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Logan M.
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Red Vs. Blue States real estate investing

Logan M.
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Posted Feb 2 2024, 10:08

You have to take this post with a grain of salt but I have a lot of people that ask me where I buy and where I don't buy.


For the most part, I invest in Red states, meaning states that tend to vote for Republican candidates but let me add a few layers to this:

1. Demographics are more important than any other factor at a macro level.

2. Some Red states like Mississippi have terrible trends when it comes to housing and an incredible amount of poverty. I avoid states like this.

3. Some states have bad weather, being a MHP investor I avoid Florida, Texas, and Louisiana. I have lived in Texas and Louisiana. 

4. The ideal climate is dry with few weather extremes.

5. If you invest in areas utilizing government funding Blue states will outperform Red states because they typically have more funding for low-income housing available.

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Glen Wiley
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Glen Wiley
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Replied Feb 11 2024, 04:17
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 While I agree that many blue states are overly tenant friendly, I'd nuance this with two caveats:

1. Red states don't mean you will never evict. Evictions don't need to crush you. Model them in your deals as vacancy and be realistic about planning for them. Evictions WILL happen, keep the frequency low with careful applicant screening.

2. Look at the municipal regulations on landlords to figure out what your real risk is. This can vary widely.

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James Wise#5 All Forums Contributor
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James Wise#5 All Forums Contributor
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Replied Feb 11 2024, 06:46
Quote from @Glen Wiley:
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 While I agree that many blue states are overly tenant friendly, I'd nuance this with two caveats:

1. Red states don't mean you will never evict. Evictions don't need to crush you. Model them in your deals as vacancy and be realistic about planning for them. Evictions WILL happen, keep the frequency low with careful applicant screening.

2. Look at the municipal regulations on landlords to figure out what your real risk is. This can vary widely.

 I don't think anyone is arguing that you won't do evictions in red states. The argument is that the laws in red states are such that an eviction isn't as bad in a red state as it would be in a blue state that makes the legal process much harder.

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V.G Jason
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Replied Feb 11 2024, 08:13

I live in blue & red, but invest in red primarily. With that said, is it about the what states are red/blue now or where they are moving to?

It's probably out of pocket to say Texas(or Florida) will ever go blue. However, if you consider the migration patterns from CA/NY whose to say it doesn't start to transition there in the next 7-12 years?

I think Texas will have pockets of deeper blue, which will make the state less red. I'm long DFW, San Antonio, and Houston real estate and will tap out when that transition has a stronger course and likely get a high(er) appreciation from it. 

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John Morgan
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John Morgan
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Replied Feb 11 2024, 08:43
Quote from @Glen Wiley:
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 While I agree that many blue states are overly tenant friendly, I'd nuance this with two caveats:

1. Red states don't mean you will never evict. Evictions don't need to crush you. Model them in your deals as vacancy and be realistic about planning for them. Evictions WILL happen, keep the frequency low with careful applicant screening.

2. Look at the municipal regulations on landlords to figure out what your real risk is. This can vary widely.
I’m in Texas and it takes 3 weeks to evict for non payment of rent or a lease violation. Not bad. I factor this in and it’s just business when it happens. My friends who have to evict in blue states have to wait many months or even years to get people out. Those evictions from dead beat tenants crush them. That’s why I would never invest in blue states. 

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John Morgan
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John Morgan
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Replied Feb 11 2024, 08:56
Quote from @Steve K.:
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 My last one took 3 weeks and cost $320 so it definitely didn't crush me. Colorado, blue state. Ranked 11 spots ahead of Texas in Most Landlord Friendly States of 2024: https://www.doorloop.com/blog/landlord-friendly-states  Sorry buddy! 

My last one in TX took me 3 weeks and $129 to evict. Talk to people who are evicting in CA, IL, NY, WA, OR, NJ and MA and get back to me with 3 week evictions. I should have said “most” blue states. 

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Steve K.
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Steve K.
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Replied Feb 11 2024, 15:36

I’m glad I happen to live in a landlord-friendly state that also happens to be blue,  but also recognize that people are finding plenty of success in both red and blue states. If executing a cheap and fast eviction occasionally is critical to your business plan, I’d say rethink that business plan. I’m not really evicting that often personally. I try to avoid that with screening, charging late fees and serving the notice to quit any time rent is late by even one day to avoid anyone getting behind on rent and developing bad habits, good management, quarterly inspections and mutual respect with residents. I have heard some horror stories coming from both red and blue states, landlord friendly and tenant friendly ones too. In places where an average eviction takes months instead of weeks, I’d stick to Class A’s and B+ and my understanding is that not every eviction goes through the courts in some of those places. Roughly one-fifth of the total US property value is in CA (blue state) and far more people have become millionaires by investing in real estate there than any other state. Personally I wouldn’t turn down a property there just because it takes a little longer to evict, it’s not high on my list of the most important metrics to consider.  

