It can be difficult for a Chicago Real Estate Agent to accurately depict the state of the real estate market in Chicago and explain to potential investors why they should consider rehabbing low price homes into investment properties.
Property Taxes Across the US
Property taxes are complex across the United States; the total amount owed on any single property can be affected by a multitude of factors, including fixed and variable rates for different aspects, entities that must be satisfied whether taxes are paid to a village, county, school district, or combination of these, and dozens of other potential factors and formula that are closely tied to geographic location.
The cost of owning property can be calculated at a median both overall and state by state. Cost of living differences are only tangentially related when it comes to property ownership – however, when rehabbing or rental conversion of units is involved, the property tax rates will affect both what the generation of revenue will need to be as well as serving as an automatic cap on rental rates for practical reasons.
Median Rates
31% (16 states) of the US has a median property tax rate of less than 1 percent. Hawaii is the lowest, with a median property tax rate at 0.31 percent. Most of the lowest median property tax rates are in states in the southeastern US and the Rocky Mountain region. These states also commonly have only a single point of tax collection (county level.)
14% (7 states) have a median property tax rate of more than 2 percent. Most states with higher median tax rates are in the northeast (excepting Texas, which has a median property tax rate of 2.17 percent). These states also typically have multiple levels of tax collection, except for the state with the highest median property tax rate at 2.67 percent; the state of Illinois.
The remaining 55 % (28 states) fall somewhere between on the scale, with tax rates between 1 and 2 percent. A homeowner in most of the US will pay less than 1.5%; meaning a home worth $100,000 will incur a property tax rate of less than $1,500 per annum.
Rehabbing Properties In Chicago
Does it make sense to rehab low-cost Chicago properties? Any Chicago Real Estate Agents can guide you to homes that are low cost, have a small down payment requirement, and which are prime for rehabbing into individual living spaces for rental purposes. Student housing and blue collar worker housing will continue to be in demand, and such real estate properties can provide a decent return on investment of rehabbing can be completed rapidly and efficiently and solid tenants obtained. The trade-off for high property taxes can be well worth it.
