Updated 4 days ago on . Most recent reply
Texas market for multifamily investing
Hello -
I am a real estate investor with multiple long term rentals (SFH) and some STR. I am looking for multifamily (either 3-4 units or commercial 5+ units). Exploring the Texas markets at the moment where I currently have no presence. Looking for tips on high cash flow and possibly appreciation markets. Tips?
Thank you!
Most Popular Reply
Don Konipol
#1 Creative Real Estate Financing Contributor
Lender
Pro Member
#1 Creative Real Estate Financing Contributor
- Lender
- The Woodlands, TX
- 9,894
- Votes |
- 6,254
- Posts
Don Konipol
#1 Creative Real Estate Financing Contributor
Lender
Pro Member
#1 Creative Real Estate Financing Contributor
- Lender
- The Woodlands, TX
I’ve lived in Texas and invested in Texas since 1978…..
Here’s the thing , Texas has NO income tax, so education and other services are financed thru property taxes. As a result, non homestead property pays about 3% of MARKET value annually in property tax. BUT, county appraisals are often grossly overstating real value. An example is a retail center we owned that we purchased for $1,200,000 and put $200,000 into improvements. We could probably sell it for $1,600,000. When the new tax appraisal came out, it was “valued” at $2,300,000. Although we were able to get the value reduced to $1,850,000, our property taxes were $54,000 per year. Unfortunately the previous landlord had signed tenant leases that obligated the landlord to pay property taxes.
Similarly, property insurance is sky high due to hurricanes and storms. As a result the “usual” quick metrics doesn’t work in Texas. There are many cases where a county, especially smaller counties, have value property very low. When the property sells to an “outsider”, revaluation is brutal, doubling, tripling, or even quadrupling the tax valuation.
Here’s the thing , Texas has NO income tax, so education and other services are financed thru property taxes. As a result, non homestead property pays about 3% of MARKET value annually in property tax. BUT, county appraisals are often grossly overstating real value. An example is a retail center we owned that we purchased for $1,200,000 and put $200,000 into improvements. We could probably sell it for $1,600,000. When the new tax appraisal came out, it was “valued” at $2,300,000. Although we were able to get the value reduced to $1,850,000, our property taxes were $54,000 per year. Unfortunately the previous landlord had signed tenant leases that obligated the landlord to pay property taxes.
Similarly, property insurance is sky high due to hurricanes and storms. As a result the “usual” quick metrics doesn’t work in Texas. There are many cases where a county, especially smaller counties, have value property very low. When the property sells to an “outsider”, revaluation is brutal, doubling, tripling, or even quadrupling the tax valuation.
- Don Konipol
Private Mortgage Financing Partners, LLC