Rental Property with unreasonable local taxes

[Peter Raber]

I have a property in a small town in Texas, it is worth approximately 250K and I am renting out for $1700 a month. This was a former residence of mine but the taxes have recently jumped to over 7K a year. I am not sure how anyone could operate a rentals in this area with those kind of taxes? Does anyone have any idea how I could lessen my taxes on this property? Do i need to hold it under an LLC would that offset taxes?

[James Kendrick]

Peter I think it depends on your risk tolerance.  You can pickup new starter homes in mix white/blue collar emerging neighborhoods in southern states like Tennessee for under $200k that will attract high income tenants.  Safe rents but lower cap rates.

Contrast this with the Midwest or the Northeast where you can pickup rentals for well under $100k in bad/recovering/gentrifying/undiscovered neighborhoods that produce amazing cash flow but many more headaches. 

If I were in Spokane I would be looking in Utah and Idaho.  I know Boise and Salt Lake are taking advantage of the California migrations and should continue to do well for real estate.