Property Tax Rates in Montgomery County

Property taxes make a big difference in your monthly payment and are a big expense of owning a home.  Comparing the highest and lowest property tax rate in Montgomery County for a property assessed around $225,000 the difference is $767/mo using the 2 examples below.  That is just in taxes!  To get the yearly property taxes you multiply the property assessment by the tax rate.

The highest rate in Montgomery county is Cheltenham Township at 0.0566505.  Cheltenham township currently has 184 homes for sale and the average listing price is $278,191.  There is a house for sale located at 1000 Dell Ln, Cheltenham, Pa 19095 for $375,000.  The assessment on that house is $221,330 x 0.0566505 Cheltenham Township rate = $12,538/year in property taxes.

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The lowest rate in Montgomery county is Bryn Athyn Boro at 0.014759.  I don’t work in this area but apparently Bryn Athyn Boro does not have a school district because 90% of the children go to the General Church of the New Jerusalem and the rest are contracted out to other school districts.  There is only one house for sale currently for $499,000 located at 771 Fetters Mill Rd, Bryn Athyn, Pa 19006.  The assessment is $225,670 x 0.014759 Bryn Athyn tax rate = $3,331/year in property taxes.

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The total rate is broken down into 3 parts.  The Montgomery county rate is 0.003459.  The municipal rate varies but there are 2 municipalities with no municipal rate.  Then there is the school district rate.  Bryn Athyn Boro district is the lowest in at 0.001 because it doesn’t have schools & Cheltenham Township school district is the highest at 0.0450943.  Choosing the school district to live in is important because it is the majority of your property taxes.


Most & Least Expensive Homes for Sale in Montgomery County…

This is just for single family homes in Montgomery County.  There are currently 2286 single family homes for sale in Montgomery County in the MLS.

Most Expensive Home:  100 Maple Hill Rd, Gladwyne, Pa 19035 is for sale for $28,000,000.  This Main Line estate is only 5 years old and located on 32 acres with 6 bedrooms & 10 bathrooms and interior square feet of 16,528.  Property taxes are $102,283 a year.  Some extravagant features include an indoor pool with self closing seamless glass door, theater, wine cellar with a tasting room and of course a professional gym!  There is also a guest house and 7 car garages.

Least Expensive Home:  442 Lincoln Ave, Pottstown, Pa 19464 is for sale for $34,000.  This is a government foreclosure that is being offered by HUD, a government agency.  This is a single family home located in Pottstown Boro that is located on 0.10 acres, it is 116 years old and has 3 bedrooms and 2 full bathrooms.  As with any government foreclosure the buyer is responsible for the entire transfer tax and will have to cover the Use & Occupancy permit costs and repairs.

The average list price of all 2286 single family homes is $628,012 and the average days on the market is 151.  The total value of all 2286 homes currently for sale in Montgomery county is $1.4 Billion!


10 acre properties are the best deals in PA Real Estate

My Takeaway:  A property on 10 acres can save you $800/mo in your payment or with a loan you can afford $228,000 more with low taxes.

Act 319 is a law passed in Pennsylvania in 1974.  It lowers property taxes for property with at least 10 acres.  I pulled up properties under $700,000 in our area with at least 10 acres.

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I’m going to compare 2 properties priced at $599,000.  One is under Act 319 and the taxes are $3792/year and another home that is not under Act 319 and taxes are $13,390/year.

271 Greenbelt Dr. Parkesburg, PA 19365  Currently on the market for $599,000 and the yearly taxes are $3792 because it has over 16 acres and is under Act 319.  With 20% down loan at 3.75% and $1500 homeowner’s insurance here is the estimated monthly payment:

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1341 Pikeland Rd. Chester Springs, PA 19425  Currently on the market for $599,900 and the yearly taxes are $13,390 because it is only 0.64 acres and not under Act 319.  With 20% down loan at 3.75% and $1500 homeowner’s insurance here is the est. monthly payment:

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That is a difference of $847/mo difference for the same priced home.  Imagine if you had a budget of $3500/mo and the taxes were under $4000/year.  Instead of $599,000 house you could now afford a $828,000 house.

Here’s more information on Act 319:  http://www.chesco.org/256/Act-319—Clean-Green


Most & Least Expensive Homes That Sold in October in Montgomery County…

The most & least expensive homes that sold in Montgomery County in October were both bought with cash.  Just like Chester County – see my blog from Nov 3rd.  It’s a similar scenario.  The most expensive home was an estate that sold for $2.6 million and the least expensive was a mobile home that sold for $20,500.  Let’s take a look at the 2 homes:

Most Expensive Home:  3080 Paper Mill Rd, Huntingdon Valley, Pa 19006 sold for $2,600,000 for cash on Oct 26th.  It is only 7 years old and the square footage is listed as 13,923 SF.  It has 5 acres and also backs up to an 800 acre preserve.  Some features of the home include french limestone flooring, gourmet kitchen, massage room, wine tasting room & complete fitness center.  It has 7 zones for heating and cooling – WOW!

