property tax question on 50% rule

[Scott W.]

i read where your operating expenses should be 30% of the rent.

The problem is our government (especially in my state) loves to spend & I'm at 27.5%! Not a lot of $ for maintenace, repairs, & insurance.

How much % of your property taxes go towards the rent?

[Account Closed]

I think you are out on a weak limb. I don't know anyone who pays 20% in taxes on gross rents in my farms. I have a property right now that I'll be selling soon for about $125K. Even with special assessments of $500 that have been added in the last few years, the new buyer's tax bill will be under $2K. Gross rents are $15,600. And that's considered a bad deal by most buy and hold people in my area. I'll get mostly retail offers, but there will be some from out-of-town investors looking to get into a better neighborhood with decent rents and no rehab.

Look at your tax bill. Your assessed value is most likely being taxed at 1-2% and then there's all the other stuff which is really variable by area. It's the high value of the property that kills cash flow. There just aren't that many high end areas where an SFH will cash flow. I live in Santa Barbara where 700K will buy you a 3BDR fixer that will rent rent for $3000.00. If you have debt service, there is no cash flow. People do it for long term appreciation, but they go elsewhere for cash flow.