Which is a better investment - San Mateo SFR vs. Houston SFR's
I have been looking at which is better, an appreciation market like San Mateo, CA, or a cash flow market like Houston, TX.
So.... which is the better investment?? What are your thoughts?? What mistakes do you see below?
I plugged in some basic info into the BP rental calculator based on a fictitious house(s). Here is what I found.
*Tax rates, rents, appreciation%, purchase price are all based on numbers I have typically/historically seen, or have first hand knowledge of base on my properties.
**San Mateo is a single house @$800K, tax of 1.1% and renting for $3800/mo. Appreciation is 8%YOY (base on my property)
***Houston is 4-houses @200K, tax of 2.5% and, renting for 2100/mo ($8400/mo total). Appreciation is 3%YOY (based on my property)
What is not accounted for in the rental calculator:
- The opportunity to take the Houston cash flow an reinvest into SFR's to further build the empire. The cash flow should be able to finance the 20% down on an additional 3-houses which would add ~$240K to the total property value in year 10 ($1.25M total) value in year 10).
- The Houston taxes are re-evaluated every year to match market value, where as the San Mateo house are taxed at the purchase price due to Prop 13. Meaning in year 10, the Houston house tax is ~$24.5K/year and the San Mateo house tax is ~$9000/year.
So.... Which is the better investment?? Appreciation vs. Cash Flow?
You can make money in either. But what this shows me is they are very different markets and call for very different strategies.
Here is the Houston houses (all 4-houses combined into 1 report)
Here is the San Mateo house (you can only get one at $800K these days :) )