California - Would you invest here?
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
California - Would you invest here?
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Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votesI lived in SoCal for 5 years in my 20s so have some fond memories from CA. I attended UCLA.
As a RE investor, I'll pass. If my money can go anywhere in the US, it makes more sense to send it to states where it is wanted and treated well. CA treats investments like it is money owed to the state.
Happy to visit CA, not to invest there.
19 Replies
- 9moGreg ScottPro MemberRental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
I lived in SoCal for 5 years in my 20s so have some fond memories from CA. I attended UCLA.
As a RE investor, I'll pass. If my money can go anywhere in the US, it makes more sense to send it to states where it is wanted and treated well. CA treats investments like it is money owed to the state.
Happy to visit CA, not to invest there.
- Investor · Southern CA · Member since 2013 · 16 posts · 12 votes9moI love my state but you mentioned many of the reasons folks are fleeing. This isn’t even mentioning the wildfires and what they have done to the home insurance market. I know that’s a concern up north as well as down here in the south. It sounds like Redding is promising with the level of rental demand, people need a place to live. With our Governors election 11 months away, I’m curious to see what effect it will have. Time will tell!
- Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes9mo
The path of least resistance and smoother, more profitable investment lies to your east. Until the management of the state goes through some fundamental changes in philosophy and administration, I'd say "pass".
Real estate is a challenging and rewarding game; enlightened players choose to play where the rules of the game are most favorable.
- 9moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
AS a Native Californian and one who profited and built a career there its sad to see current state of affairs.. Just left Oregon you talk about a state / City ( Portland) that governance has totally ruined LOL..
I love N CA Mainly Plumas county area and Sierra county. Came close to buying a summer place there last year.. Insurance was an issue. But when I go to the Bay Area Traffic is as bad if not worse than ever so someone is taking the place of those that are leaving.
but being raised there in the 60s was really something ..
All markets have their place.. We hear the horror stories of Chicago but when I go there you see millions of people so even though lot of out migration there is still those that are born and raised there and are never leaving. Same in CA. Although CA of course has had the massive in migration from Mexico and South of there.. Along with Pacific rim folks.. So its much more of a melting pot than most folks understand.
As for REdding area I see continued growth just from those that live and retire in SOCAL Or Bay Area and dont want to leave the state .. Same thing happened to SAC and the foothills .
If the projects pencil in Redding I would encourage you to proceed CA is not going to fall into the ocean anytime soon..
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes9mo
Quote from @Jay Hinrichs:
AS a Native Californian and one who profited and built a career there its sad to see current state of affairs.. Just left Oregon you talk about a state / City ( Portland) that governance has totally ruined LOL..
I love N CA Mainly Plumas county area and Sierra county. Came close to buying a summer place there last year.. Insurance was an issue. But when I go to the Bay Area Traffic is as bad if not worse than ever so someone is taking the place of those that are leaving.
but being raised there in the 60s was really something ..
All markets have their place.. We hear the horror stories of Chicago but when I go there you see millions of people so even though lot of out migration there is still those that are born and raised there and are never leaving. Same in CA. Although CA of course has had the massive in migration from Mexico and South of there.. Along with Pacific rim folks.. So its much more of a melting pot than most folks understand.
As for REdding area I see continued growth just from those that live and retire in SOCAL Or Bay Area and dont want to leave the state .. Same thing happened to SAC and the foothills .
If the projects pencil in Redding I would encourage you to proceed CA is not going to fall into the ocean anytime soon..
I agree Jay. CA stilll has the same things going for it that it always has had, natural wonders! Within 10-45 minutes of Redding we have Lake Shasta (365 miles of shoreline) Sacramento River and its trail system, Whiskeytown lake, Burney Falls, Shasta Caverns, Castle Crags, Mt Shasta and Mt. Lassen! You're right, what has put such a demand on the market are all the Covid refugees, and those that came here afterwards, wanting a smaller city. Bethel School of Ministry draws people from around the world that end up moving permanently here. Thus the reason so many SFR homes are being used as room rentals for highest ROI. Our area up here is the only red county in CA, so there's that too. Hopefully people will elect people in the future that are more fiscally conservative, and less regulation oriented.
