up to $1,307 for this tax year. 

OHIO PROPERTY - $2,043 (Cash flow $388 on a $935 rent) 10% on PM

What I pay total on my investment properties in taxes is almost equal to what I will be paying on my residential. 

So, by living in Texas I avoid state income taxes (where some of my properties are located), and by buying and holding outside of Texas I avoid high property taxes and low cash flow.