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Joel Owens
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Joel Owens
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ModeratorReplied Feb 11 2024, 21:08

These posts could go on forever.

You know what I have learned talking with thousands of millionaires from 7 to 9 figure net worth and billionaire families over the decades?

A return in real estate can literally be made hundreds or more ways.

People are too busy chasing other people doing investments and think they have to match them or surpass them. 5 million, 100 million, 1 billion doesn't mean squat if you are not living the life you want. So where you invest and what you invest in is an individual question as to what crap or not do you want to put up with for a yield?

The answer varies because someone else's nightmare can be someone else's dream who has various different skillsets and personalities. 

Virtually all my cold belt clients on the NNN side buy in warm belt states because they see the growth there long term and many state they want to retire in a warm belt state. I do have a few that still buy locally in cold belt states.

I personally can't stand residential but that is just me. I like my life a certain way and if I make 5 million a year versus 10 million doing something that makes me unhappy then I take the 5 every time. It's about how I feel everyday when I wake up and ask myself am I happy and living the life I want. If the answer is not a resounding yes I take a minute and re-evaluate what I am doing.

Once you have for some people 7 figure wealth and others 8 figure wealth you let off the gas and start enjoying more fruits of your labor as you get older and time becomes more and more precious. ( Dust in the wind ) song is very real (not another minute will your dollars buy). There are some addicted to the game of investing at all costs. Lots of guru's that need to keep puffing to create more buy in to huck their wares.

Cold belt states fundamentally live differently in a lot of ways than warm belt states. It's all about do the positives for you outweigh the negatives for the location and asset type your are seeking. 

So all questions come back to the ultimate question: What kind of life do you want as an investor? In the beginning there tends to be lots of investment types and things you do not want to do that you might have to for getting started but as your net worth, liquidity, and track record grows over years and decades the more you get to decide the ultimate life you want to live. You get that freedom to make the choice versus being restricted by bills, cash flow, net worth, etc.

Each level of net worth is not all sunshine and rainbows. There is a certain life force taken out of you each time leveling up careers, real estate holdings, a business you own etc. It's all subjective when enough is enough and you want to coast. At that point it's mainly outpacing inflation and keeping the money safe. 

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Timothy Hero
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Replied Feb 12 2024, 08:13

I try to keep political stuff away from business and investing, but I guess ultimately it cannot be ignored, as it does play a part.

One thing Covid showed us was as a real estate investor, blue states are often more tenant friendly and allow many months and in some cases years of tenants not having to pay rent if a case is currently open.

I'm not an attorney, so I only know what I've been told with no first hand experiences on the matter. But I'll say this: of all my high net worth clients, I only have one investing in a blue state.

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Logan M.
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Logan M.
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Replied Feb 12 2024, 13:37
Quote from @Steve K.:
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 My last one took 3 weeks and cost $320 so it definitely didn't crush me. Colorado, blue state. Ranked 11 spots ahead of Texas in Most Landlord Friendly States of 2024: https://www.doorloop.com/blog/landlord-friendly-states  Sorry buddy! 


 This is awesome, thanks for sharing!

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John McKee
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John McKee
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Replied Feb 12 2024, 14:36

Local politics are different and don't necessarily align with the whole state.  Some cities are more business friendly than others.  One example is the VRBO market.  What cities allow these, how long does it take to get a permit, What kind of zoning is allowed, are there any tax incentives?  These are the questions you should be asking your local governments.  A good local broker and investor will be able to tell you these answers.

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Adri Sileno
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Adri Sileno
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Replied Feb 14 2024, 12:45

What's your take on Milwaukee, Wisconsin? The market for investing here has been getting bigger and bigger as the years go one. Milwaukee has a lot of pockets that really needed investors to come in and fix up; great opportunities. Ever since the money has been invested in Milwaukee from our new stadium, Fiserv Forum being built, to Northwestern Mutual expanding their headquarters downtown. I think Milwaukee is the next city to be at. 

