New to Real Estate · Charlotte, NC · Member since 2021 · 5 posts · 1 vote
Hey Guys,
I'm new to investing and currently live in Rock Hill, SC. I would like to invest somewhere closer to home if it makes sense as far as my goals are concerned. I'd love to get my first rental property within the next year and ideally, it'd be somewhere closer to home but I understand that sometimes the numbers don't always work, and it makes more sense to look in other places.
I'm looking to start out with buy and hold properties and mainly looking for cash flow. I'm looking at either SFH or even Townhomes if the numbers make sense and something that I would self-manage.
My biggest hindrance to investing in SC is the taxes. It's something I'm still learning about, but I also understand from what I've been told that non-owner occupant taxes in SC almost triple and can eat up your cash flow at the end of the year.
As a result, I've been looking at some places in NC that I'm kinda of familiar with like Gastonia, Hickory, Greensboro, Winston Salem, and Fayetteville.
I know I've still got a lot to learn which is why I'm here, but I was hoping to get some advice from people with more experience, especially when it comes to SC taxes and just investing in general.
Columbia, SC · Member since 2017 · 77 posts · 49 votes
4y
Hey Matt,
Yes, taxes are the bane of the REI existence in SC. You mentioned them tripling, but it's a bit more complicated. Back of the napkin, you can estimate them like so: Purchase price (or assessed value, whichever is newer) x .06 for a rental x millage which is often .45 or so, depending on the county and district. Owner-occupied homes are: Purchase price (or assessed value, whichever is newer) x .04 x .45. Then there is a sale tax break applied, and in some counties, owners do *not* pay for school operating costs, only construction bonds. (Lexington county is this way, but Richland is not, for example)
So, $100,000 home: $100,000 x .06 = $6,000. x .45 = $2700. (Rental) $100,000 x .04 = $4,000. x .45 = $1800, - sales tax credit and possibly school costs. (Owner-occupied)
You can play with these on your county's tax assessor sight, estimating real property taxes for occupied/rental.
If you want to get into the SFH space, and be competitive, I think your best bet is to invest in properties whose assessed value is sub $75k-$90k.
My strategy is to invest in 2-4plexes, as the *land* is what is taxed, not the number of doors. This allows you to divide the total tax bill across the units, to help keep rents down and be more competitive.
I have one 2br condo and the taxes on it are slightly less than I pay for my home. It's ridiculous.