Cleveland area property taxes
Originally posted by @Wayne Bodley:
Hi all, while looking on Zillow at Cleveland area properties I've seen some pretty good deals on duplexes. But then when I look to see what the property taxes cost it kills the cash flow. I've been looking in places like Lakewood and Parma. Sample property would be $115k or so but with $3500- $4000 in property taxes. I saw one place they was $85k or so with $9000 in property taxes, what? I can't imagine why someone would buy that property so seems like the owner is stuck with or just gives it up. Is it a situation where up and coming neighborhoods have low property taxes now but they gradually rise? If someone could shed some light on this subject I'd appreciate it. Thanks Wayne
It is true there are some higher taxes around here. It really depends on where you look. Places like Lakewood and Shaker Heights are going to have much higher taxes than Euclid, Bedford, or Parma. "Up and coming" neighborhoods would be places like Ohio City and University Circle, but with those areas speculation is impossible and who knows where the taxes will go or where the neighborhood will be in 5 years! Sometimes the more stable areas will have a more consistent tax rate which will keep your projections more accurate. You may want to just keep looking. Also, MFs will have much taxes higher than SFs. Maybe that is something you might want to consider.
You can also easily challenge the taxes after the purchase.
Good luck!
It really just depends on the neighborhood. I don't think there is any specific pattern you'll find. There are some properties that I've passed on specifically because of the high taxes, but they've been right down the road from areas that don't have that problem. While you're getting familiar with Cleveland properties, you're also going to want to learn about POS (point of sale) inspections. Someone did a post a while back with all the suburbs that require them. They can complicate deals, especially rehab projects, so keep doing your research!
The tax bill is a function of two components: the tax rate for the city you are in and the assess value. If the assessed value is above market value, you can challenge the assessment through the Board of Revisions. In Cuyahoga County, complaints against valuation are accepted during the first 3 months of the year for the previous tax year. Typically, a recent arms length sale of properties that were advertised for sale publicly is deemed to be persuasive evidence of the property's actual market value. If you don't have a recent arms length transaction, or the hearing is expected to be contested because you're asking for a large reduction in value, you can hire an appraiser to prepare an assessment of value and testify on your behalf. If you prevail, the new tax valuation will remain in effect until the next periodic adjustment done by the county.
You can check the current tax bills and tax assessed values for properties through the county auditor's page. If the valuation is wrong and you'd like to estimate your tax bill after you get the assessment adjusted, the fiscal office makes a calculator available here: http://fiscalofficer.cuyahogacounty.us/en-us/property-tax-calculator.aspx. You just enter the market value, city, and whether the property is owner occupied.
Bookmark this http://myplace.cuyahogacounty.us
It's the fiscal office link where you can search what the property is currently valued for. IF it is over the purchase price you buy you can argue the tax amount in Q1 of the year.
Some investors pass up great deals because they don't want to do this step but i've bought great deals because everyone passed up on them due to a high tax that could easily be argued to a lower price in 6months. So keep on passing up deals I'll be there to pick them up :)