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Least Expensive Home:  3 W Adair Dr, Norristown, PA 19403 sold for $20,500 for cash on Oct 31st.  It is a mobile home that is 27 years old with yearly taxes of only $258 and a monthly lot rent of $470-there’s not much information on what is included in that fee.  It is 784 SF and has 2 bedrooms and 1 bath.

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In all of Montgomery County in the month of October 840 homes in total settled through real estate agents.  The average sold price was $329,387.  The average days on the market was 63 days.  526 were single family homes.  256 were twins or townhomes.  49 were condos.  10 were mobile homes.  32 were foreclosures (that seems high at 3.8%).  11 were short sales.  39 were in 55 and over communities.  64 were new construction.  165 has pools (that includes if there is a community or above ground pool).



First Time Investors you can’t get rich quick

I’ve personally invested in real estate.  I love real estate as a tool to invest long term and/or build a cash flow business.  What I hate about real estate as an investment is when first time investors read a book or see an informercial where you can get rich quick flipping houses using other people’s money and blindly take a huge risk.  Yes, some get lucky but most learn the hard way that the risk is too high.

Here is the point of this blog and feel free to read further for explanation:  It’s very risky to use other people’s money to flip properties.  In great/low inventory/seller’s market areas the return is too low because you can’t get good deals when you purchase.  In riskier/high inventory/buyer’s market areas the deal will be there when you buy but then after 3-6 months of rehab the buyers have dried up and you have to take a loss or break even to get it sold.

I get many phone calls from first time investors.  They call and ask me to send them good properties that are great for investment.  For the inexperienced investor that wants to flip a house in the suburbs of Philly it is difficult for me to tell them the truth:  You’ll be lucky to make a 10-15% return on your money on a flip.  That is assuming you are using your own cash for down payment and fix up costs.  If you are not using your own money then that return goes down more.

So, how do you get the best return on a flip?   You make your money when you buy.

  1.  Cash is king.  Investors who get the highest returns on flipping property in this area pay with cash and buy homes that are so bad that the average homeowner won’t touch them.  Banks trying to unload foreclosures and distressed properties know how difficult and time consuming the bank loan process is.  Banks will sell a foreclosure at a lower price to a cash buyer over a higher priced offer that is contingent on a loan.  (I can set you up on a search where foreclosures and bank owned properties are emailed directly to you as soon as they hit the market)
  2. Buy at auction or on the court auctions.  Getting deals at auctions with all cash purchases can be really good deals.  Unfortunately, real estate agents do not have access to these so it is a process that needs to be researched on your own.
  3. Buy when everyone else is not.  Winter is the best time to buy as an investor.  There are much less buyers out looking due to holidays and cold weather.
  4. Find contractors that are fast and good prices.  Velocity of money is important here.  Get the rehab work done fast and for a low cost.  If you have time do some of the work yourself then do it!
  5. Sell in the spring market.  That’s when you have the most buyers looking for homes.
  6. Stay up on the latest trends and technology.  Know what the buyers need and want in that price range when you fix up houses.
  7. Be sure not to overimprove for the neighborhood.  Don’t take a split level home in a neighborhood with all split level homes and put $100,000 into it trying to sell it for $500,000.  It won’t happen.  You’ve overimproved it.
  8. Buy the worst property on the street.  These have the most chance of making money because the nicer homes will pull it’s value up higher once the rehab is complete.
  9. The house needs to be in a neighborhood and not on a busy street or anything nearby that will pull the value down like a sewer treatment plant.  Also, the better rated the school district the better chance you have of selling it for a higher price and selling it fast.

Is there another way to make money investing in real estate?  Yes!  Cash flow properties but again you need cash.

  1.  Buy fixer uppers and rent them out.  Buy a foreclosure with at least a 10% down payment but 20% is better to avoid PMI.  Cash is better to increase cash flow.
  2. When you buy a fixer upper to rent just clean it up, paint, carpet and make sure everything is in working condition.  Don’t fix it up too much until you are ready to sell it.
  3. If you buy and hold then assuming you buy in a great area you will also have appreciation.  So when you go to sell it or if you decide to hold it long term and refinance out some cash to buy more investments then that equity will be there.
  4. You don’t want to be a landlord?  Then hire a management company to manage it and watch the rent checks come in.  Lower cash flow but more time to research more investment properties to buy.
  5. Depreciation.  You can depreciate your rental properties for more tax savings and that provides an increase in cash flow.
  6. Research the rental rates for the investment as well as the resale value when you analyze investment properties.  You want to make sure you are making the most cash flow per month as well when you need to sell that it can sell quickly and hopefully for a profit.
  7. Did you know for a married couple that $500,000 of capital gains is tax free ($250,000 if not married).  Here’s IRS info on it:  https://www.irs.gov/taxtopics/tc701.html  If you buy a foreclosure, fix it up, live in it for at least 2 years of the past 5 when you go to sell it then the money you make is tax free.  Do that!  Fix it up enough to live in it then slowly fix it up over 2 years if you are low on cash.  Do that every 2 years until you hit the maximum.  Climb that property ladder.

Those are some quick tips and thoughts on investing.  Feel free to reach out to me if you have any questions.  Laura Laws laurajlaws@gmail.com or 484-985-5222.