Why are property taxes so high in Cleveland, Ohio, relative to the sales price? I saw a duplex listing price of about $90k with good cash flows, but my goodness.....the property taxes were $4800. This is about 5.5% of sales price. I'm in southern california, and I think my property taxes are high, about 1.1% of sales price, which comes out to $5k. Is there something i'm missing? Terry 3234 Euclid Heights Cleveland Heights, Ohio 44118 NEW BANK APPROVED PRICE $89,900 HIGHLIGHTS • 2 units • Down is a 3 bed 1 bath unit • Down is rented for $795 per month • Down lease available upon request • Up unit is a two floor 5 bed 1 bath unit • Up unit is being left vacant for easy showings • Up unit market rent is $995/mo • Total market rent; $1,790/mo • Tenants pays gas & electric • Owner pays water & sewer • Roof is older • Older furnaces approx 20 years old (each unit has it's own furnace) • Hot water tanks around 5 years old (each unit has it's own hot water tank) • Annual property taxes are $4,823 per year

@Federico Gutierrez Accept? That is like accepting marriage without sex. As an investor and male, I would say no to both. Terry

There is a whole separate conversation about bad management of resources by city government which none of us can fix. I look at it this way - The cost of a home in Cleveland or even the nicer suburbs is very low compared to many areas of the country yet our taxes are disproportionately high. The "why" to me is that roads still need to be fixed (a LOT!) and teachers, cops, firefighters, etc need to be paid and that costs about the same here as it does everywhere else. You can contest the tax amount but expect to pay more it's just part of the ticket to ride.

Yes, taxes are high. Yes, the property still cashflows amazing in spite of the high taxes.

Hi all, I noticed I was mentioned on here. Those taxes in Euclid are pretty high. However, I invested closer to Lake Erie, close to Wickliffe on Lakeshore and my duplexes run $750.00-$825.00 a side in rents and I payed about $30,000 a side all fixed up in 2014 and 2015. I sold 4 of those front doors in 2016 and 2017. One rose about 50% in value in two years. I purchased at $33,000 and sold at $48,000 2 years later. I used that money to help with repositioning my apartment complexes in Lake County and Euclid too. In about 2 months we should have 8 apartment complexes and 122 front doors, including a 24 unit in Akron too. I just don't want to sell those 4 little front doors I still have in Euclid. At one time I had 8. Although, I could sell them now for well over $200,000 if I chose to do so this summer and in a 3 year period of ownership I could make a good 60% profit at sale, not to mention the $300.00 cash flow per door per month for the last three years. I also currently have Zero vacancies as of today, March 19th. Those Property taxes are no worse than the HOA fees I was paying out here in San Diego on my 10 rental condos. Plus, I still paid property taxes on top of that too. If the numbers work, they work. Simple as that. Swanny

I think you might have a little more sway with your wife then the city of Cleveland.

Section, township, range. Each township within a section has it's own millage rate. It does correlate to infrastructure for that township as well as property usage for the township. $100,000 value would have a 10% assessed value for owner occupied primary dwellings. If your millage rate is 7% you calculate... $10,000 × .07 for a $700 tax bill. If it's not owner occupied it's considered a 2nd property and/or investment property. Same millage rate but now you pay a 20% assessment tax. $20,000 × .07 for a $1,400 tax bill. Every county lists their millage rates on the tax assessors website. To reduce the tax amount you can do 2 things... Buy in a personal name instead of a business. You are allowed to own one property in a county that can be a 10% assessment. The 2nd in a county starts the 20% assessment. Hire an appraiser to contest the taxes every year in May. They do not like seeing appraiser's in contest hearings because they lose every time. Municipalities also raise their millage rates when they are trying to change the usage from predominantly rental areas to owner occupied for gentrification. Higher millage rates kick many investors out of an area. It's backwards because what it actually leads to is vacant properties instead of gentrification.

