Recently ran into a situation where a friend had asked for tax advise regarding his RE taxes on 15 rental properties that he owns. His question was:
Should I get a line of credit in order to pay my RE taxes every year?
His taxes were roughly $20,000 per year, not escrowed.
My answer was: It Depends.
It depends on how disciplined you are as a investor and financial manager, etc. Using a line of credit for a large tax bill isn't a crazy idea. Many business owners do this.. but it is only used successfully if you are disciplined enough to pay the line back down.
His rationale was that he 'just doesn't have enough cash' to pay the taxes. Usually in these situations you will need to reevaluate cash flow to see where exactly the money is going and if the property is actually cash flowing as much as you think it is.
Interested to hear everyones thoughts.
Obviously I don't know your friend but the situation sounds like he has no financial discipline. Paying your property taxes is a no-brainer. Even if you "own" a property with no mortgage, go on avoiding paying the taxes and you'll soon find out who really owns your property.
@Hunter Fitch I dont think it was a matter of whether he was going to pay them or not. Rather the fact that he needed borrowed funds to pay the taxes..says to me maybe the cash flow really isnt what it seems.