Texas or Washington - MFR Buy + Hold

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Texas or Washington - MFR Buy + Hold

Chris Harrington
Rental Property Investor · Boston, MA · Member since 2018 · 10 posts · 1 vote

Hello,

I recently accepted a remote sales role and am planning to relocate out of Massachusetts to either Texas or Washington (based on a number of factors/analysis I did on the market, economy, taxes, etc). 

Given that I can work anywhere in the states, and being in a high-paying sales role, I'm planning to move to Texas or Washington to remove income taxes and begin building out a real-estate portfolio of Multi-Family Residential units. My goal is to buy and hold and build up a portfolio over the next 5 years. Ideally, $100/mo/unit in positive cash flow after all expenses. 

With that said, what state looks best in the Real Estate world? What areas within each state looks best at this point? I've been analyzing areas like Spokane and Tacoma WA, and areas like Dallas, Austin, Houston, and San Antonio. There seems to be pros and cons to each. I've been having a difficult time (at first glance) finding a lot of MFR's in WA, and Texas looks to have more options with cheaper property values. I'd rather not spend more than $300K on a first property just so I can get some experience under my belt.

Any recommendations?

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Tim S.
Investor · California, CA · Member since 2016 · 367 posts · 375 votes
6y

I'd base it on where you would prefer to live, not the RE market.  You can invest anywhere, but you have to actually live where you choose to live.  Some places are cheap for a reason, because no one wants to live there. 

On the RE question I'd probably choose TX vs. WA, it's much more investor/landlord friendly.   I'm saying that as an investor in WA.  Just comparing the macro factors.  If I found a great deal in WA, I wouldn't pass it up just because it's in WA. 

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  • Derek Johnson
    Real Estate Agent · Puyallup, WA · Member since 2017 · 9 posts · 7 votes
    6y

    @Chris Harrington Tacoma is a great place to start if you move here! High appreciation potential and still some possibility for cash flow. We’re seeing huge population increases with people being priced out of King County (The Amazon/Microsoft effect). You’re not going to see 12 caps here, but you can hit that $100/month per unit on the right deal.

    1Reply
  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    6y

    I'd base it on where you would prefer to live, not the RE market.  You can invest anywhere, but you have to actually live where you choose to live.  Some places are cheap for a reason, because no one wants to live there. 

    On the RE question I'd probably choose TX vs. WA, it's much more investor/landlord friendly.   I'm saying that as an investor in WA.  Just comparing the macro factors.  If I found a great deal in WA, I wouldn't pass it up just because it's in WA. 

    2Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    6y
    Originally posted by @Chris Harrington:

    Hello,

    I recently accepted a remote sales role and am planning to relocate out of Massachusetts to either Texas or Washington (based on a number of factors/analysis I did on the market, economy, taxes, etc). 

    Given that I can work anywhere in the states, and being in a high-paying sales role, I'm planning to move to Texas or Washington to remove income taxes and begin building out a real-estate portfolio of Multi-Family Residential units. My goal is to buy and hold and build up a portfolio over the next 5 years. Ideally, $100/mo/unit in positive cash flow after all expenses. 

    With that said, what state looks best in the Real Estate world? What areas within each state looks best at this point? I've been analyzing areas like Spokane and Tacoma WA, and areas like Dallas, Austin, Houston, and San Antonio. There seems to be pros and cons to each. I've been having a difficult time (at first glance) finding a lot of MFR's in WA, and Texas looks to have more options with cheaper property values. I'd rather not spend more than $300K on a first property just so I can get some experience under my belt.

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    2Reply
  • Jeffrey M.
    Spokane, WA · Member since 2019 · 33 posts · 17 votes
    6y

    I can't speak for TX or the west side of WA, but Spokane has been discovered and is pretty competitive, and currently a seller's market but deals can be had thru due diligence. The rental market is strong here.

    >> If you are liberal move to Washington...

    I hear ya, but this only applies to the west side of Washington. Travel east of the Cascades and its purple and red and Spokane has a Republican Congresswoman.

    0Reply
  • Chris Harrington
    OP
    Rental Property Investor · Boston, MA · Member since 2018 · 10 posts · 1 vote
    6y

    Thanks all! For Washington, I'm definitely seeing Tacoma and Spokane as good potential options.

    For Texas, it looks like Dallas or San Antonio would be great.

    I'll have to do some digging on landlord laws. Real estate taxes are obviously a bit higher in Texas, but again, it looks like more deals to be had at lower price points than most of Washington. Tacoma has grown a lot and is a hot market right now, whereas Dallas/ San Antonio are cooled off (going off Zillow statistics)

    As far as the political references, I don't really associate myself to one side over the other, so I don't think that's very relevant. Also, Texas isn't that much more conservative than Washington as a whole, it's like 10% more than WA from what I was reading.

    0Reply
  • Kris L.
    San Antonio, TX · Member since 2019 · 930 posts · 836 votes
    6y

    I would be interested to see the stats that SA is cooling.  Hasn't been my experience, but it's a big city, so was curious what areas/neighborhoods were driving that.