- 9moBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Generally .....NO. (Although I did recently buy a house with my son for family reasons.)
Makes more sense to go where things are easier......why bang your head against the wall all the time?
Having said that, there are always deals to be had....anywhere! If the numbers work - for you - go for it.
But generally, it's a huge NO for me!!!!
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes9mo
Quote from @Bruce Woodruff:
Generally .....NO. (Although I did recently buy a house with my son for family reasons.)
Makes more sense to go where things are easier......why bang your head against the wall all the time?
Having said that, there are always deals to be had....anywhere! If the numbers work - for you - go for it.
But generally, it's a huge NO for me!!!!
@Bruce Woodruff: Your comment "why bang your head against the wall all the time?" "is right on"
When we left Seattle, years ago now, we thought we were headed to California. It didn't take long, as untenable as Seattle had become, CA was worse. And it has continued it'ssliderun to ruin. We went next door. We spend our time between Arizona and Texas now. Nice!
- Inland Empire, CA · Member since 2017 · 151 posts · 79 votes9mo
Love living here. Have our home here. But unfortunately wouldn't invest here.
- 9moHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP I always like nasty situations.
Check the zoning, do market assessment, go big for expansion, buy a large piece of property. On the left side do permanent mobile home park. You just want to own the lots and not the trailers. On the right side put a RV park. Leave space in between. Use one entrance but two separate roads to them. Watch our front gate system. They will Decide your market and expansion as each grows. Put maximum age limits on units and upkeep park rules.
Dont let older units in. Make the rentals month to month. So you can raise rents and run people off. You want to be known as clean and safe. Autopay only.Roads, water, sewer, electric, meters, internet. Your a contractor so this is easy. Laundry house.
Maintenance of park, management. Develop self service system. Watch our YouTube on our self storage website and adapt. Give free rent to two people for maintenance of the park.
Keep separate Billings and cost in the install. So you can do a cost segregation from the invoices and do the year 1 writeoff.
Pick the largest, nastiest property possible. People love trees, boulders, water, views or no views. Leave as much trees and brush as possible. Any ditches make into ponds. Set up for views and no views privacy. You can have tree spade move in trees. Move in boulders if nearby.
Build pads for RVs and parking pads for vehicles.
Economy, California high cost, insurance, fires, affordability issues, property taxes, etc. these are all your friends. Build the ponds and get pumps for fire suppression. If you’re worried about floods and droughts do your part. Build earthen water catchment systems for underground water. Dont let any water run off your property. Save the planet or at least California. Watch YouTube’s in India and Sahara desert. Simple to install with bulldozer and excavator.
Charge $800 per spot or higher. You don’t want to own a single unit.
Run the logic and the numbers. Should be easy with your background.
Talk with zoning group about current zoning, planned zoning map, and potential for special use or variance permit.
Every No you get is great. Overcome. The harder it is, the more valuable it is.
I would only do this if you plan to scale to other markets. No point learning for one deal.
- 9moHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
OP. Run the numbers, zoning, market, access, sewer, water, electric, internet, etc
Do this on the Seven Lakes Ranch property. Make sure the listing is correct, it looks awful low priced for what I’m seeing. Also 10 minutes from Redding which is perfect.- 9moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Henry Clark:
OP. Run the numbers, zoning, market, access, sewer, water, electric, internet, etc
Do this on the Seven Lakes Ranch property. Make sure the listing is correct, it looks awful low priced for what I’m seeing. Also 10 minutes from Redding which is perfect.
Henry this is CA not the mid west.. land development is quite a bit different and entitlements are very tough to impossible in most rural to semi rural areas.. at least for what your talking about.. - Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes9moOh if only it were that easy. In California you don't just dig ponds, its a major process involving multiple agencies. Same with parks for manufactured homes. The 7 Lakes property is beautiful, and it may be possible for someone to add cabins, etc for a fishing resort type use, but other than that, zoning wouldn't support development.
