I'm a successful Realtor & real estate investor. 99% of my full time job is devoted towards rentals and investments. The new mayor, I'm sure, has good intentions... unfortunately like most politicians he is not informed enough and fails to see the consequences should his plan come about. It would quickly turn the real estate market in Campbell from bad to worse and he doesn't realize it!
I'll explain: taxing $1,000 per unit per year is unheard of. If someone owned a triplex (3 units), then under this plan they would owe $3,000 EVERY YEAR. Parts of Campbell where investors buy have low priced properties. I have sold triplexes for as little as $20,000. So, if the poor guy who buys that triplex has to pay $3,000 every year he's paying the equivalent of 6% of the value of his property annually! That's on top of the 25 - 33% he's taxed by the state & federal govn't for any income he receives.
Believe me, the great majority of landlords only make a small profit if they rent. I have several properties in this area where I see less than $1,000 profit each year. Now... taxing an absurd amount annually will kill any chance at profit. Then what happens? Think about it, it's easy. No new investors buy in Campbell which = more vacant homes not getting repaired which = lower home prices with declines going down faster. It also means that people who own investments there all immediately put their properties up for sale so they can go buy rentals right next door in Struthers, Liberty, Youngstown, etc. where they won't be taxed. More homes dumped onto the market at once means deflated values. As values drop and less people own tax revenue drops sharply as well. Remember it's property values that we're taxed on.
So, does charging an outrageous amount every year sound smart? The mayor should have been thorough and consulted professionals who know what they're talking about. His heart may be in the right place, but running a city is complicated and there are no easy fixes.
Landlords object to plan for fees
I'm a successful Realtor & real estate investor. 99% of my full time job is devoted towards rentals and investments. The new mayor, I'm sure, has good intentions... unfortunately like most politicians he is not informed enough and fails to see the consequences should his plan come about. It would quickly turn the real estate market in Campbell from bad to worse and he doesn't realize it!
I'll explain: taxing $1,000 per unit per year is unheard of. If someone owned a triplex (3 units), then under this plan they would owe $3,000 EVERY YEAR. Parts of Campbell where investors buy have low priced properties. I have sold triplexes for as little as $20,000. So, if the poor guy who buys that triplex has to pay $3,000 every year he's paying the equivalent of 6% of the value of his property annually! That's on top of the 25 - 33% he's taxed by the state & federal govn't for any income he receives.
Believe me, the great majority of landlords only make a small profit if they rent. I have several properties in this area where I see less than $1,000 profit each year. Now... taxing an absurd amount annually will kill any chance at profit. Then what happens? Think about it, it's easy. No new investors buy in Campbell which = more vacant homes not getting repaired which = lower home prices with declines going down faster. It also means that people who own investments there all immediately put their properties up for sale so they can go buy rentals right next door in Struthers, Liberty, Youngstown, etc. where they won't be taxed. More homes dumped onto the market at once means deflated values. As values drop and less people own tax revenue drops sharply as well. Remember it's property values that we're taxed on.
So, does charging an outrageous amount every year sound smart? The mayor should have been thorough and consulted professionals who know what they're talking about. His heart may be in the right place, but running a city is complicated and there are no easy fixes.
December 19, 2009 at 7:30 p.m. permalink suggest removal