    0Reply
  • Chris Harrington
    OP
    Rental Property Investor · Boston, MA · Member since 2018 · 10 posts · 1 vote
    6y

    @Kris L. just the present state of home sales.



    https://www.zillow.com/san-antonio-tx/home-values/

    0Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....

    2Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    6y
    Originally posted by @Nik Moushon:
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....


    Hmmm, I didn't realize State laws like "foreclosure avoidance is a criminal act", excise tax on all property sales, the tax costs from the tunnel in Seattle, funding the ferry system, increasing gas taxes to accommodate the heavy traffic in Seattle etc don't affect Wenatchee, Spokane and the rest of the eastside. All of these (and many more) originated by representatives from King Co. Add to that at some point there will be state wide rent control. Where King Co goes the rest will eventually follow. Can't be avoided simply because that is who dominates the legislature.

    But hey, after having lived in Seattle for over 50 years and investing in it for 20 years, what do I know?

    Caveat emptor Washington investors.

    "The doctrine of caveat emptor or “let the buyer beware”—is based on the notion that purchasers must fend for themselves"



    0Reply
  • Cody L.
    Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
    6y
    Originally posted by @Nik Moushon:
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....

    I'm very conservative and lived in a very liberal area of Houston (Montrose).  And I currently live in a rather liberal area of San Diego.  Luckily I think I'm able to get along with people regardless of their political leanings.   And the areas I like to live, for some reason, tend to be more liberal.  Maybe because I like the urban downtown hipster'ish places. 

    1Reply
  • Chris Harrington
    OP
    Rental Property Investor · Boston, MA · Member since 2018 · 10 posts · 1 vote
    6y
    Originally posted by @Account Closed:
    Originally posted by @Nik Moushon:
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....


    Hmmm, I didn't realize State laws like "foreclosure avoidance is a criminal act", excise tax on all property sales, the tax costs from the tunnel in Seattle, funding the ferry system, increasing gas taxes to accommodate the heavy traffic in Seattle etc don't affect Wenatchee, Spokane and the rest of the eastside. All of these (and many more) originated by representatives from King Co. Add to that at some point there will be state wide rent control. Where King Co goes the rest will eventually follow. Can't be avoided simply because that is who dominates the legislature.

    But hey, after having lived in Seattle for over 50 years and investing in it for 20 years, what do I know?

    Caveat emptor Washington investors.

    "The doctrine of caveat emptor or “let the buyer beware”—is based on the notion that purchasers must fend for themselves"



     

    Mike,

    Are you suggesting the low real estate taxes and no income taxes get made up in other areas which might make Washington less enticing from a tax perspective? 

    0Reply
  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    6y
    Originally posted by @Chris Harrington:
    Originally posted by @Account Closed:
    Originally posted by @Nik Moushon:
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....


    Hmmm, I didn't realize State laws like "foreclosure avoidance is a criminal act", excise tax on all property sales, the tax costs from the tunnel in Seattle, funding the ferry system, increasing gas taxes to accommodate the heavy traffic in Seattle etc don't affect Wenatchee, Spokane and the rest of the eastside. All of these (and many more) originated by representatives from King Co. Add to that at some point there will be state wide rent control. Where King Co goes the rest will eventually follow. Can't be avoided simply because that is who dominates the legislature.

    But hey, after having lived in Seattle for over 50 years and investing in it for 20 years, what do I know?

    Caveat emptor Washington investors.

    "The doctrine of caveat emptor or “let the buyer beware”—is based on the notion that purchasers must fend for themselves"



     

    Mike,

    Are you suggesting the low real estate taxes and no income taxes get made up in other areas which might make Washington less enticing from a tax perspective?  

    Correct. You have to look at the total package, what the trends are and if the general atmosphere is pro landlord or anti-landlord. Washington is suitable for people who are progressive, don't mind the state setting restrictions on who you can't rent to and they make getting rid of problem tenants a lawsuit waiting to happen. If you are progressive and like the state making decisions for you going forward, Washington is fine. It's a beautiful state. Texas assumes you are an adult and can make those decisions for yourself. Texas is suitable for people who like to call their own shots. It is just a matter of what kind of environment you want to invest in. Both can be very profitable.

    2Reply
  • Nik Moushon
    Architect · Wenatchee, WA · Member since 2018 · 843 posts · 907 votes
    6y
    Originally posted by @Account Closed:
    Originally posted by @Nik Moushon:
    Originally posted by @Account Closed:
    Originally posted by @Chris Harrington:

    Any recommendations?

    I've invested in both states.

    If you are liberal move to Washington, you'll hate Texas.

    If you are conservative move to Texas, you'll hate Washington.

    Both have great investing opportunities.

    lol you need to be a little more specific than that...

    If youre conservative dont move to the largest cities....stay in the outer suburbs and rural areas. If your liberal move to the large cities. This is true for both states. 

