How Do I Estimate Property Taxes?

This week’s question comes from Gre on the Real Estate Rookie Facebook Group. Gre is asking: How do you find accurate property tax info, including school taxes, when running numbers on a potential investment property?

Great question Gre! Running your numbers accurately is super important when making sure a deal will be profitable, thankfully, there are many online (and in person) resources where you can find accurate property taxes within minutes.

If you want Ashley and Tony to answer a real estate question, you can post in the Real Estate Rookie Facebook Group! Or, call us at the Rookie Request Line (1-888-5-ROOKIE).

Ashley:
This is Real Estate Rookie, show number 78.
My name is Ashley Kehr, and I am here with Tony Robinson and today we are back with another episode of Rookie Reply. Hey, Tony.

Tony:
What’s up, Ash? How is your day going today?

Ashley:
Pretty good. Nothing real exciting. I took my son to… He started a little gymnastics fun camp thing so me and him went to that this morning, but other than that, it’s a beautiful day outside and I’m stuck in my closet.

Tony:
That’s so funny. It’s been super gloomy the past two days in SoCal so we’ve been stuck inside too.

Ashley:
Yeah, I also brought my motorcycle back from Texas, so I think I might go for a motorcycle ride today.

Tony:
Oh, man. Your first ride in New York.

Ashley:
Actually, I did one the other day. I did 15 miles-

Tony:
Fifteen miles?

Ashley:
And I was freezing. I even had a sweatshirt on, my motorcycle jacket on, gloves on, my helmet and I was so cold. At one point, I pulled over because I felt myself shaking. So I pull over, I’m like, okay, I’ll just sit in the sun. Because it was sunny out but it’s still cold. Sat in the sun for a minute, cars go by me and I feel one car slowing down next to me. And I’m like, oh, great. Here we go. It’s somebody I know or whatever. And it’s just this guy. He’s like, “Hey, are you okay? Do you need help?” And I was just, “I am good.” I gave him the thumbs up and he just kept going. Then I pulled out behind him and kept going, but it was really funny.

Tony:
Hey man, that’s awesome. So are you riding anywhere in particular or just like a leisure stroll through Western New York?

Ashley:
Oh yeah, I found that I can’t go over 50 miles without feeling like I’m going to blow off the bike. So yeah, just a real casual stroll. And, so that one ride was basically a straight shot. It was one road to my rehab. So like 20 miles there, 20 miles back pretty much.

Tony:
I see, I see.

Ashley:
And then a couple turns to actually get to the house, yeah.

Tony:
Fun time.

Ashley:
Anyways, today on Rookie Reply, do you want to go ahead and read off our question today? We pulled this one from Facebook.

Tony:
Yeah, absolutely. So today’s question comes from [Gray 00:02:10] Clifton and Gray’s question is, “As a newbie, I’m learning so much, but I was wondering how do you guys find accurate property tax information, including things like supplemental school taxes, when you’re running numbers on potential investment properties? I’m looking at multiple cities and states and my first purchased, only ended up having a lot more taxes than I realized even though it’s still a good rental property for me, but I just want to make sure I don’t make that same mistake again. Thanks in advance.”
So Gray’s question is pretty much around how do you estimate property taxes accurately? I can kind of share what I do and then Ash, if you’ve got something different you can jump there. There’s a few different ways you can do it, or at least that I’ve done it. The first way is you can go to the County Assessor’s Office, online, not the actual office, you can pull up their website and you can type in the address, the parcel number, whatever information you have. And it’ll usually pull up all of the property tax amounts for that property over the last several years, and you can use that as a basis.
I’ve also used websites like PropStream. They have pretty accurate property tax information and even like Zillow, I’ve compared Zillow’s to the County Assessors and a lot of times those numbers are pretty spot on as well. But like Gray, I’ve had a situation where I looked at that data and when I actually purchased the house, it ended up going way up. So I usually put a little bit of a buffer on whatever those previous year’s taxes are. And the last thing that I’ll do is I’ll ask other investors in that market what their property taxes are, because if they’ve recently purchased, they’ve got a house that’s similar to mine, that at least gives me a ballpark of whether or not what I’m seeing online aligns with what’s happening in the real world.
That’s what I’ve done in the real world. Ash, what about you?

