Rental Property Investor · Waukegan, IL · Member since 2018 · 2 posts · 4 votes
I live in Illinois in lake county and I want to buy property were I'm at. (Currently renting). But then I thought about it and wondered what keeps people buying rental property in Illinois when we have the second highest taxes in the country? In lake county,its the highest in the state. So should I Invest elsewhere (I heard you get the bet bang for you buck Arizona or even Detroit) or should i look for deals in Illinois?
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Domineque Taylor they are passing the tax burden along to the tenant. Property taxes just force rents higher. Just look at taxes like any other expense.
Catskill, NY · Member since 2018 · 636 posts · 668 votes
6y
I invest in NY (state) where we also have extremely high taxes. A lot of people do it because they're local and it's easier to manage. Also, some investors can make the numbers work, even with high taxes. Are you in an area where the RE is rapidly appreciating? Some investors are in it for the appreciation and not the cash flow.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
6y
@Domineque Taylor they are passing the tax burden along to the tenant. Property taxes just force rents higher. Just look at taxes like any other expense.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Domineque Taylor what counts is not how much you pay in taxes but how much you get to keep. Most people probably invest there because it is where they know.
I invest in Baltimore despite it's high taxes because I know it well and know how to find good deals.
Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
6y
Taxes are just one component of deal analysis. Here in the Phoenix area, cash flow tends to be tight (even with lower property taxes) because we've had a lot of appreciation. It's just one piece of the puzzle. Also, as has been said, property taxes are generally an expense you pass on to the tenant (so long as your rental rates remain competitive for the local market).
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
6y
Why does your landlord care if his property taxes are high relative to other states? You are paying them for him/or her. So the tax burden actually falls on the renter, not the landlord. You still live in Lake County for some reason...even though you are paying for its very high taxes.
And the taxes of the competition in the subdivision and town around you are basically the same so there is no disadvantage. Everyone could be paying 10,000 a month in taxes. If the rents in the area cover it, who cares?
As long as the rents cover your expenses and leave the cash flow you desire, why do you care if taxes are high or low or utilities are high or low or insurance is high or low? Taxes are just one of the expenses. No different from any other expense.
As landlord, you care if one of those expenses is expected to dramatically rise in the future because you are locked into a rent rate for some period and you may not be able to raise the rent to cover the increase. But you don't really care if the general level of any particular expense is high or low.