Quote from @Henry Clark:
OP. Run the numbers, zoning, market, access, sewer, water, electric, internet, etc
Do this on the Seven Lakes Ranch property. Make sure the listing is correct, it looks awful low priced for what I’m seeing. Also 10 minutes from Redding which is perfect.
There are some good projects that would be marketable here, but we need to get rates and materials costs down. Hopefully that happens soon.
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes9mo
There was a large mass exodus during the pandemic and remote work. Even if people are leaving, people are returning to California after leaving for other states, partially due to return to office mandates, weather, outdoor amenities, family etc. Where else could I live where I could be at the beach then drive up to the mountains and hike and I haven't even explored most of NorCal or SoCal.
There are still multiple offers on some homes depending on the area. San Jose has the highest median home prices and San Francisco has the highest rents. S.F is making a comeback after COVID. The only other place I would make a high W2 income is New York City and I don't plan to move to NY anytime since I don't like winter weather.
I also invest here. I bought a while ago so I benefit from Prop 13 with property taxes going up a max of 2% a year. It's much easier in my own backyard where I can drive over to the properties, do repairs myself, talk to the contractor face to face, etc. I'm lucky to not have issues with tenants or to deal with evictions (so far). Most of my tenants are high income earners, tech workers and engineers. In contrast I've had the most issues with my Midwest (Indiana) properties. With all the talk about cash flow on these forums, I'll cash flow more from doing rent raises or if my tenants move out and I raise it to market rate on a new tenant than buying 3 Midwest properties (which wouldn't cash flow now anyway with higher rates). Many people here are renting, especially younger people since it's cheaper than a mortgage payment so there are lots of high quality tenants willing to pay high rent.
Besides the tech industry there's a diverse economy with healthcare (RNs are compensated very well here), state and local government workers, retail, excellent public schools in good areas, top rated universities, public transportation, great restaurants, much of the produce the U.S. gets is from the Central Valley, etc. Many middle class people long ago became multi-millionaires from RE here. I continue to network with local investors who still buy here - the difference is they're all wealthier and have lots of capital.
The things I don't like are the some of the local regulations and paying out a relocation fee in the thousands to get a tenant out if I wanted to sell or move into the rental myself. And who keeps voting yes on all these local measures to add special assessments to my property taxes and adding to the county sales taxes. Yes there are problems here but every state has problems.
Overall, it's been a positive experience for me investing here and I will pass on a large amount of generational wealth to my kids, where housing has largely become unaffordable to them even in other states (the ones they'd want to live in). The only other state that I'd invest in now is Nevada, right next to CA.
My CA market is full of sophisticated value add opportunities the result of various regulations. Sophisticated value adds are my favorite value add and are typically jurisdiction specific.
I have done very well investing in CA RE. In CA RE, a single purchase can result in over $1m quick profit. My last 2 purchases one is over that return and the other is approaching that return.
My view is if you purchase RE passive in CA off the mls with market rate financing, no value add, to traditional LTR you likely will need patience to do well. Note you will still end up doing well with time as the appreciation and rent growth are near top in nation in many CA markets. Prop 13 is an RE investors dream/bonus. I am not patient enough to choose the patience route. If you take advantage of various value add opportunities, you can do outstanding.
Educate on the opportunities. Bonus density, advantages of located near transit centers, recognize unit separation laws and path of progress regarding these (I expect to make a lot of money (at least 7 digits) on this in the next couple/few years effortlessly). Etc. Not my job to teach the opportunities (unless I take you as a protege).
Those who advocate against CA RE investing are missing great opportunities. There are opportunities in many areas, not just Ca but CA certainly has a lot of RE opportunities.
Good luck
- 9moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Dan H.:
My CA market is full of sophisticated value add opportunities the result of various regulations. Sophisticated value adds are my favorite value add and are typically jurisdiction specific.
