Potential purchase - NOI and Property Tax
I'm looking at a few commercial properties and I'm confused as to who's numbers to use when evaluating the property. Specifically the property tax.
I know the property tax rate is about 2.8% for this region.
Seller is showing me his P&L and his NOI is 150,000. He's asking 2,400,000. I can see his
property taxes are 23,000. Using the 2.8% from above I can tell the tax authority 'thinks' his property is about 845,000.
If I know the market cap is 7%, this would value his property at 2,100,000.
However, if I were to evaluate purchasing the property at 2,000,000 that would increase the property taxes significantly to 56,000 (using the 2.8%) thus lowering the NOI to 94,000 (all other rev/exp staying the same). With this NOI, the property would then be worth 1,300,000 at the same 7% cap rate.
So I'm confused as to which property tax amount to use when evaluating. Help.