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Marcus Auerbach
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Marcus Auerbach
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Replied Feb 15 2024, 05:28
Quote from @Adri Sileno:

What's your take on Milwaukee, Wisconsin? The market for investing here has been getting bigger and bigger as the years go one. Milwaukee has a lot of pockets that really needed investors to come in and fix up; great opportunities. Ever since the money has been invested in Milwaukee from our new stadium, Fiserv Forum being built, to Northwestern Mutual expanding their headquarters downtown. I think Milwaukee is the next city to be at. 

I have been investing in Milwaukee for 15 years and the trend is clear, I like what I see a lot. The issue with OOS investors is that most of them unfortunatley will not invest and fix up properties. The focus is on cash flow, not on improving neighborhoods. Trash outside propertie or properties that have to be considered not suitable for human habitation are an ongoing problem, the DNS get's involved, often the OOS owner does not even know whats going on, because they have never seen the property. Unfortunatley this gives investors a bad name. We are constantly in the news, in the MJS and public opinion is swinging to an anti-landlord sentiment. This drones out all the good we do. The RPAWI .org (REIA) trys to counter this as much as possible and work with legislators in Madison, but they follow public opinion. We have many local investors that really work hard to take care of their properties and there are also some OOS investors who take this approach, but as they say: a few rotten apples spoil the bushel.  

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James Wise#5 All Forums Contributor
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James Wise#5 All Forums Contributor
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Replied Feb 16 2024, 11:53
Quote from @John Morgan:
Quote from @Glen Wiley:
Quote from @John Morgan:

Avoid blue states at all cost. An eviction will crush you.


 While I agree that many blue states are overly tenant friendly, I'd nuance this with two caveats:

1. Red states don't mean you will never evict. Evictions don't need to crush you. Model them in your deals as vacancy and be realistic about planning for them. Evictions WILL happen, keep the frequency low with careful applicant screening.

2. Look at the municipal regulations on landlords to figure out what your real risk is. This can vary widely.
I’m in Texas and it takes 3 weeks to evict for non payment of rent or a lease violation. Not bad. I factor this in and it’s just business when it happens. My friends who have to evict in blue states have to wait many months or even years to get people out. Those evictions from dead beat tenants crush them. That’s why I would never invest in blue states. 

 If I had to wait years to evict a deadbeat, he'd be getting a People's Elbow to the face.

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Becca F.
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Becca F.
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Replied Feb 18 2024, 10:41
Quote from @Logan M.:

@Scott Trench thank you for your response on this post, I think it provides a lot of great points.

I grew up in California and there is a lot I love about the state but I'm terrified to own real estate there.

My parents will be selling there home soon and I've thought about buying it since it's my childhood home but I'm nervous about collecting rents etc.


 What part of California are your parents selling their home? If you can buy it a discount might be worth considering. 

I'm in the San Francisco Bay Area. San Francisco, Oakland and Berkeley are heavily pro-tenant, which is where my rentals are located. If you want to get a tenant out to sell the property or move back in, you have to pay a relocation fee which varies according to number of tenants, if there are minor children, if tenant has a disability or over age 65. It's because you're forcing them to move out and go look for another place at market rate rent, for example if they've been renting for 10 to 20 years they have a reasonable rent. In other cities, they might tilt towards less tenant friendly (would need to research these cities landlord-tenant laws). 

In my county (Alameda) the COVID rent moratorium expired in April 2023 and one landlord is owed $120,000 in back rent. There was huge protest about why this moratorium has gone on for so long. I think this owner bought a long time ago and likely has a paid off property or small mortgage so he can afford to take this kind of loss. I've heard of landlords having non-paying tenants squatting for many months and it takes thousands in legal fees to get them out. A lot of long-time landlords do things to save money like rent out illegal ADUs (not up to current safety code) or accept under the table rent payments to not report it the income to the IRS - they're just asking for trouble doing this in a pro-tenant city. 

I'm currently renting out my Bay Area SFH to family members who are getting a deal and unlikely to sue me or go the local rent board - myproperty is up to code and gone through all inspections. If I were renting it out to strangers I would be consulting a RE attorney or use a PM. I also have an apartment building with co-investors, managed by a PM company - haven't had any problems (so far).

I gave examples of horror stories but also there are millions of investors who do well and don't have these nightmare issues. California has Proposition 13 so our property taxes go up 2% a year from the original tax base (of when acquired) so long time investors from pre-2008 and going way back to 1960s to 1970s are doing well if charging market rate rent. 

