Property taxes are a big make or break factor for landlords. Unfortunately, many rental property owners don’t get just how big of a difference they can make, until it’s too late. On the bright side there is a solution for those already finding these taxes are a problem.
The Importance of Knowing Your Taxes Upfront
You can’t accurately value a potential rental property acquisition unless you know the property taxes, and how much they are likely to go up after you’ve purchased the property. This can be especially true of new construction or renovated properties which can see very big leaps in property tax bills. The same even applies to homeowners who are planning on moving and are contemplating holding their old home as a rental. Never just assume. Like insurance, property taxes can vary by thousands of dollars on similar properties that are just a few blocks from each other for a whole array of reasons.
There may be a lot of other things on your mind. Like renovations, finding a tenant, securing a mortgage and the mortgage payment you’ll get. Yet, property taxes can make all the difference in how much that property really costs you every month.
Taxes Keep on Going Up
Annual property tax bills don’t just stay steady either. There may be some cases in which they should go down. For example; if your property has been hit by a hurricane or local property values are going down. Unfortunately, most of the time property tax bills just keep going up. They go up when your property value goes up, tax rates go up, there are special assessments, or there are local area improvements and development. Some of these factors can spike your property tax exposure by double digits.
As a landlord, that means you have to plan to continually raise the rent. If you aren’t raising the rent every year, your income from your rental will keep shrinking until you are coming out of pocket each month to avoid foreclosure.
This is in addition to all the other rising costs landlords are dealing with. Like insurance, utilities, labor for maintenance, and income taxes.
The Pain of Not Factoring in Tax Hikes
The real pain shows up when landlords get caught out by rising property taxes. Some may be tempted to try and squeeze tenants in a variety of ways or force them out in order to rent for more. Be very careful. Tenants have a lot of rights. Especially in New York. You may be limited on how much you can raise the rent, and there are definitely ramifications for poorly treating renters; both legally and in terms of your reputation and online reviews. That can crush all the potential you have for making money on any rental properties you have now, or may acquire in the future.
The Good News
There is good news. You can get your property taxes lowered. You can get them reduced when you buy a property, and annually when new assessments and bills are levied. In fact, there is a very high chance you are currently being overcharged. Property Tax Adjusters, Ltd. can help you evaluate your current taxes, challenge them and secure lower bills year after year to ensure your investments are safe and you are maximizing your profitability and cash flow.