@Thomas S. Debt crossed my mind. Usually property taxes pay for municipal items like police, fire, city, and schools. One just has to look at cities with high property taxes like New Jersey, New York, San Francisco, Chicago, and Los Angeles. The one thing in common besides high property taxes is their leadership. All the cities mentioned have democratic majorities in mayor and city council. Those elected officials are supported by unions, teachers, police, and fire. The obvious cost with those position is pensions. The offset to the high property taxes is high home prices. However, Cleveland, Ohio, lacks the home appreciation. Thus, with the good rents, you will be killed by the property taxes. Terry

Hi All, This is a classic case of the real estate theory of relativity - everything is relative depending upon where you come from and where you are looking. However, at the end of the day, it doesn't matter who you are or where you invest as long as you do the homework and your numbers make sense. I would also throw caution at the idea the Cleveland has high property taxes as a general consensus because people may take that to mean all the suburbs as well. For example, Westlake has relatively low taxes primarily because they have many businesses located there that pay taxes too. So that helps offset the need to have higher residential property taxes. Westlake is also a very well run city that has never had bad debt as long as I can remember. So this in turn makes it a very desirable city to live in where you will most likely be in multiple offers against others on a solid home under $300k. Happy investing!

Terry: One of the reasons that taxes are so high in relation to the value of the property is that the properties are worth significantly less than in other parts of the country. 2% taxes on a $1mm property are 20k a year...Taxes on a $80k property at 2% would only be $1,600 a year. Another HUGE problem is that a LOT of these mid-western cities have BLOATED government structures....they are burning money on education, they have a LOT of retired workers with underfunded pensions, they have LOTS of current workers that are not very efficient. It is a huge problem that is going to get bigger/more attention in the near future. I've been fighting egregious taxes in the Detroit area. Detroit is MUCH worse than Cleveland. Detroit has higher rates (generally speaking) AND has the added insult to injury of properties being OVER ASSESSED. For example, property tax rate is 5%....you buy a property for $25k, but it is assessed at $150k. Clearly the $150k assessment is WRONG...and you can fight it, and you get some relief...but the assessment will go from $150k to $80k. Clearly an improvement...and perhaps your $25k property is certainly worth more than $25k, but NO WHERE near worth $80k. So end result is that you are paying SILLY taxes on properties. This is keeping the valuation & (re)development of properties low. It is also impeding growth of communities. What is maddening is that most of the government employees do not seem to understand this, and could care less. They just want to keep the money train rolling. So the end strategy is that you've got to be INCREDIBLY careful in how you invest...you've got to understand how to protest your tax rate...how to go in front of the board of review, how to make your case, how to appeal the new assessment. Finally, you've got to buy properties with SILLY TAXES at SILLY PRICES!

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Updated almost 7 years ago on 03/20/2018. Most recent reply

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Posts: 686
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Terry LaoPoster

Professional
Anaheim, CA

Cleveland Real Estate Forum

Property taxes in Cleveland, Ohio.....why so high?

Terry LaoPoster

Professional
Anaheim, CA

Posted March 17, 2018 11:52

Why are property taxes so high in Cleveland, Ohio, relative to the sales price? I saw a duplex listing price of about $90k with good cash flows, but my goodness.....the property taxes were $4800. This is about 5.5% of sales price. I'm in southern california, and I think my property taxes are high, about 1.1% of sales price, which comes out to $5k.

Is there something i'm missing?

Terry

3234 Euclid Heights

Cleveland Heights, Ohio 44118

NEW BANK APPROVED PRICE

$89,900

HIGHLIGHTS

2 units
Down is a 3 bed 1 bath unit
Down is rented for $795 per month
Down lease available upon request
Up unit is a two floor 5 bed 1 bath unit
Up unit is being left vacant for easy showings
Up unit market rent is $995/mo
Total market rent; $1,790/mo
Tenants pays gas & electric
Owner pays water & sewer
Roof is older
Older furnaces approx 20 years old (each unit has it's own furnace)
Hot water tanks around 5 years old (each unit has it's own hot water tank)
Annual property taxes are $4,823 per year

Cleveland, Ohio

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