Does anyone have experience doing business in these states?
I'm currently at the juncture where I can either stay in Phoenix area where I live right now, or move to Las Vegas/Summerlin. I've sold my rentals in AZ (not good financing terms), and looking to get into more buy-hold deals and residential assisted housing (i.e. will be buying properties AND providing services on premises). My day job has offices in both metros, so I'm in a good position for a move.
Which state has a more business friendly environment? More RE/Landlord friendly? Better RE/money making opportunities? Lower tax burden for LLCs and S-Corporations?
Obviously, Nevada doesn't have a corporate tax, but they implemented a gross receipts tax a few years ago. At this point, I don't think my business would be affected (not sure though?) but the trend worries me.
If I were to make the move, it would be now - or never. I'd appreciate any insight from those who are familiar with AZ and/or NV.
No two states are exactly alike.
Except for these 2.Boom together. Bust together.
If you are looking for buy and hold I prefer Phoenix. I have been in both and got out of Vegas just in the nick of time before the recession. It was NOT a great rental market, mostly due to the transient nature of the population. I just found it much harder to keep long term tenants. If you are looking to buy, hold and re-sell then Vegas might be ok. I would guess you might get better appreciation there. But for the long term landlord, I would prefer Phoenix.
What about looking at the differences from the perspective of ease of incorporating/doing business/taxation?
Heard NV corporations have a higher rate of audits and generally are being scrutinized more by the IRS than other states...
I don’t have any Phoenix experience but I’ve often asked why people live in Phoenix. It’s almost exactly like Vegas with more expensive housing, less food and entertainment choices, and higher taxes.
If you’re going to make a reasonable salary, I’d figure out how much would go Arizona state taxes. If you have out of state friends and family, figure out which they would rather visit you in. If you prefer an infinite choice of what and where to eat and shows that aren’t available outside maybe New York or LA.
If you want long term tenants I think it’s all about Vegas. People with mediocre to ok credit, good paying jobs, people that will never leave the valley. I don’t know why people always say Vegas is “transient”. Maybe it was in the 80’s before I got here? Maybe it’s only people who don’t live here and just assume it is? Maybe they mean attractive as people keep coming here. But that’s not what transient means. New York and California lose more residents than any other states in the union, and yet they are rarely called transient. Anyone with kids pretty much wants to stay years at a time.
I only rent SFR so maybe it's not true of apartments but the shortest lease I've ever done in 20 years is 2 years. The average tenant stays about 5-10 years and almost always moves only because they are finally buying their own home.
Ps. You will also hear about the boom and bust cycles in Vegas housing. It has only gone down more than 4% once in the history of the city. Not much of a “Cycle”.
Hey Inga, I haven’t heard that and I don’t know if that info would even be available. But I would ASSUME it would be mostly Nevada corporations formed by people who don’t live here to avoid taxes in their home state. A non-factor for a resident.
But mostly I wanted to reply because you brought up a subject that is also a plus for Nevada. They are one of the first/few states that has “series llcs”. So you can put each property in their own llc and yet only file one set of paperwork.
Bill thanks for the tips. Did the gross receipts tax affect you at all?
People say Vegas is transient because it is.
When you exceed $4million in rent per year you can probably afford to pay it. But I’m assuming the CPA would say start another company when your rent hits $4mill/year. As the tax is per entity. I could even go so far as to say each series llc might be considered a separate entity. So until 1 property brings in $4mill/year it’s a non-factor. Nevada almost always goes after the big guys (casinos) and the tourists. I’m not a fan of that strategy (I don’t know if Florida invented the strategy but rent a car at a Florida airport and tell me what percent “tax” you’re paying on your rental. (In this case I consider fees to be equal to taxes.)
“As part of the plan, the state created a business entity tax called the “commerce tax.” ... The tax is imposed on every business whose Nevada gross revenue exceeds $4 million, but no deduction is permitted for cost of goods sold or other expenses. The tax is imposed on a separate entity basis.Jan 7, 2016”
@Bill: good stuff, thanks! Very helpful.
Seems hard to believe Eric. In 2017 it was the 4th most moved to state. with 61% of the movers coming not leaving. So that part isn’t transient. And as I’ve said tennats tend to stay years at a time, so that part isn’t transient. Almost everyone I know who has a job above entry level has been there for 5+ years, most 10+, so that part isn’t transient. What part is transient and who are you comparing it to?
I would ay almost any “retirement state” (Florida, Nevada, Arizona.) are by default less transient.
Please give me your list of non-transient locales for comparison. (That list should include more than 1/2 the country assuming you’re saying Vegs is more transient than average for America. So name at least 25 states. I’ll give you Hawaii and Alaska as they are probably the mostly likely, if stuck in a bad situation, to find it’s too expensive to move.)
Ps. If it’s “transient” and people are coming, that’s actually a good thing. Detroit, New York, California, New Jersey, are all transient in a bad way, not the same thing. The valley is less than 20x20 miles. It’s not like the Midwest where a city can just keep on building.
You bolster you position by saying minimum wagers don't count. That's funny.
I've 🐝 n watching Vegas a long time. They keep 🏢 ing and 🏢 and 🏢ing.
No worries, I love talking real estate. Have you looked at RV parks in Arizona? They do seem to have an abundance of properties for sale. (I never noticed how close they were to Phoenix proper as I lost interest when I saw the distance from Vegas.) Vegas land is just too expensive for anything other than tiny parks built 40 years ago, or massive parks built in what used to be “way out of town”.
I’m considering building a small 4plex community on a few acres out here as fourplexes here also tend to be “Vegas ancient” (40+ years old). Flat roofs, in rougher neighborhoods.
No Eric, I bolster the not at the same job for 5-10 years at minimum wage. What kind of person are we talking about that can’t get promoted from a minimum wage job? Are you saying it would be better if people stayed 5-10 years at minimum wage? If they weren’t so transient and moved on to a better job? A job they probably got while in high school? Do you know what percent of the jobs are minimum wage? Almost zero. The bureau of labor statistics says 3.3%. And you know what, it’s not the same 3.3% year after year.
Should we tatto these people and say “you are minimum wage material” you will stay here and not move on.
I don’t know if you are being a jerk, or really didn’t know any of that? Why do you thnk the government excludes them in studies? I mean, yeah they probably are doing it to lie but I wasn’t. Thanks for asking why I excluded them instead of just assuming. See, you learned something for free.
Thanks for adding so much to the conversation. Do you do the same thing at parties. “Hey I know you weren’t talking to me, but look at me, I’m saying stuff...”