I have done very well investing in CA RE. In CA RE, a single purchase can result in over $1m quick profit. My last 2 purchases one is over that return and the other is approaching that return.
My view is if you purchase RE passive in CA off the mls with market rate financing, no value add, to traditional LTR you likely will need patience to do well. Note you will still end up doing well with time as the appreciation and rent growth are near top in nation in many CA markets. Prop 13 is an RE investors dream/bonus. I am not patient enough to choose the patience route. If you take advantage of various value add opportunities, you can do outstanding.
Educate on the opportunities. Bonus density, advantages of located near transit centers, recognize unit separation laws and path of progress regarding these (I expect to make a lot of money (at least 7 digits) on this in the next couple/few years effortlessly). Etc. Not my job to teach the opportunities (unless I take you as a protege).
Those who advocate against CA RE investing are missing great opportunities. There are opportunities in many areas, not just Ca but CA certainly has a lot of RE opportunities.
Good luck
Like my path of progress property in Rohnert park ( Sonoma county) paid 27k for bare land sat on it for 23 years the city came to me and sold it for 2.2 mil.. :) yathzee..
- 9moTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
Interest rates are not high-they are normal. Last 10 years, they were ridiculously low. Would I invest in California-probably not. Prices are too high and laws are skewed in favour of the tenant. It is a lovely place to visit.
Costal CA is great for legacy investors like me that have significant equity and already made a lot of money. So renting out fully paid off units in prime locations is an easy way to live off one’s investments. But I’m personally not eager to buy more here, even with value add plays, etc. Not that it can’t be done, but given all the headwinds, the juice isn’t worth the squeeze IMO. By headwinds I mean: entitlements are more difficult and expensive to obtain; interest rates kinda high; insurance is high; construction costs very high; rents still off their past highs; tenant laws getting worse. (These factors are all worse than 5-10 years ago.) All of this meanwhile the question of traditionally fantastic CA appreciation is less certain going forward than it’s been in the last two decades. So personally I’m okay resting on my laurels, but for punters with more motivation, sure they can play the game and see what transpires :)
- Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes9mo
Quote from @Amit M.:
Costal CA is great for legacy investors like me that have significant equity and already made a lot of money. So renting out fully paid off units in prime locations is an easy way to live off one’s investments. But I’m personally not eager to buy more here, even with value add plays, etc. Not that it can’t be done, but given all the headwinds, the juice isn’t worth the squeeze IMO. By headwinds I mean: entitlements are more difficult and expensive to obtain; interest rates kinda high; insurance is high; construction costs very high; rents still off their past highs; tenant laws getting worse. (These factors are all worse than 5-10 years ago.) All of this meanwhile the question of traditionally fantastic CA appreciation is less certain going forward than it’s been in the last two decades. So personally I’m okay resting on my laurels, but for punters with more motivation, sure they can play the game and see what transpires :)
What I've read is that some cities prevented evictions and some landlords haven't been paid in 3 1/2 to 4 years. I've read than some cities have burned to the ground because of inept or corrupt city officials, I've read that the homeless are taking over some streets, I've read that shops in some of the best malls have shut down, I've read that the retirement funds are a trillion dollars in debt, I've read that . . . well, it just goes on and on. beyond my tolerance level anyway.
We just come over, pay the outlandish gas prices, high food prices, higher hotel prices, enjoy the beaches and go home happy we don't have to pay the property taxes, or rely on the decisions of an incompetent city, or suffer the traffic throughout the week. All is good.And the highspeed rail system that is a bizillion dollars over budget and taking longer than a pyramid to build.
- 9moJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Karen Margrave I know people who make it work and do really well there. The good thing about rent control is it kills supply and pushes rent really high. The bad thing is if you get behind you're in trouble, oh yea and good luck evicting someone.
In TX they just passed a new law making evictions even easier and faster (21 days). If you file to delay it you have to swear the reason is legitimate or face legal consequences.
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