Property tax decides more deals than price does
Change nothing about a rental except which state it sits in, and the verdict flips from strong pass to fail. The tax line moves the answer further than most price negotiations do.
| Row | Monthly tax | Cash flow | Verdict | Max workable price |
|---|---|---|---|---|
| National average (the default) | $225/mo | $498/mo | PASS | $323,510 |
| Hawaii | $76/mo | $754/mo | STRONG PASS | $367,728 |
| Alabama | $97/mo | $464/mo | PASS | $317,638 |
| Connecticut | $402/mo | $337/mo | BORDERLINE | $295,702 |
| Illinois | $491/mo | $201/mo | FAIL | $272,212 |
| New Jersey | $491/mo | $284/mo | BORDERLINE | $286,548 |
Computed on $285,000 at $2,900/mo rent, 25% down at 6.67%, across all 51 state settings. The ceiling ranges from $242,503 to $367,728.
The experiment
Take one property: $285,000, renting for $2,900 a month, 25% down at 6.67%. Run it through every state setting in the calculator. Change nothing else — same price, same rent, same loan, same vacancy assumption, same management fee.
The verdict is not stable. It is not even close to stable. And the input doing the damage is the one most people skip past, because it arrives pre-filled with a plausible-looking number.
Why the spread is so wide
Property tax is charged as a percentage of value, so it scales with the purchase price rather than with the rent. That makes it structurally different from a management fee or a maintenance reserve, which both come out of rent and shrink when rent shrinks. Tax does not care what the property earns.
It is also the largest single operating expense on most rentals — bigger than insurance, bigger than maintenance, usually bigger than management. So an error in the tax figure propagates straight into net operating income, and from there into DSCR, cash-on-cash, break-even occupancy and cash flow at the same time. Every screening metric moves together, in the same direction, on one wrong number.
Hawaii charges roughly a quarter of what New Jersey does. That is not a rounding difference; on this property it is the difference between comfortably passing and failing outright.
What to do about it
Find the actual tax bill before you trust any verdict. It is public information, it is printed on most listings, and it takes about ten seconds to check — which makes it the highest-value ten seconds in the whole process.
Do not stop at the state, either. Rates are set by counties, cities and school districts, and the variation inside a state is often larger than the variation between states. Cook County against downstate Illinois. A Texas property inside a high-rate school district against one two miles away. A state median is a starting point, not an answer.
The calculator now tells you how much room your tax estimate has before the verdict flips, and how many states would push it past that line. Use it as a tripwire: if the ceiling is close to the figure in the form, the tax bill is doing the deciding, and you need the real one.
What this doesn’t show. This shows how much the answer moves with the tax rate. It does not tell you your rate — for that you need the listing, the county assessor, or a call to a local agent. The state figures here are medians with an investor adjustment, and no individual property pays a median.
Run it on a property you’re looking at
Two numbers and the same engine that produced the table above returns the verdict, the tightest constraint, and the price that would make it work.