Real Estate appreciation potential in Texas

[N/A N/A]

I currently own a commercial office building of 9000 sq ft in Southern California and am considering doing a 1031 exchange to move my money out of state. I am currently considering investing in pre-construction single family houses in Houston, Dallas, Austin of Texas. I understand the property tax in Texas is very high and the house price is still very affordable. I believe I can get positive cash flow after putting 20% down. However, I worry about the following things :

1) How easy is it to rent it out ?

2) Although I will employ property managemnt company, I still worry
about the hassle factor since they are far away from me.

3) The appreciation potential of Texas as comapring to other states .

Can anyone advise me if this is a smart move ? If not what will be better opportunities?

Andy

[Frank Adams]

Well I'm not sure I can tell much to anyone who owns such a sweet commercial deal in the southland. I moved to TX 28 years ago from the Bay Area and a lot of what you've heard about TX is true.

Ppty tax rates in the big cities run about 3%, ouch.

Insurance is relatively high, homeowner's insurance isn't regulated in TX.

Historically our appreciation is about 2-3%, I know someone will post telling me about the recent article in (????) Forbes saying how hot TX appeciation has been the last couple of years. I tend to take the longer view and I think a lot of the metro areas are a bit overbuilt, and overbought, by out of town speculators, from the look of all the "for rent" signs I see in some areas.

In the last 4 years I sold 3 Houston houses that had been built in the (high oil price) boom of the early '80s. On average t hese places sold new in '82 for about $100K, I paid HUD and the banks an average of $64K in '89. I sold them for an average of about $125 in '04.

Even looking at my discount, and holding for 15 years, doubling my money isn't that great.

IMO a "positive cash flow" after putting 20% down, IS NOT POSITVE cash flow.

Before you invest in any of these areas, spend a few days driving the neighborhoods, get a good feel for them before you invest.

BTW, I would NEVER own a SFH that I couldn't DRIVE to in less than 30 minutes.

No receommendations, just some observations.

all cash