Ashley:
My first thing would be to look first, is what kind of taxes do you have? So around me it’s very common to have a school tax, a county tax, so the town and county tax. And then also sometimes there’s a village tax and you’ll have three tax payments. So the village tax is common if there’s village water, there’s public utilities there. And then, you know I live out in the country, we have our own septic. We don’t have any village tax at all which is nice, but we’re not getting some of the amenities of public water and a public sewer. But… So first I would look at that as to what taxes does this property actually have.
And then like Tony said, you go to county websites and you can pull and you can verify. So around me the different towns, some you can’t even find online, which is really, really annoying, but you can go to the school website a lot of times. And sometimes I’ll just Google, “Springville School property taxes”, and the website will come up as to where that’s linked, and sometimes you really got to go through like a school website and click through, okay, here’s this department to go to this department and to go to this page and then you find it, but Google will be your best friend. Just Googling exactly what you’re looking for, to pull that up, going to the town or the village website.
Sometimes even you have to go to “pay my bill” and click on “pay my bill” and it’ll be like, okay, do you want to pay your water bill? Do you want to pay your property tax bill? And you can search the property tax bill from there.
Other ones have just the whole assessment roll where it’s just thousands of pages of every property and what the tax was for that year. And it’s not an actual search where you can put in the address, but all you do for that is go to… use your webpage find key and then type in either maybe the owner’s last name or the start of the property address and then it will start pulling it up, and you can use that find and replace key that your computer has.
Also, so as Tony talked about having your property reassessed after you purchase the property, if you think that is going to happen and it is illegal in some areas, I don’t know about all, to have this done after you purchase your property. But you can find out how they actually calculate your taxes. So if you… the property is assessed at $150,000 right now, how do they calculate what percentage are you being taxed at, so you know what that amount is. Okay, well, if you’re purchasing the property for 200,000 and you think that your assessed value is going to go up to 180 or something like that, calculate it, use their calculation, their percentage to see what that tax would actually go up to, worst case scenario, that you are reassessed.
And then also the GIS mapping website for your county too, is a great tool as to where to find a property tax information too. You just click right on the parcel and it’ll show you owner history and also tax payment for town and county too.

Tony:
Yeah, great advice. I’ve also heard of investors just calling the county and just asking them, “Hey, what do you think this number will be next year?” And sometimes they’ve been able to get a decent estimate going that way as well. But I say, whatever number you land on just add some level of buffer because it is hard to kind of nail that number down exactly.

Ashley:
And your property taxes usually aren’t the same exact amount every single year, they usually do creep up every year. So you are probably going to pay, even if it’s a hundred dollars more or something like that the next year, than what they actually were when you purchased it.

Tony:
And Ash, we should probably just define what you meant when you said reassess, right? So if the initial owner owned the property, there was some tax basis that they were using… and every county, city kind of does it differently, but there’s some value that the county has assessed that property at. And whenever a property changes hands, a lot of times they can go back and then reassess that property to see what the new tax assessment is today. So it’s basically the county just saying, hey this property used to be worth $100,000 when the old owner has it. Now we assess it’s value to be $200,000. That means the taxes are going to go up based on that new value.

Ashley:
Yeah, that’s a great explanation. I’m glad you broke that down, it’s basically the value they see your home as, and it’s usually less than what the actual value is. If you look at the actual tax bill, it will say your full market value and then what the assessed value is on your property, and sometimes those numbers can be way off. Sometimes they can be in your benefit, sometimes they can not be.
One thing that’s hard to estimate is a new development when you’re doing… you’re buying vacant land and you’re going to build on there. What are your taxes going to be? When we built our personal house, we had gone to the tax assessor and just asked, this is the floor plan we’re kind of looking at, the square footage. This is how many acres we’re putting on to the property, what do you think it would be? And to kind of get an estimate.
But also parceling off a property too. If you’re buying around here it’s common for farmers to maybe sell off some of their land and… But they want to keep their house, and so they’re selling 20 acres and they hadn’t gone through a tax period yet where that’s been a separate 20 acres, maybe off their 100 acres. And that’s where you have to figure out too, what will your taxes be. Because there is no history of taxes yet, for that property as it’s separate parcel.

