Bay area(east bay) or Texas (HOU /DFW)

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Bay area(east bay) or Texas (HOU /DFW)

Ron Singh
CA · Member since 2014 · 244 posts · 47 votes

Is it still good time to buy in sf bay area or Texas for rental /investment purpose : SfR/multi fm

Pro and cons for me :

Bay area appreciation to continue ? hard to get cashflow - can manage locally

TX - cashflow but would need prop management company involved, so cut in cashflow

What would you do , for long term investment at this time ?

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Arlen Chou
Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
6y

@Ron Singh the BA is a different animal than most places. The BA proper is geographically constrained with very few transit arteries in and out. Additionally, you have VERY bad zoning laws that keep new housing capped. It may look like there is a ton of new products coming online that will flood the market. The reality is that they cannot build enough fast enough. Trying to get permitting for higher density housing is a very long and costly process. I could write a dissertation on why to buy and hold in the BA is a strong play, but if you do a little research there are graphs floating around here on BP that go back approx. 30 years showing the effects of the various downturns in the market. 

Please keep in mind that the BA is very different than "California", so don't take general CA data and apply it to this local economy. 

As a real life long term example, my first property was purchased in 1997 in Mountain View. It was a 2 bed 2.5 townhouse. The purchase price was less than $300k currently Zillow has it estimated at $1.3M. Unfortunately, I sold it back in 2004 for over $600k. I was young and ignorant back then, I don't sell anything that I buy now. I just refi cash out every few years.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    6y

    @Ron Singh

    I’ve been investing in the DFW area in TX for the last 3 years and it’s super competitive here. I would stay away from DFW. You’ll be extremely lucky to make the 1% rule. Look at San Antonio if you’re thinking about investing in TX because you wont make much in north Texas.

    0Reply
  • Narinder Gill
    Rental Property Investor · Turlock, CA · Member since 2018 · 35 posts · 5 votes
    6y

    @Arlen Chou why not just pull a heloc instead of refi.. each time. Wouldn’t you avoid paying the refi fees? This is more a question not a suggestion.

    0Reply
  • Sam Josh
    Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
    6y

    @Guy Gimenez

    To us here in the Bay Area the “exodus” is like Big Foot, people have only heard of the exodus but no one has really seen it.

    2Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    6y

    @Sam Josh

    One will never find that which is does not seek. Bay Area is not CA...it's only a small part of it. Look outward instead of inward...the numbers don't lie. 

    0Reply
  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    6y

    @Narinder Gill 100% a HELOC is a great path. I have personally used this method in the Bay Area to acquire additional properties. However, getting to a substantial HELOC loan position is a little more difficult. In my case, I was able to wrap additional properties on top of my personal home to get access to a 7 figure HELOC, it was basically a portfolio HELOC. I don't think that would have been possible without have a long relationship with a single lender and a strong track record of performance. Additionally, a HELOC is analogous to a giant credit card. Along with that comes inherent dangers if the user is not careful. Therefore, I believe when starting out, it is safer to take the simplest route, learn the process and then level up the complexity.

    1Reply
  • Collin Chan
    Investor · Dublin, CA · Member since 2019 · 167 posts · 134 votes
    6y

    @Sam Josh I have only seen traffic get worse and higher density housing go up. I know people are leaving based on the stats but most people I work with are from out of state coming for the higher salaries, job opportunities, and more. Totally agree. There might be an exodus out but there is also a lot more people coming in.

    1Reply
  • Sam Josh
    Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
    6y

    @Collin Chan

    My observation exactly. More people coming in and coming in for high paying jobs.

    0Reply
  • Anne Marie Kodama
    Rental Property Investor · Foster City, CA · Member since 2019 · 24 posts · 35 votes
    6y

    @Ron Singh and @Arlen Chou

    Ron, I have a SFR in Fairfield since 2011. With the tax advantages of investment property, I have yet to pay federal or state taxes on the income, just the $800 LLC fee to the state. However, I have been looking OOS for my next purchase. I hope to by a couple of properties in Columbus, OH this year.

    Good luck!

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Anne Marie Kodama How is your search coming along in Columbus, Ohio?

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
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  • Anne Marie Kodama
    Rental Property Investor · Foster City, CA · Member since 2019 · 24 posts · 35 votes
    6y

    @remington 

    @Remington Lyman We are in the middle of a refi on the Fairfield property and working on our income taxes.  I will being interviewing agents over the next couple of weeks while the refi is completed. 

    2Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    6y

    @Anne Marie Kodama Sounds great. Good luck on the refi

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
    Reafco512 Reviews
    WebsiteView Page
    0Reply
  • Sat Ram
    Rental Property Investor · Sunnyvale, CA · Member since 2017 · 16 posts · 10 votes
    6y
    Originally posted by @Sam Josh:

    @Collin Chan

    My observation exactly. More people coming in and coming in for high paying jobs.

    Mine too.. I have been hearing about this UHAL stats for years too.With all the new development of high density units, and condos hitting 1M easily near the transit stations, it seems that net population goes only up..

    0Reply
  • Guy Gimenez
    Investor · Corpus Christi, TX · Member since 2012 · 2k+ posts · 1k+ votes
    6y
    Are people really fleeing the Bay Area in droves? Here's what new Census data says

    https://www.sfgate.com/expensive-san-francisco/article/bay-area-exodus-fleeing-moving-cost-census-13778557.php


    Texas No.1 destination for companies leaving California for last 12 years



    https://www.thecentersquare.com/texas/texas-no-destination-for-companies-leaving-california-for-last-years/article_8e2f83cc-161d-11ea-8869-576046d73239.html

    0Reply
  • Collin Chan
    Investor · Dublin, CA · Member since 2019 · 167 posts · 134 votes
    6y

    @Guy Gimenez Thanks for providing the articles.  Demographics have shifted and this is very noticeable in the Bay Area.  Honestly, it is difficult for some international immigrants to move out of the Bay Area due to the conveniences that the location offers to them including international grocery stores and friends and family networks for cultural similarities.  Some are also here to make as much as possible with the higher salaries and then move to a cheaper location later.

    In this case, the Bay Area offers some people exactly what they want.  Until there are other locations outside of CA that are similar or if immigration becomes tighter, we might not see a decrease in population at all.

    Thoughts?

    1Reply
  • Sam Josh
    Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
    6y

    @Guy Gimenez

    Have read those articles and that’s my point we don’t see the impact of the same here on the ground. There is a lot of walk and talk in the media but we don’t see or feel it on the ground. What we see is lord more traffic and rising costs and competition for resources.

    What is happening for sure is some large corporations have moved their HQs to Dallas. McKesson, Schwab for example. Others are expanding their presence in Texas vs abandoning California.

    At this time there are labor cost differences in Texas that are attractive and companies are taking advantage of the same. Now those trends are not turning California is a ghost town, there are plenty of people coming in. Lots of domestic and international migration is happening and for every one company leaving the state 5 new ones are created. For example Uber spreading its wings while McKesson leaves or Google expanding its office spaces across the bay etc.

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