What Is A "Reasonable" Annual Cost For Property Taxes?

[Seth Williams]

When you are evaluating a new real estate investment, what do you consider to be a "reasonable" annual cost for property taxes?

I know there are a lot of factors that can go into the determination of a property's annual tax bill. I also know that a property's annual tax obligation can change drastically when it is transferred from one unrelated party to another (and then varies slightly from year to year with the property's assessed value).

In my experience, most of my annual tax bills have fallen within 1% - 2% of the property's current market value (and with non-homestead rental properties, the cost is up to 3% - 4%). In most cases - I generally consider this range to be "reasonable".

Is this what you all have seen as well? Would you agree with me on this?

On some rare occasions, I've come across properties that have a HUGE annual tax bill relative to the property's value (e.g. - a $10,000 property with a tax bill of $1,000). This usually happens when the local municipality makes a major improvement (e.g. - new sewer system, road improvement, etc.) and then passes the amortized cost along to all of the affected property owners.

I'm curious, at what point do you consider the annual cost of property taxes to be acceptable or unacceptable?