Rental property calculator

[Chatree C.]

Newbie question here - I'm confused by the property tax input field in the rental property calculator. And the help text says it can be looked up the county assessor's office. If I look that up, it'll be the tax value for the current owner and the previous purchase price. Wouldn't property tax in the calculator just the X% of my purchase price?

Thanks!

C

[Chris Mason]

@Chatree C. @Chris May - You have to ignore ALL information about how property taxes work that is not written by a Californian that works in Real Estate. I refinanced once with an out of state call center loan officer just for the experience (it wasn't a good one... as expected), and I literally had to teach him step-by-step how to calculate property taxes in California because what he was doing was going to screw my escrow account three ways from Sunday.

Here's the quick-down-and-dirty way to calculate it pretty accurately for a property presently listed at $3,000,000. In this example $3353.44 semi-annually is about to become ballpark $3,345 per month (I picked Piedmont because I knew from experience that it would only take me like 2 tries to find a crazy example like this). I'm not including homestead exemption, etc, but this will always give you a pretty damn good ballpark. 

Now, the plus side to this big fat giant property tax hike that the buyer will incur is that the county is prohibited by Prop 13 from coming in and jacking that bill way the hell up on an annual or bi-annual basis. The current owner's ~$6,600/year property tax bill is based mostly on when they purchased it and the price they purchased it for, a zillion years ago. Where will the current buyer be, a zillion years hence? 

My grandma owns a million dollar duplex here in glorious California, and pays about $175 per month in property taxes just because she's owned it for a zillion years. Prop 13 rewards buy-and-hold. A lot. Meanwhile, a zillion years from now, a 12 ounce bottle of coke will cost $150 but the above buyer's prop tax bill will still be tied to $3,000,000 in low low 2016 dollars. 

It wouldn't be a crazy idea for California REI to save/print that as a cheat sheet for future reference to accurately run numbers on deals.