Property Tax Hike! Underwriting advice?
How do you guys underwrite property taxes before making a purchase? There's always the possibility that they can go up a significant amount based on a number of factors that would really compromise cash flow. We closed on a home last June and added the taxes into our spreadsheet $300 higher than they were the previous year since they seem to go up by a little more than half of that each year and wanted to be conservative. This year there was a big adjustment in our area which caused a $1100 jump in our property taxes. Luckily we're house hacking and the homestead exemption will take care of some of this until we move into the next property, but I wish we would've made our offer taking this scenario into consideration. Do you call the village and see if they plan on making one of these area-wide adjustments in the coming years? I understand that this should generally get passed on to the tenant via annual rent raises, but there are other implications of doing so that could add insult to injury. Especially if your local competition hasn't bumped up their rent pric in quite a while. Any advice would be greatly appreciated.