All Forum Posts by: Brian Burke

I called Cuyahoga County about 3 weeks ago and they told me they were sending notices regarding new appraised values the week of 7/23. I was under contract on on a property and the increased asssessed value based upon the same tax rate (an assumption but also an unknown at present) would have taken annual projected cash flow from $2000 to somewhere around breakeven. 

I was told transactions such as a sale will not affect the 2018 assessments which have wrapped up, but come 2021 when they review values it will be on their radar then. 

I actually called the County appraisal department and received some clarity on this. Right now (end of July) they are sending notices regarding the new assessed values. The process of reappraising each property which they do once every six years is concluding right now. Hypothetically if a property were to sell tomorrow, they’ve already set the new assessed value based upon the appraisal, and it would be too late to reassess the value based upon the sale. Once they conduct their valuation update which is every three years, they will pick up on the sale transaction and that likely will change them assessed value at that time. 

I’m researching how property taxes are calculated in Cuyahoga County as I’m working on a purchase in the Cleveland area and I’m finding a straight answer is harder to come by on the County website than I expected. 

I understand property “market values” used in calculating property taxes are assessed every three years through a County appraisal process. However, does an actual arm’s length transaction immediately (or almost immediately) trigger the increase in market value when taxes are assessed?

In other words, if the current tax bill shows a property’s market value at $60,000, and I purchase it for $100,000, will taxes be assessed based up on the $100,000 value? Does a transaction matter or is it all the 3 year appraisal process?

Thanks everyone. A lot of helpful information. 

I've heard in other forums from single family investors in Houston get flood insurance regardless of whether the property is within or outside the 500 year flood plane. I received a quote today for flood insurance on a 2100 sq. ft. SFR in Humble for $2000 annually, which is in addition to any other hazard insurance or liability coverage. Insurance at this price kills the potential deal and I suspect it would many deals.

Two questions:

1. Have you noticed flood insurance is this expensive?

2. Do you carry flood insurance on a long term rental regardless of where it is in Houston?

Thanks.

@Tony Castronovo, that sounds pretty much exactly like what I’m thinking I need to do. I’m about to go under contract to sell a rental condo here in Orange County and I’m looking to take the proceeds and buy about 6 SFRs. I’m realizing I should perhaps pay cash on a rehab in a decent location, put in the improvements before refinancing and moving on. Eventually I figure I’ll need hard money to buy “all cash.”

Thanks everyone for the feedback. Can’t say it’s the most encouraging but certainly helpful. 

I was attracted to Houston because I thought it provided a good combination of cash flow and appreciation. After looking at several dozen single family properties (more or less with no rehab necessary) ranging from $130-$175K, I’m seriously beginning to question how you make money with a long term hold single family rental given the tax rates in desirable school districts and the lack of any exemptions on assessed value for owners not occupying the property. Is there a value range you have to stay under? Do you steer clear of the 3%+ tax rate areas such as the CyFair School District? Have you found even as an investment that the assessed value isn’t the price you paid?

I’m starting to bang my head against the wall trying to make anything pencil not knowing exactly what the property taxes will be but figuring it is the combined rate on the tax assessor’s site multiplied by the acquisition price. In doing so, the “1% rule” often doesn’t seem to work.

Thanks guys. I appreciate it.

In researching property taxes for properties to buy, I’ve noticed the combined assessed rates can be over 3% in some cases, particularly in desireable school districts. When reviewing the tax bills I’ve seen that the assessed value can be subject to a number of exemptions reducing the assessed value and therefore the tax. It appears most or all of these would not apply to most investors (e.g. homestead exemptions, exemptions for owners over 65, etc.). 

When underwriting a potential single family investment in Harris County, should I assume the purchase price will be the assessed value subject to tie applicable tax rate?