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Highest commercial property tax rates in the USA?


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Hey all:


I would like to ask this board a question regarding COMMERCIAL property tax rates where you guys are located, or have knowledge of.




I am located near Detroit MI.  I own some residential & commercial property.  In my experience, commercial property taxes are ALWAYS higher than residential.


I own both types of property here in Michigan.  I am looking to acquire some more.  In my research, I've come across a city in Michigan that has an unusually high property tax rate.  So high, I would argue that it is SEVERELY impairing the value of property and acts as a discouragement to trading/formation of property.


The city in question is Harper Woods MI.  They have a commercial property tax rate of close to 5.5% of the "true market value" of a property.  Thus, if the property you own is worth $100,000 on the market, the property tax is going to be something like $5,400.


In effect, this is like a mortgage that can never be paid off.  Another risk is that in the future, what do you wish to bet that property taxes will go UP?  What is the ratio of raises to reductions?


If you wished to buy a commercial property as an rational, sane investment, you would have to do the following:


A). pay property taxes-          5.5%

B). pay repairs/depreciation-    4%

C). property management        2%

D). mortgage                        6%

E). OWNER PROFIT                6%?


So you are looking at having a "cost of capital" of something like 23 or 24%, and even that might be a bit low?


So a property that has a rent roll of $100k a year, might be worth $400k or $425 on the market?


The above assumptions don't factor into whether the real estate market is going up/down.  I would think over a long time frame, the value of property goes DOWN.


So my question to the board members, what is the highest commercial property tax rate that you've encountered?


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