Property taxes too high - is cashflow possible for SFH rentals?

Question

I've been checking Miami, Fort Lauderdale area. I've realized the tax millage for properties are 19 to 22. Which means for properties that are worth $500k you'd be paying $10k property tax!

I find this way too high. I tried to look for rentals around the area and it seems like they are not that high to make up for the taxes.

My question is which areas (and zip codes) i should look for cashflow positive? Also what price point do properties make cashflow positive? It seems like the lower the property value is, the more likely it would make cashflow positive?

Patrick Bavaro · Answer

@Sarp Ka I live in FTL and have 1 property here as investment. You’re right, it’s very expensive and the tax rates make It difficult to cash flow, but It is possible. Mainly, I think there is a heavier speculation for most investing in SoFlo. I’ve started looking and buying in other FL markets who I feel are exploding in growth and transplants from other states such as Ocala, FL and Cape Coral, FL.

Currently I’m building a 4/3 new build in Cape Coral. Total all in cost is about $265k and I financed It at around 3.6% with 10% down. Rents right now are at about $2300 and climbing. Currently post construction appraisals are coming back at $340k-$410k depending on location of the property. If I play my cards right I will be Anel to do a cash out refi, still cash flow decently and take all my equity out to do it again. I’d be happy to connect to share experiences. Good luck!

Malgorzata Sadowska · Answer

not enough info to properly advise. Depends if you are renting ST or LT; depends what's your downpayment; in general, it is always challenging to cash flow upon purchase in South Florida (simply too much demand here most of the time..,). Some patience, sweat equity, creativity & money (= renovations / upgrades) will bring you into great cashflow.

Sarp Ka · Answer

Hi Tim,

thanks for the help. I've checked few different counties they all seem to have similar taxes. I've ran some numbers and it's not cashflow positive. I'm wondering if the price point I'm looking for is wrong. Which areas at what price point can provide cash flow positive?

Account Closed · Answer

That's all dependent on what rents are going for in those areas compared to what your all in monthly costs would be including mortgage, taxes, HOA, etc. If there's positive cash flow that's a good thing. It's all up to what you're looking to do and if you can "afford" to break even for a while and wait for appreciation but there's no guarantees with that and could leave you in a tough spot.

Account Closed · Answer

@Sarp Ka While high in your area, I wish our taxes were that low in New Jersey! We would be close to double that depending on where you live. Although a pain, search for your desired counties' millage tables which should detail each town's exact millage rate. For Miami Dade County; https://www.miamidade.gov/pa/library/2021-adopted-millage-chart.pdf. If you need assistance in other counties, please let me know and I'll do my best to help. Google whatever Florida county you want followed by millage tables. e.g. "Miami Dade County Millage Tables"

Patrick Bavaro · Answer

@Griffin Boonsompornkul sure! There’s a few builders out there, but I managed the deal directly through a turnkey company. They use a few builders, each with a different model and each have pros and cons. Most are pros, only negative is timeline for permitting process but It is what It is! Demand is the problem, but it’s also a great thing for appreciation and rent increases. Send me a DM and I’ll shoot you a text if you’d like to jump on a call to discuss in detail any questions you might have. Happy to swap stories/experiences.

Griffin Boonsompornkul · Answer

@Patrick Bavaro - ironic seeing your post. I've been looking into this exact area and wanted to find a build to rent situation out there. Do you have any information you can share about the builders and availability?

Clay Lehman · Answer

I have a couple of new builds going in Ocala and I am debating if I should stick with my original strategy of build to rent or if I should take advantage of the crazy high retail sales prices.  Rents will be $1,650ish, sales price around $240,000.  I want to build a long term cash flowing portfolio, but it’s hard to for go a quick hit at a return.  Looking forward to hearing your feedback and the feedback of others who respond.

Michael Carbonare · Answer

@Sarp Ka  I've lived in south FL for about 21 years.  Single family houses will not work as rentals.  Property values have skyrocketed, taxes are high, and there are HOAs to contend with.  You may need to consider out of the area/out of state properties.

Sarp Ka · Answer

It's for the long term tenants. I'm flexible with properties that can go as high as 500k.

Property taxes too high - is cashflow possible for SFH rentals?

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