Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
You can create all the hypothetical charts in the world but none will negate the fact that 100% of the income in a rental is derived from the tenant and 100% of all expenses, including taxes, are paid from that income until such time as the expenses exceed that income. At that time (actually before) the landlord should have ceased operating the rental unit unless they simply have a need to lose money.
real estate is a long term investment . it can take years in some locations to pay your dues and see a profit .
i have never owned a piece of real estate that day 1 paid me more than it cost me . not in 30 years in ny has that happened to me unless i want to plunk down an insane amount .
my first property back in 1987 took 5 years to see a gain without figuring depreciation . it cost us over 1200 a month with 8% mortgages and 20% down and rents were in the 850-875 area .
my expenses didn't matter , markets rule and set prices . today that property is a cash generation machine at 1900 a month rent and no mortgage but it took paying our dues
You can create all the hypothetical charts in the world but none will negate the fact that 100% of the income in a rental is derived from the tenant and 100% of all expenses, including taxes, are paid from that income until such time as the expenses exceed that income. At that time (actually before) the landlord should have ceased operating the rental unit unless they simply have a need to lose money.
That's simply not 100% true in an area like this. Here's an example https://www.trulia.com/property/3259...-Lake-NY-10925
As you can see, the 3 rents barely cover the Piti but what the Piti shown isn't including is the school tax. That's another 5k. Granted, the rent is low but so is the PP. I have income stream reports from different pp and unless you're buying a pos or an upscale place, you're VERY lucky to get the property taxes and 50% of the mortgage out of the tenants. Rents here aren't cheap but the market isn't going to let you charge an extra 1k/month to cover the taxes, either.
Lately it's looking like a bad idea. But so is renting.
Look on Zillow for counties in the Finger Lakes region of NY. Seneca, Madison, Cayuga, Tompkins, etc. You will find 2500 sq. ft. homes with multiple acres going listed for the high 200's. In low property tax jurisdictions they would fetch twice that.
High property taxes appropriate the value of a house. The state takes it from the property owner. Over a period of years, these home owners will find out their houses are barely worth what they put into them. All the appreciation has been appropriated.
As far as renting, the landlord has to charge enough to cover the mortgage, property taxes, maintenance, and make a profit. High property taxes mean high rent. And since he won't realize much appreciation when he sells (which is the main attraction to real estate investing), he'll have to get that through higher rents as well.
Lately it's looking like a bad idea. But so is renting.
Look on Zillow for counties in the Finger Lakes region of NY. Seneca, Madison, Cayuga, Tompkins, etc. You will find 2500 sq. ft. homes with multiple acres going listed for the high 200's. In low property tax jurisdictions they would fetch twice that.
High property taxes appropriate the value of a house. The state takes it from the property owner. Over a period of years, these home owners will find out their houses are barely worth what they put into them. All the appreciation has been appropriated.
As far as renting, the landlord has to charge enough to cover the mortgage, property taxes, maintenance, and make a profit. High property taxes mean high rent. And since he won't realize much appreciation when he sells (which is the main attraction to real estate investing), he'll have to get that through higher rents as well.
https://www.trulia.com/for_rent/3607.../price;a_sort/
As you can see, there's 318 available rentals but 238 are under 2k. If the Piti is 2k, they aren't even breaking even when you have income tax and upkeep
I really don't see LL making a big profit around here unless it's a large, upscale house, more than 3 units or a run down dump in places like Newburgh. I have come across duplex listings that basically advertise "live on one side and let the other tenants pay your property taxes". Even if you rent out both sides, you're not being made whole.
I am still kind of stunned that I'm seeing people paying 5.25% interest on a mortgage or even 8%. Why? That makes no sense at all. If you're paying that much in interest, you need to refinance like yesterday. And if you're credit is not good enough to get a better rate, then maybe you shouldn't have bought a house until that was fixed.
This has to be an apples/oranges comparison. Similar houses in the same area should have a similar tax assessment, whether owner-occupied or rented out. Even if there a Prop 13 like tax difference, the landlord would just pocket the difference. I know where I live a house like mine would rent for more than my PITI payment.
Some of the families I manage have been residents going back to the late 80's... Prop 13 very much effects the ability to provide the stability all enjoy and that is keeping very good tenants at below market rents.
People that rented places bought in the last Real Estate boom often found they were in the middle of a foreclosure and taxes were a huge part of the mix...
Rents did not cover expenses and the prospects of rents increasing in a down market were dim... on the other hand, owners that were fiscally prudent and in for the long term did well... our cost were lower and fixed rate loans and Prop 13 provided stability.
That's simply not 100% true in an area like this. Here's an example https://www.trulia.com/property/3259...-Lake-NY-10925
As you can see, the 3 rents barely cover the Piti but what the Piti shown isn't including is the school tax. That's another 5k. Granted, the rent is low but so is the PP. I have income stream reports from different pp and unless you're buying a pos or an upscale place, you're VERY lucky to get the property taxes and 50% of the mortgage out of the tenants. Rents here aren't cheap but the market isn't going to let you charge an extra 1k/month to cover the taxes, either.
Two apartments at $650 and the two bedroom should be about $1000 for a monthly total of $2300 which would cover the PITI even if your claim of an additional school tax is correct. In any part of NY I'm familiar with school taxes are collected as part of the property taxes and the city or town then distributes the share to the school, library or whatever. $12,500 total taxes sounds very high for an upstate area property. If there is a reason the landlord chooses to charge rents that don't cover his expenses that's his problem, not the tenant's.
Two apartments at $650 and the two bedroom should be about $1000 for a monthly total of $2300 which would cover the PITI even if your claim of an additional school tax is correct. In any part of NY I'm familiar with school taxes are collected as part of the property taxes and the city or town then distributes the share to the school, library or whatever. $12,500 total taxes sounds very high for an upstate area property. If there is a reason the landlord chooses to charge rents that don't cover his expenses that's his problem, not the tenant's.
Orange County is not upstate. It's NYC metro. People think everything north of the Bronx is upstate.
You're wrong about the taxes. They are done separate (at least around here).
Is owning always better if property taxes cause your monthly housing payments on a 250k house to be $500-750 more than renting? If you add in maintenance, the amount is at least another $2500 per year. Rent goes up but so do taxes. At what point does renting win over buying or does it ever?
250k, 20% down, 11000 school and property tax =$1900ish
Rent 2 bedroom house/apartment =$1200-1400
in a nutshell, I 'got back' (profited) ALL THE PAYMENTS AND TAXESthat I paid on the last two homes I've lived in. Rent = you NEVER get anything back!
Each was long term 10yrs + 16yrs, and each home I bought was older home in good (structural) condition needing 'updates' to suit my tastes, on nice mature-treed lot, on edge of large growing city. Did simple updates myself (painting,tile, etc) and shopped best deal on contracted work. Sold each home 'totally updated' for about DOUBLE what I paid for it, and just for grins, compared that to the payments and taxes I paid over the time I was living in them, essentially getting all that back.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
