Real Estate Agent · Houston, TX · Member since 2026 · 4 posts · 2 votes
Out-of-state investors keep using "about 2%" for Houston taxes. Close, but here's what a rental actually pays. There's no homestead exemption, so you pay the full rate.
1) Inner Loop (City of Houston + HISD), 2025 rates per $100:
City 0.5192 + HISD 0.8783 + Harris County/Flood/Hospital/Port 0.6241 + HCC 0.0988 = about 2.12%, plus a small county education levy.
On a $300K rental that's roughly $6,360/yr, or $530/mo.
2) Towne Lake (Cy-Fair, MUD 449): about 2.54% all-in, using a published estimate.
Same $300K is about $7,620/yr, or $635/mo.
That's about $105/mo of cash flow gone before insurance, just from the MUD line. And MUD rates aren't fixed. MUD 449 was 1.03 in 2023 and is 0.94 now, and other districts move the opposite way.
Never underwrite off the listing's "tax" number. That's usually the seller's homesteaded bill.
What are you plugging in for taxes on your Houston deals right now?
Really useful breakdown, and the last line is the one people need to hear in every market. The tax number on a listing is the current owner's bill, not yours.
Different setup up here in NYC but the same trap. A lot of the time the seller has a homeowner exemption like STAR, or a senior or veteran exemption, so their bill looks low. On paper the house cash flows, then the investor buys it and the number goes up once the exemption drops off. I've seen a few hundred a month disappear that way.
For anyone out of state running Houston numbers, I'd take your approach and just run the full rate on the purchase price from day one. If the deal only works with the seller's bill, it doesn't work.