Developer · Point Pleasant Beach, NJ · Member since 2015 · 303 posts · 216 votes
7y
Truthfully, people have made fortunes investing in every state in the US. Sure, the average cash flow numbers may be higher or lower in some states and laws/taxes will vary, but you should really invest in locations you know and understand. Look for great deals in areas you are familiar with and you will find them, regardless of what state you are in.
@Jason Hirko Jason, I’ve been interested in looking into Texas for potential investments, can u elaborate on which areas of Texas?? So I can start my research. Thank u so much
When it comes to buy and hold, I could make an argument for any area you name in Texas. Rio Grande Valley is a great play for low priced homes (you can get the 2% rule there and some speculative appreciation), between San Antonio and Austin is the fastest growing area of the country, Houston and Dallas have excellent $100k neighborhoods that are great passive 1% plays, the Permian Basin is blowing up right now, etc., etc.
Thanks Jason!!! I am going to have to really start doing research on Texas. :).
This is such a common misconception. In California, you pay 1% in property taxes. In Texas, I pay about 1.9%. BUT I'm not paying 13% in state income tax! If you're doing it right, you'll gladly make that trade for no state income tax!
True. But isn't that only applicable to Texas residents? The OP was asking about best markets to invest. I assumed he plans to invest out of state.
Rental Property Investor · Member since 2018 · 55 posts · 14 votes
7y
@Subbie Kaur i have to get a contact in indiana i looked through the mls however im not seeing what i am aiming for out there most likely i need to create a relationship with a realtor and wholeseller in indiana to see a much better selcetion of multi unit properties you got any references ?
This is such a common misconception. In California, you pay 1% in property taxes. In Texas, I pay about 1.9%. BUT I'm not paying 13% in state income tax! If you're doing it right, you'll gladly make that trade for no state income tax!
Not only that, but it's not just %, but rather how many months of rent income does it take to pay that tax bill. Using made up numbers:
In Houston I pay $1m for a property that brings in $10k/month. My tax bill is $20k/year. Or 2 months of rent to pay the tax bill
In California I pay $1m for $3.3k/month in rent. Tax bill is $10k/year. Or 3 months of rent to pay the tax bill.
So really, even property taxes, at least as a function of your rental income to pay them, is lower in Texas than CA.
This is such a common misconception. In California, you pay 1% in property taxes. In Texas, I pay about 1.9%. BUT I'm not paying 13% in state income tax! If you're doing it right, you'll gladly make that trade for no state income tax!
Not only that, but it's not just %, but rather how many months of rent income does it take to pay that tax bill. Using made up numbers:
In Houston I pay $1m for a property that brings in $10k/month. My tax bill is $20k/year. Or 2 months of rent to pay the tax bill
In California I pay $1m for $3.3k/month in rent. Tax bill is $10k/year. Or 3 months of rent to pay the tax bill.
So really, even property taxes, at least as a function of your rental income to pay them, is lower in Texas than CA.
Those are some low low rents on 1 mil. In LA 1 mil might bring in 5k-7k, then add you still might have to pay income tax if you live in CA and invest in Texas. Keep in mind the 10% CA income tax bracket does not kick in until you make 268,000 so is it under 10% until that point. Still a rip off imo.
I would stay away from Pine Hills and Paramore (Zip codes: 32808, 32818, 32805). Those are the primary places to stay away from however you may find a few other areas here and there that I would also personally pass on. If you plan on coming to town PM me, I'd be more than happy to help with your search.
Developer · Sammamish, WA · Member since 2018 · 9 posts · 3 votes
7y
I've been in the Western Coastal markets but those are too high now for the individual investors to compete. Major cities being on the coast and having mountains makes the population huddle closeby rather than fill in rural towns who become small cities.
What I saw in the Bay Area the last recession and what I will see in Seattle this recession is that the mega tech companies will keep the job market steady (not as tied to consumer spending) despite the overall performance of the economy. California was one of the first markets to bounce back and there has been a huge ride in value for those who were able to time it right. If your tenant went dark, you'd still have so much value in the property that you'd profit. The constraints of building in coastal markets challenging, which decreases the entry of competitive product.
I see a lot of institutional investors stick to the coasts CA, NY , MAS, TEX, FL, WA where population migration has been shifting the job base to for opportunity tech, finance, etc. I am always cautious of getting too involved in sprawl markets like Phoenix, Vegas, Palm Springs which don't have the physical land constraints to stop new projects, better product from filling down the street from you. Being from the west I'm focused on Boise, Spokane, Sacramento, Missoula. I've liked strong suburbs in improving steady growth markets like Tampa, Kansas City, Charlotte, Denver, Nashville.
Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
7y
That's an easy question. If you are new to investing which ever state you feel most comfortable investing. If you are seasoned, which ever state you feel most comfortable investing in.
One of the biggest problems new investors have is trying to make sure every single investing metric they have ever heard of is covered in their first deal. They think it needs to be in a B+ neighborhood but below market, cash flow right away, be close to the best schools, be in a city that has population growth, be in a city with that recession proof (whatever that means), have wage growth, have a high median income, have the most potential for appreciation....etc... Basically it comes down to they are looking for the unicorn property.
Don't get hung up detail, find a deal you are comfortable with and the numbers work for you and go with it.
Rental Property Investor · Member since 2018 · 55 posts · 14 votes
7y
@Brian Egr I been looking in alot of different states and everything always seems to be good until i start checking flood areas how close to a flood area is too close ? If its marked on the map as a No flood zone.
Flipper/Rehabber · Lincoln, NE · Member since 2016 · 144 posts · 71 votes
7y
@Darius Anderson I wouldn't buy anything in a 100 year flood plain, in those area's there a chance you will might have to deal with a flood at some point. You can get flood insurance to cover the loss if a flood happens, but it's still going to be a giant pain to deal with. If you are really nervous about it though buy something on top of hill. LOL
Rental Property Investor · Orlando, FL · Member since 2018 · 545 posts · 386 votes
7y
Ultimately the most important things to look for in an area you're targeting are population growth, job growth, strong rental rates & trending upward, strong economic sectors, tax implications or favorability and regulations, and obviously property values.
Rental Property Investor · Member since 2018 · 55 posts · 14 votes
7y
@Brian Egr😂 too funny you right though i alway make sure its not only in a no flood zone but a little space from were there is a chance of it flooding and yea its def. Going to be a headache i dont wamma deal with it at all.
Wholesaler · Charlotte, NC · Member since 2015 · 398 posts · 680 votes
7y
@Darius Anderson Not South Carolina...I don’t even invest in my own backyard. The cities are too small, and the sellers in the hot zip codes think their houses are sitting on gold. Texas, some areas in Georgia, and South Florida are areas where I’m focused.
Los Angeles, CA · Member since 2018 · 12 posts · 0 votes
7y
@Corby Goade
Hi, I’m an investor from California and looking to expand. By the looks of it you know your market very well. Is there any chance that we can connect?