Some parents here have gifted their properties to their adult kids - parent child transfers via inheritance or gift, you can inherit their property tax basis but you have to live in the house - this was from Proposition 19 passed in 2020 to undo some of the Prop 13 benefits. I would talk to an attorney to verify this - this is what I was told by my attorney. I signed a petition to get on the Nov. 2024 ballot to repeal that part so children can inherit property at the parent's low property tax basis and be able to rent the property out (and not have to live in  the property).

I also have SFHs in Indiana and my leases there are much more straightforward, so far great tenants but my property taxes go up with no limit. There are many ways to invest and in different locations and no one right way for everyone. 

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Becca F.
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Becca F.
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Replied Feb 19 2024, 12:14
Quote from @Steve K.:

I’m glad I happen to live in a landlord-friendly state that also happens to be blue,  but also recognize that people are finding plenty of success in both red and blue states. If executing a cheap and fast eviction occasionally is critical to your business plan, I’d say rethink that business plan. I’m not really evicting that often personally. I try to avoid that with screening, charging late fees and serving the notice to quit any time rent is late by even one day to avoid anyone getting behind on rent and developing bad habits, good management, quarterly inspections and mutual respect with residents. I have heard some horror stories coming from both red and blue states, landlord friendly and tenant friendly ones too. In places where an average eviction takes months instead of weeks, I’d stick to Class A’s and B+ and my understanding is that not every eviction goes through the courts in some of those places. Roughly one-fifth of the total US property value is in CA (blue state) and far more people have become millionaires by investing in real estate there than any other state. Personally I wouldn’t turn down a property there just because it takes a little longer to evict, it’s not high on my list of the most important metrics to consider.  


 I completely agree on the part about more people have become millionaires from real estate in California for all the "California is a terrible place to invest" statements I've heard. Yes it's not the most landlord friendly state. 

I know lots of multi-millionaires in the Bay Area. All the people who bought pre-2012 in the Bay Area have seen huge appreciation, some did 1031 to better performing properties. The people that really hit the jackpot in 2008 when values plummeted, bought and  held onto them and it's now worth a couple of million. Many people who were lower/middle to middle class (janitor, librarian, accountant, etc) who bought in 1970 for $50,000, house is worth $1.5+ million now. I've met a lot of people here who own 1 or 2 rentals, not big time investors or trying to scale, net rental income coming in equivalent to some people's salary  and that real estate is passed down to their kids and grandkids. The more recent buyers (primary home owners and investors) are very high W2 income earners like software engineers and physicians.  

I also live here so I can do a renovation, check on the property multiple times a week, screen and meet the tenants in person. I've had a couple of people suggest to me to 1031 exchange my SFH here to buy multi-unit OOS or many SFHs...sounds like huge headache venturing into the unknown and all those tenants, repairs, capital expenses etc. I have a reasonable property tax which goes up 2% a year, not 15% or 30% like some other states. Given a choice I'd get rid of all 3 Indianapolis homes (one is a money pit so far) before I ever sell off a California property. I should have bought in Nevada or Arizona before the prices started skyrocketing. Texas is a common choice among my CA investor friends despite the high property taxes - San Antonio and Dallas, haven't heard too much about Austin.

I'm sure there's someone in Alaska doing well with real estate or some other obscure market we haven't heard about. What's a good investment for one person could be terrible for someone else since we all have different financial situations and risk tolerances.

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Guy Gimenez
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Guy Gimenez
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Replied Feb 20 2024, 06:31

24 years of investing in Texas. Evictions are simple, clean and relatively inexpensive. For those that love blue state landlord-tenant laws, kudos to you. I'll stick with Texas where the population is growing like a weed. I'm guessing there's a reason for that. 

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Jonathan Pflueger
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Jonathan Pflueger
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Replied Feb 20 2024, 06:48

In terms of investing, I have never thought about states as blue or red. My only concern is return vs. risk and then time involved. Because of this I have never invested out of California, and for that matter, the Bay Area.

I sincerely believe that any investor can be successful anywhere, it basically comes down to mindset (and sure, having lots of capital and other things can also help, a lot). So much of what I see is investors with limiting beliefs when it come to where to invest. I keep hearing that Red states are inherently more risky than Blue - I just don’t buy this. In my modest opinion, the biggest risk we all take when we invest is opportunity cost. This comes in the form of limiting beliefs, lack of education, siloing our approach to what could be based on who we read, listen, and talk to.

