All Forum Posts by: Eric James

@Jim Basar

Reason Number One – Texas is Highly Dependent on Revenue from Property Taxes
Despite having the 6th highest property taxes in the nation, the state of Texas has an average tax burden for its citizens. Sales taxes for the state are comparatively low at 6.25% (it can reach a maximum limit of 8.25%), and Texas is one of nine states that does not have personal income taxes.

However, as taxation is a vital source of revenue for local government, the burden falls squarely on property taxation to compensate for the lack of other revenue. This money (property tax revenue) is utilized to fund essential resources and public services for Texas citizens, including public schools, libraries, emergency services, road maintenance, and community safety measures.

If property tax reform occurred, this would likely result in redistributing the tax burden by implementing state income tax or introducing higher sales tax rates to make up this shortfall. This is unlikely to occur even though it would mean tax relief on our annual property tax, as many of us enjoy the fact that there’s no income tax.

Reason Number Two – Property Values are on the Increase
Property Value Increase

How Are Property Taxes Calculated in Texas in Relation to Property Values?

Ad Valorem Tax is based on an item’s assessed value, so ad valorem property taxes refer to the assessed value of a property. Texas tax laws dictate that an appraisal district in each county, administered by a chief appraiser, is responsible for appraising property values each year.

For a the appraisal of a taxable property, property tax is determined as a percentage of your home’s value, so the more your home increases in value, the higher your property tax bill will increase. For example, a residential property in Austin that is appraised at a value of $250,000 will pay around $4,933 per year. If this same home’s value increases to $275,000, the annual property tax bill will increase to $5,426. This is great for selling your home but is a substantial increase in annual taxation if you’re not. If property owners do not agree with the property appraisal value or find that their home has been overvalued, they can lodge a formal protest with the appraisal review board to have the property re-evaluated.

Reason Number Three – These Taxes are Set at a Local Government Level
The State of Texas doesn’t determine what your property tax bill will be, as this is set by your local authorities. While this is a good thing in some ways, as it keeps the power to change taxes local to your own community, it does mean that the state government can’t act to regulate or influence this taxation. The most they can do is pass a bill that tightens regulations on tax hikes, pass a law that allows residents of Texas to vote on tax increases in their local community, or increase state funding for public education (the largest item that property taxes cover). For these changes to occur, they would have to be passed by the state legislature, which hasn’t happened at this point. In fact, state funding for public education has dropped in recent years from 45% to 38%.

All the best!

Sounds like a personal problem. Owner doesn't have to explain why they are deciding to supply the materials. You know nothing about the project to be rambling about project success. Mistakes & Delays = Zero!

Four murders? That's D-class, period.

Property Managers still work in a C-class neighborhood. I have quite a few C-class rentals and they are more problematic, but we handle them pretty well because we know what to expect. We inspect them more often, watch late-paying tenants more closely, nip problems in the bud more quickly.

Thank you all for your replies. After the mortgage, taxes, and insurance the property will cash flow just over $125 a month. After the purchase I was on the fence about keeping the property and rent or flip the property. I like the area and think the property will keep on appreciating. I currently have a high paying w-2 job and my wife works as a 1099 for her business. I think  keeping the property even with the low cash flow would help me a lot with taxes at the end of the year. I plan on saving all the cash flow plus having a large amount of cash that would be used for any vacancies or repairs that would be needed. Also after the year lease I was going to see how the market is and 1031 possibly into something new. 

@Rodger Curbelo  But just remember at lease renewal time the landlord can either raise the rent on not renew the lease , The pendulum can swing both ways .