An out of state bank recently hired us to sell 4 commercial investment REO properties scattered across Cook County. After analyzing the listings the investor motto ABC (Anything But Cook) became clear. Add up the 4 asking prices and it comes to $400,000. Add up the taxes and you get $130,000, or around $33,000 a building.
With an asking price of $100,000 per listing the mortgage payment would be roughly $750/month while the taxes would amount to $2,700/month. Yes there is something wrong with this picture. We have received a ton of interest in the 4 commercial investment buildings, however, after the taxes are discussed that ends the conversation.
Another tax disaster involved a note sale secured by a 4 unit mixed use building in the Lakeview area of Chicago. After a month of dialogue between bank and investor the second tax installment came out at $27,000. The estimated taxes for 2010 = $36,000. With a potential gross income of $90,000 the taxes would eat up 40% of the gross. The buyer backed out of the deal.
Once a building becomes REO it is common that the financial institution that owns it has not appealed the taxes. The taxes are partially based on a previous sales price well above the new REO price. I recommend talking to a lawyer that specializes in tax appeals to determine what, if any, tax relief you can expect.
Building Equity Commercial Real Estate
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Email:: solutions@buildingequityre.com
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This is an interesting and informative post. Tax is basically a big factor that can increase the value of the property. However this is also the source of income for the government. Let's just hope that the taxes we paid are used for our benefit.
Posted by: landlord software | April 08, 2011 at 07:13 AM