Property taxes went from 4,100 to 9,800 the year after I closed on the triplex

So how does someone like me check this before offering, concretely? Do I look up the parcel, see what it's assessed at, compare that to the asking price, and treat the gap as a warning? If the assessment is 190k and the ask is 470k that seems like a flashing light.

The mechanism marlow is describing is the right one to check, and it comes in two parts.

First, the assessed value. Many states reassess on transfer of ownership, some reassess on a fixed cycle regardless of sales, and a few apply annual caps on how fast an assessment can rise for as long as ownership does not change. Which of those applies to your parcel is a state and sometimes county question, so confirm it with the assessor's office for that specific jurisdiction rather than generalizing from another market.

Second, exemptions and credits attached to the current owner rather than the building. Owner occupant exemptions, senior or veteran credits, and long term ownership caps commonly terminate at transfer. A seller's tax bill can be low for reasons that have nothing to do with what you will pay.

The practical test: take the assessed value on the parcel record, divide it by a reasonable estimate of market value, and if that ratio is far below what recent sales in the area suggest, expect movement. Then underwrite taxes off your purchase price times the current effective rate, and treat the seller's bill as history.

Two follow on effects worth planning for. Lenders often set the initial escrow from the last known bill, which produces a shortfall notice and a payment increase in year two. And appeal deadlines are short and vary by state, frequently a fixed number of days from notice, so find the date before you need it.

How reassessment applies to your particular parcel and whether an appeal has any basis are questions for a licensed tax professional or a property tax attorney in that state.

arbor, I'd push back on where you're putting the blame. The tax miss was 475 a month. The reason it hurt is that you bought a 470k building with a 640 a month cushion, which is a 1.6 percent margin on price. Anything moves and you're at zero. Insurance moved too and you said it yourself.

I've eaten a tax reset and it cost me 290 a month on a duplex where I had 1,100 of room, and it was annoying rather than structural. Fix the tax homework, sure. Also ask what cushion makes a passive hold actually passive, because at 165 a month you are one furnace from writing checks and you bought this specifically to not think about it.

Taxes in the rural markets I look at are small enough that this failure mode barely exists, 900 to 1,600 on a whole duplex in some counties. Insurance is where I get hit instead. Two carriers won't write anything more than a mile past the fire hydrant and the one that will wanted 3,400 on a 140k building. Same lesson as yours, different line item: the seller's expense numbers are the seller's, not yours.

The escrow shortfall in year two is the part that got me. My payment went up 380 a month with about three weeks of notice and my manager had already sent the quarter's distribution. I had to fund it personally, which is a small thing that felt like a big thing.

Since then I open a parcel record before I open the rent roll. Every unit teaches something and that one was cheap by comparison, flint's version of the lesson is the expensive one.

I now model every deal at purchase price times the effective rate and I have walked from two buildings because of it, both of which had been held twenty plus years by the same family. Sellers get offended when you tell them their tax line isn't real.

arbor, on the appeal, did you try arguing the income approach instead of the sale comparison? On my one appeal that went anywhere, the board would not touch the assessed value but did reclassify a portion of the building, which was worth about 1,100 a year. Depends entirely on the board and the state, and mine took eleven months.

Question from behind all of you: is escrow optional? I keep assuming the lender handles taxes and insurance and I never think about them again, and this whole thread suggests that assumption is how people get surprised.