Didn't the "rule of thumb" used to be that your gross rent for one month on a single family house should cover your taxes and insurance for the year?

I think it really varies by community.

When I started, a month's rent in my LCOL area would cover the property taxes and have leftovers. Then Austin decided rural counties weren't bringing in the income they expected to see, and taxes were raised arbitrarily. But until the last few years, there was no way to make the rent jump to mirror that, because rent is dictated by supply, demand, and the economic stability of an area.

Likewise, with my insurance, it was reasonable for my needs--- but the last year or two, Germania/Lloyds kept arbitrarily changing the coverage they were selling me. (ie, I paid $y for $x coverage, but they kept charging me $z for $5x coverage.)

I don't have a comparison - what's a lot? What's less? Hard to compare one state to another, even one property another unless they are identical?

As Deanna noted - it varies by community. I have owned rental houses in prosperous growing areas with reasonable tax and insurance rates - 10 to 15% of rent.

Currently the two houses I have are located in a rural no growth area. For the 3x2 nice B house Taxes and Insurance are 26% of rent.

For the 2x1 nice B house Taxes and Insurance are 21% of rent.

Note-The current rent for either house is within the HUD range.

In Pa some very BROAD rules of thumb, insurance should be one month's rent and taxes should be two months rents.

Ohio houses cost roughly 10% more than Pa homes across the boarder. Your taxes are also about 10% less than Pa.

Okay. I just solved for X on one property. Taxes and Insurance are 15% of the gross annual income. Taxes are 1/3 the cost of insurance.

On another it's 14% total. Same thing: taxes are about 1/3 the cost of insurance.

On one of our mobile homes on own land, it's 7% total. On that one, taxes are higher than insurance.

Well, there's also the issue of what you get for your taxes.

We don't have water, sewer, trash or fire service on most of our houses (fire is volunteer, trash is self-haul, sewer is owner-maintained septic and water is an owner-maintained well. And the schools are terrible, plus I have no kids.) As far as I can figure, our taxes in one county go solely to pay county employees.

Well, there's also the issue of what you get for your taxes.

We don't have water, sewer, trash or fire service on most of our houses (fire is volunteer, trash is self-haul, sewer is owner-maintained septic and water is an owner-maintained well. And the schools are terrible, plus I have no kids.) As far as I can figure, our taxes in one county go solely to pay county employees.

Deanna **Speaking of which, I'm in the market for a new insurance provider**

I highly recommend National Real Estate Insurance Group (NREIG), a sponsor of this site.

When they quoted us, I thought it must have been a typo as our rates were so low, but no typo.

If memory serves me correctly, they only quote rental property, no homeowners.

One size doesn't fit all. Instead of income tax, Texas uses property taxes. It takes around 1.5 months for just property tax here. In other states I'm familiar with it would be more like 1/2 a month.

Insurance is also highly variable. Depends on how you cover things. I have a $5K deductible to keep rates down so mine is more like 3/4 of a months rent. I'm basically self insured for the smaller stuff like roof's.

In Brew City, where the majority of residents seem to be on the dole, it takes 3 months of rent to cover the property taxes and another 0.5 months of rent to cover insurance. I have ACV insurance, which keeps costs down.

In Rubber City, it takes about 1.3 months of rent to pay the taxes, and another 0.5 months of rent to cover insurance.

Mike, I am not planning on using the rule of thumb for anything!

I was just astonished to see how much my taxes had gone up this year!

I guess it is time to raise my rents!

Thanks, Renne! Will look into that!

Agree with Don, but just for kicks I'll share mine. Insurance is about a third of a month's rent, and taxes are about 1.5 months.

Susan,

I just use the real numbers.

My property taxes outside city limits are MUCH lower than in the city.

School districts differ.

My rents have gone up faster and higher than ins and taxes so a formula would be inaccurate.

I work the other direction - I start with the max rent I think I can get, then subtract the actual taxes, ins, maint, vacancy, etc and see if the remaining amount meets my investment goals for cash flow.

BRAD

Renne [TX]

I just posted a question about NREIG experience. I am in the middle of getting a quote from them for Collin County SFHs, they only do 5% deductible due to terrible hail rating in DFW but their rate is so low!! Have you had any claims with them? how is the experience with processing?

I had Foremost for a long time, their rates are ridiculous.

NREIG doesn't do business in Dallas County, so I have to stay with Foremost for those homes.

thank you!