    WA is a liberal state only because Seattle (King County) has more population than the rest of the state. In our last Senate election every county, except King County, went Republican...but the Dem Senator won bc King County when to them. Also, the West side of the mountains tends to be more liberal where as the East side tends to be more conservative. But honestly, outside Seattle and the most rural of farm towns you get a healthy mix of all sides that know how to except that not everyone shares the same views. 

    The same goes for Texas....kind of. Big cities are run by liberal and suburbs and rural areas are conservative. Its just that in Texas there is enough population outside of the big cities that the state still leans conservative. 

    But put politics aside. You will be able to find your $100/mo/unit in either state very easily. So if you can find both then but REI aside and focus on looking at what each state as to offer for the quality of life you want. Do you like mountains and lots out outdoor activity but brings with it a full 4 seasons or do you want a 2 season state like Texas? WA has beaches...but are a bit on the cold side where as TX has some very nice beaches with warm water...and hurricanes.... Each states going to have pros and cons to live in. Figure out where you and your family are wanting to live. WA & TX are about as different as you can get in states. Once you figure out what state then you can narrow down a more specific location and focus on REI. I'm going to be obviously biased to WA over TX but after growing up in the midwest summers with 99% humidity and now experiencing the 0-10% humidity of eastern WA....I'm never going to live in a humid state again....


    Hmmm, I didn't realize State laws like "foreclosure avoidance is a criminal act", excise tax on all property sales, the tax costs from the tunnel in Seattle, funding the ferry system, increasing gas taxes to accommodate the heavy traffic in Seattle etc don't affect Wenatchee, Spokane and the rest of the eastside. All of these (and many more) originated by representatives from King Co. Add to that at some point there will be state wide rent control. Where King Co goes the rest will eventually follow. Can't be avoided simply because that is who dominates the legislature.

    But hey, after having lived in Seattle for over 50 years and investing in it for 20 years, what do I know?

    Caveat emptor Washington investors.

    "The doctrine of caveat emptor or “let the buyer beware”—is based on the notion that purchasers must fend for themselves"



     You flip'n missed the entire point.....

    0Reply
  • Alpesh Parmar
    Investor · Dublin, CA · Member since 2016 · 344 posts · 228 votes
    6y

    @Chris Harrington you can’t go wrong with Texas. Highest inbound migration in last 10 yrs and business friendly state. Most of the people who moved out of Cali moved to Dallas or Austin.

    0Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    6y

    At this point in the thread, I would just like to offer this:  Go Huskies!

    2Reply
  • Kai Van Leuven
    Investor · USA · Member since 2015 · 325 posts · 447 votes
    6y

    @Chris Harrington

    There is really a big difference between western and eastern Washington. To invest in eastern Washington is more similar to Idaho or Eastern Oregon. Not similar at all to the Puget Sound Region. To me it is like someone saying “I want to invest in New York State.”

    The Puget Sound is a pretty nice area but the prices are pretty high and have probably peaked.

    Spokane is growing right now from what I have heard.

    1Reply
  • Account Closed
    Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
    6y

    @Chris Harrington Tacoma could be a good spot to invest but don’t ignore EVERETT which is similar to Tacoma but a bit smaller and on the North side of seattle. I have made hundreds of thousands in cashflow there and millions in appreciation over the last 7 years. It is a great spot to invest.

    1Reply
  • Mark Sewell
    Investor · Houston, TX · Member since 2017 · 1k+ posts · 871 votes
    6y

    I am from WA state but Texas is probably more 'investor friendly' in terms of landlord / eviction / foreclosure laws.  We have our own Puget Sound area here (it's called Austin) but other than that, there are major cities and mid-size cities where you can find a nice blend of cash flow and some reasonable appreciation.

    0Reply
  • Prasad J.
    Rental Property Investor · Washington/Texas · Member since 2016 · 104 posts · 12 votes
    6y

     Do you think there is more appreciation in Everett / TACOMA in next 2-3 years? Everett seems to have stabilized at around 200-210$/ sq ft for older multi family properties since about a year

    0Reply
  • Account Closed
    Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
    6y

    @Prasad J. I’ve doubled our Everett portfolio over the last 1.5 years from 35 to 70 units. Therefore over the next year or so we will be honing in our operations and recouping capital. Then in 2021 we plan to continue aggressively buying. That said, I’m hoping the market continues to stabilize and not see the 8-15% appreciation we’ve seen in years past. I’m guessing we should see a standard 3-5% appreciation in the next 2-3 years

    1Reply
  • Prasad J.
    Rental Property Investor · Washington/Texas · Member since 2016 · 104 posts · 12 votes
    6y

    @Account Closed What proforma market cap rates are you seeing after doing the value add on the properties you are buying or brought in the last 1 year in Everett? Are you able to hit the 1% ratio on proforma rents on the (purchase + rehab price )?

    0Reply
  • Account Closed
    Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
    6y

    7ish caps and we’re around .8-.9 after rehab costs. 

    1Reply
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