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Steve K.
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Steve K.
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Replied Feb 20 2024, 12:46

One thing to keep in mind with this topic is that landlord-tenant laws are more local than the state level. Most big cities in red states are blue, and most rural areas in blue states are red. The division between red and blue is more rural vs. urban than state by state. Most of us will invest around jobs and therefore will operate within more progressive landlord-tenant policies as time goes on, seeing as most urban areas in both red and blue states are trending that direction. It is what it is, just have to know the laws, develop good systems, screen well, be professional. Glad to see the civil discourse here. I miss the days of being able to strongly disagree with someone or vote differently than someone and still have mutual respect for each other. We don't all have to agree on everything all the time. It's rare anymore thanks to how we've gone all-in on pandering to the extremes to get votes and clicks. 

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Raju Balakrishnan
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Raju Balakrishnan
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Replied Feb 21 2024, 07:01

It is all about numbers. Eviction time etc is another cost, and goes into your numbers. Keeping it purely as a financial discussion, not political one, all that matters is more specific questions like rent control, building regulations, rate of appreciation, population increase etc. Red or blue does not matter, though that may be a driver of some of these numbers. But we need not bother once they factor that as numbers into our calculations.  

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Pete Harper
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Replied Feb 21 2024, 16:23
Quote from @Becca F.:
Quote from @Steve K.:

I’m glad I happen to live in a landlord-friendly state that also happens to be blue,  but also recognize that people are finding plenty of success in both red and blue states. If executing a cheap and fast eviction occasionally is critical to your business plan, I’d say rethink that business plan. I’m not really evicting that often personally. I try to avoid that with screening, charging late fees and serving the notice to quit any time rent is late by even one day to avoid anyone getting behind on rent and developing bad habits, good management, quarterly inspections and mutual respect with residents. I have heard some horror stories coming from both red and blue states, landlord friendly and tenant friendly ones too. In places where an average eviction takes months instead of weeks, I’d stick to Class A’s and B+ and my understanding is that not every eviction goes through the courts in some of those places. Roughly one-fifth of the total US property value is in CA (blue state) and far more people have become millionaires by investing in real estate there than any other state. Personally I wouldn’t turn down a property there just because it takes a little longer to evict, it’s not high on my list of the most important metrics to consider.  


 I completely agree on the part about more people have become millionaires from real estate in California for all the "California is a terrible place to invest" statements I've heard. Yes it's not the most landlord friendly state. 

I know lots of multi-millionaires in the Bay Area. All the people who bought pre-2012 in the Bay Area have seen huge appreciation, some did 1031 to better performing properties. The people that really hit the jackpot in 2008 when values plummeted, bought and  held onto them and it's now worth a couple of million. Many people who were lower/middle to middle class (janitor, librarian, accountant, etc) who bought in 1970 for $50,000, house is worth $1.5+ million now. I've met a lot of people here who own 1 or 2 rentals, not big time investors or trying to scale, net rental income coming in equivalent to some people's salary  and that real estate is passed down to their kids and grandkids. The more recent buyers (primary home owners and investors) are very high W2 income earners like software engineers and physicians.  

I also live here so I can do a renovation, check on the property multiple times a week, screen and meet the tenants in person. I've had a couple of people suggest to me to 1031 exchange my SFH here to buy multi-unit OOS or many SFHs...sounds like huge headache venturing into the unknown and all those tenants, repairs, capital expenses etc. I have a reasonable property tax which goes up 2% a year, not 15% or 30% like some other states. Given a choice I'd get rid of all 3 Indianapolis homes (one is a money pit so far) before I ever sell off a California property. I should have bought in Nevada or Arizona before the prices started skyrocketing. Texas is a common choice among my CA investor friends despite the high property taxes - San Antonio and Dallas, haven't heard too much about Austin.

I'm sure there's someone in Alaska doing well with real estate or some other obscure market we haven't heard about. What's a good investment for one person could be terrible for someone else since we all have different financial situations and risk tolerances.

I hit the California Real Estate Jackpot.  We purchased a house in the South Bay with land in 2012, renovated the house, developed two building lots, retired in 2018 with $3M in equity.   It took some work but we jumped through all the regulatory hoops and were able to get site approval on two separate land tracks.  Was is a PIA? Certainly was! But the rewards are worth it if you have the patience.  After retirement we relocated back to Texas because of family.  We've taken our CA nest egg and reinvested in TX cashflow properties.  We've more than replace our CA Hi-tech W2 incomes.  Enjoying the good life thanks to California.