High Property Tax rates on SFH rentals in Indy

[Victor Tatyanin]

Hello, I'm an out of state investor who just started building a portfolio of SFH rentals in Indianapolis. Got 2 properties under contract (in Carmel and Fishers (yay!), but one thing caught me by unpleasant surprise: Property Taxes for rentals are crazy 2.1 - 2.3%!

How do you fellow investors managing that? I mean, I cannot apply Homestead deduction, any other means of managing this number?

For context:

I was targeting 8% rent to price ratio as reasonable (I know it's low, but I'm in the long-term game and little to no cashflow is ok with me, as long as it's positive with 25% down). So having 300K house, renting it for $2000 per month seemed fine. Costs would be:

$950 - P&I; $200 - PM fee; $110 - Insurance; $50 - HOA;

but when I substract $570 Taxes it leaves me with $100 monthly on maintenance. Ok, I probably can try to rent it out for 2200, but still very thin margin.

Those are sample numbers, but they are 95% close to exact numbers on one of the properties. 

[Jay Hinrichs]

Originally posted by @Andrew Rosenberg:

@Victor Tatyanin This is something that your realtor should have disclosed. IN is a 1-2-3 state: 1% owner-occupied, 2% non-owner occupied and 3% commercial. Lotta websites and news articles site Indiana's low tax rate, but they are written by morons. 2% is pretty standard midwest property tax. Hear too often of OOS investors running numbers without knowing to double published or disclosed property taxes. This really irks me personally, as someone making a relatively large commission should be more than a glorified salesperson.

with so many west coast investors.. who are used to west coast tax's rates being the same over all class's of property there is no homeowner discount or exemptions.  So when they look up tax rates on a home that has been an owner occ.. they dont realize thats NOT the tax they are going to pay once they buy it.. it catches many by surprise.. Agents generally will disclose it but other marketers and or wholesaler etc may not or do not. So it becomes caveat emptar.   And Texas can be worse..

This is why i am bullish on vegas.. tax rates are very very low .. comparative and you can get nice cash flow on a 300k buy that rents for 2k because of it. And your generally dealing with a home that is 20 years old or less.. stucco  tile roof  newer components etc no freeze thaw issues.. easy desert landscaping.  And if  you move there no state income tax.. Just my personal experience of owning rentals all over the mid west including Indy.