Tony:
Awesome. Well, I think we hit pretty much everything there is when it comes to estimating taxes. I don’t know, you got anything else on your side?

Ashley:
I don’t know, I feel like there was one more thing I was going to say about it, but yeah, it’s long gone now.

Tony:
Yeah, anytime that you’re analyzing a property, these are all estimates you know, and if you’re being off by $50 or $25 on your property taxes breaks the deal, then maybe reconsider whether or not it’s a deal that you want to go after anyways.

Ashley:
Yeah. I think at least verify what they are now, know exactly what they are. So don’t just take what the realtor is telling you they are, or what the homeowner is telling you what they are. Look it up, ask for the tax bills, use some of these websites we mentioned to verify that data and then go and estimate what the future may hold.
And another thing too is that if you are reassessed, so whether it’s because you purchase the property, the tax assessor’s coming and reassessing that property and seeing what the new value is, or the whole town as a whole is… The whole town is reassessing every single property. This recently happened in the city of Buffalo where everyone’s property was reassessed. You can actually go and you can fight that. They have a date set where you can come and you can say why you don’t think this is fair and why this is the actual value. So, if you have that happen, that’s definitely an option for you and reach out to the Assessor’s Office to see when that date is that… There’s a word for it, I can’t think of what it’s called, but they call that date something where you can actually go and kind of protest what your property was reassessed for.
There’s also companies out there that will actually do that full process for you, of disputing your property taxes and the new assessed value, and they just take up a percentage of what you would’ve paid or something like that. The percentage of the money they’re saving you. So that’s always an option for you too.

Tony:
Hmm (affirmative). I didn’t know that about the company, that companies exist that do that. That’s super interesting.

Ashley:
Yeah. I can’t give you any examples but I know they’re out there.

Tony:
You know they’re out there somewhere.

Ashley:
I know people that have used them, and use them anytime they’re reassessed even if they save 100 bucks a year, they paid the person maybe 20 bucks or whatever to save… But, yeah.

Tony:
Awesome.

Ashley:
Hey, well, think that’s it for our property tax episode.
But also something really interesting if you guys are doing market research and looking for maybe an out-of-state market, is look at the property taxes too when you’re analyzing a market, because they vary widely and you can go online and you can just Google “what are the worst states for the highest property tax” or anything like that and maybe that can help you narrow down where you actually want to invest.
Right now property taxes are really high in New York and a motivation for me to invest out of state would be because they are so high here. And I look at it, okay, I can get houses pretty cheap right now in my area, but I’m paying maybe $20-30,000 now, but I’m paying $5,000 every single year going forward in property taxes. Maybe I would rather go out of state and buy a property for 150,000 and only pay 3000 in taxes every single year, because once I have that 150 paid off, I’m paying a lot less in property taxes every year. And instead of… I’d rather pay more money now than continuously pay money every single year.

Tony:
Every year forever. Yeah, it’s a really good point because we have cabins in Tennessee that are almost 3000 square feet and we’re paying like 130, 140 bucks a month in property taxes. And I have a 900-

Ashley:
Why are you going to make me cry right now?

Tony:
We have a 900 square foot house in Joshua Tree and we’re paying like 317 a month in property taxes. We’ve got our 391 square foot studios, I think we’re paying 290 or 280, something like that a month in property taxes. So it’s a really good point that property taxes should be included when you’re comparing markets as well.

Ashley:
Yeah. Hey, well you guys, thank you so much for joining us. These episodes, if you haven’t heard already, are going to be released on the very new Real Estate Rookie YouTube channel, so make sure you guys subscribe to that, yeah.
Every week you’ll see the podcast episodes on there, but you’ll also… There’ll be another video released every single week with a different tips, advice, tricks to real estate investors specific to rookies. Some will be by me, some by Tony and some from our awesome contributors, Kyle and Lauren who are on episode one of the Real Estate Rookie podcast.
Thank you guys for listening, I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. We’ll see you guys back next Wednesday with a new guest and make sure you guys join our Facebook group: Real Estate Rookie. We’ll see you guys again.

 

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