Good Evening everyone!
I am looking at purchasing a 3-Unit Rental property near a local State College. I have a few short questions, and I also thought I would post some numbers and ask for a little feedback and input on it.
My main question at the moment is about the ever dreaded Illinois Taxes! The property was purchased by the current owner way back in 2006 for $227,500 and has a whopping Tax Bill of between $6200 - $6400 per year. As I understand it's current Assessed Value, it's still to this day being taxed on that $227,500 purchase price, or very close to that. I intend to purchase it for $185,000 or close to that number and properties in that price range in my area are being taxed at approximately $4700 - $4900 for the year. If I were to purchase it, does anyone have a reasonable estimate of how long the change in taxation should take? I understand that they assess properties once every 4 years in my area, is there a way for me to petition based on the new sales price to have a reduction in taxes? Thanks guys, I've done some research in the area, but some of it can get pretty complex!
Here are some numbers for the place (Monthly)
Gross Rent - $2495
P&I - $820 Based on a 30-year, 25% Down Fixed 5.7% Mortgage
Taxes - $533 (At current Rate)
Insurance - $305 (Near a Flood Zone)
Budgeted Maintenance - $160 (7%)
Budgeted CapX - $120 (5%)
Vacancy - $94 (4%) (Think I am overshooting here as it is walking distance from the college)
Turn-Over - $45 (2%)
Monthly Cash-Flow - $418
What do you all think? Thanks for your input!
Not sure about the taxes, but I will say a lot of veterans here seem to use a 20-23% fee for Vacancy, Maintenance and CapEx.
Regarding being near a college, here are some things to consider:
1. Someone drops out and leaves during the middle of a semester. May be tough to rent.
2. May have high turnover, and with that turnover you may need to paint, clean, replace curtains etc each year.
3. Repairs, repairs, repairs. Hopefully you don’t unknowingly get a fraternity in there.