Hello BP members. I was talking to a potential funding partner of mine yesterday and he asked whether the property taxes in Oregon or Washington are better (i.e. lower) for real estate investing. I looked into it and discovered they are significant in both states.
I'm curious about how this affects cashflow. For example, for a $167,000 home in Washington State, the taxes this year are $3280, which comes out to $273 monthly. That seems like quite a chunk out of your monthly cashflow (if it were a rental). Is this typical, or do Oregon and Washington have particularly high property taxes? Perhaps you would simply avoid owning a home that expensive as a rental?
Thank you for any input or comments.
P.S. I understand this is just another expense that must be accounted for when evaluating the deal, unless there's some caveat about deducting it or something that I'm not aware of.
Joseph, property taxes may be one of the reasons why it is harder to have really strong cash flow on the west coast. I can't hit the 2% rule or consistently make $200/door/month like others can in other geographies, but I can hit 1-1.5% and $100/door/month, so it works given that I want to invest where I live. Property tax is a big factor in which properties we buy, since it varies a lot in our city, but once the property is purchased it is not an expense that I'm concerned about. Poor move outs cost way more than the annual property tax bill. My perspective might change as the market recovers and rates go up...
I find that the taxes are high, however they are determined largely by the individual cities. I live in Tri-Cities, WA which is made up of 4 different cities and each one has a slightly different property tax rate, depending on whic cities have passed school/hospital bonds, etc.
Thank you both for your responses. That is good to know. I'll factor that into my future deals.
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