This post goes over the important of always watching property taxes, and how the the coming economic trends are showing that property taxes will definitely be raised to make up for shortfalls in city and state budgets due to ever declining tax revenues. However, investing in houses under $30,000 has built in protections naturally to protect you against those swings and still comfortably maintain your investment property and help you to retain cash flow. This is because firstly, without any raises in property taxes, they are usually no more than 1-2% of the house value, which is much lower than other investors that start at a higher investment price. Secondly, if they do raise taxes outside of the resale value of your property, then you have a LOT more cushion than most investors in order to “take the hit” and still have a profitable property that is going to be paid in full much, much sooner.
8 Comments
Hello again, I have my office in Alexandria VA we should meet up sometime. I heard you saying you have met no one yet. My group consists of two other people one from DC and another one from MD… Please be our guess if you want or join the team… !
Thank you! I just saw this message, and I will reach out to you. Thanks!
I would like to share my opinion on why property taxes rise rather than gas. So as you know parks and other services that your town provide cost money to run and they need to be funded. The thought is costs in government should be spread to those that benefit. So properties location is easy to identify if they are in the area then its assumed they benefit from new roads or better roads or parks or other things that government spends money on. So if they raise gas tax they will raise money but it’s not as targeted as property tax. If gas was taxed in your town 2 cents per gallon it would make it harder for gas stations to be competitive since gas stations don’t make much on gas something >5c per gallon and now your price is 2c higher than the town next store or your profit is 2c lower.
Similar idea goes to debt the cost of building a park or roads should be spread over the life of the asset to those that will use it. They do this through amortized loans if it lasts 30 years pay for it over 30 years. Not that government sticks to this theory or is financially smart but that is the thought behind using debt to purchase things.
There is a lot of shady things that go on in government accounting and is one of the most confusing things that I had to learn. They only have revenue and expenses no assets or liabilities. Issuing 100m is bonds is 100m in revenue not too hard to have a surplus when you can borrow your way there.
Hope you see where I am coming from and not trying to argue just sharing things I have learned and providing another view point. Hope it makes sense its early in the am here and idk what I’m saying. =) I understand gas was just off the top of your head.
Thanks for all your content! =)
Jordan
Thanks for your input Jordan! Yeah, I do simplify a few things into black and white, and of course there are other factors involved. Thanks for going into the long term pay off aspects of property taxes.
Most politicians also own real estate.
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