Arizona vs Texas vs California vs NC real estate

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Arizona vs Texas vs California vs NC real estate

Kumar Gaurav
Member since 2019 · 258 posts · 35 votes

Hello

I have a choice of moving to one of the following places:

Phoenix AZ

Dallas/Plano TX

Charlotte NC

San Francisco CA

Which of these places currently gives me the best bang for the buck from a real estate perspective. I currently own a multi-famiy and considering a 1036 exchange upon moving to continue investing in multi-famiy.Since I plan to move with my family my other criteria are good schools ,decent tech job market

Appreciate insights from experienced members here.

Thanks

Thanks

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Kristina Sparrow
Investor · Denver, CO · Member since 2013 · 69 posts · 54 votes
6y

Depends on what your investment goals are: appreciation, cash flow, or both? When investing in San Francisco, you're sacrificing cash flow for the potential of future appreciation. Dallas, Phoenix, and Charlotte are more cash flow focused markets.

A couple of important factors I consider for a market are job growth, population growth, and wage growth. You could do a quick google search for any of these terms like "top cities for population growth in 2020" and find a variety of lists and see where any of your options fall on the list. You want to find a stable, but growing market.

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  • Trevor Bragg
    Rental Property Investor · Member since 2019 · 13 posts · 5 votes
    6y

    @Kumar Gaurav My only experience is between San Francisco and Arizona.

    San Fran has a heavily increasing homeless problem with rising taxes plus its super expensive.

    Arizona is increasing population by the day because thousands of people are leaving California to move there.

    There are deals everywhere, but AZ seems to be appreciating through the roof without an end in sight.

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  • Thibault Ko
    Rental Property Investor · Pineville, NC · Member since 2015 · 1 post · 1 vote
    6y

    Honestly it's hard to beat Charlotte.

    Very good weather, great mix of country activities and town feeling. Cost of living is very reasonable. every 500 yards you have new constructions of neighborhoods. Check out the Ballantyne area it's a perfect area to live in. 

    1Reply
  • Kristina Sparrow
    Investor · Denver, CO · Member since 2013 · 69 posts · 54 votes
    6y

    Depends on what your investment goals are: appreciation, cash flow, or both? When investing in San Francisco, you're sacrificing cash flow for the potential of future appreciation. Dallas, Phoenix, and Charlotte are more cash flow focused markets.

    A couple of important factors I consider for a market are job growth, population growth, and wage growth. You could do a quick google search for any of these terms like "top cities for population growth in 2020" and find a variety of lists and see where any of your options fall on the list. You want to find a stable, but growing market.

    1Reply
  • Account Closed
    Riverside, CA · Member since 2017 · 412 posts · 296 votes
    6y
    Originally posted by @Trevor Bragg:

    @Kumar Gaurav My only experience is between San Francisco and Arizona.

    San Fran has a heavily increasing homeless problem with rising taxes plus its super expensive.

    Arizona is increasing population by the day because thousands of people are leaving California to move there.

    There are deals everywhere, but AZ seems to be appreciating through the roof without an end in sight.

    I chose Phoenix AZ. It cash flows well, appreciation is good, they are landlord friendly, property taxes are low, it's close to So. Cal. , they don't have the craziness of CA, and employment and in-migration are at the top.
    1Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    6y

    @Kumar Gaurav, Interesting questions.  You may want to separate out the personal from real estate specific criteria.  You don't necessarily have to live where your assets are.  The 1031 exchange will let you move your portfolio wherever you want.  So pick the best region for investing in real estate to move your properties.  And then you can look at the best of those to live work and raise a family.  The world of land lording is getting smaller all the time. 

    But a couple of other considerations that can also play into your decision apart from all the good analysis being given here by others.

    1. Property Tax differences - State to state differences in property tax assessment and mill levys can make a huge difference in your NOI. CA and TX are known for their high property taxes.

    2. Income tax - This is a factor that will play in both where you live and where you invest.  Most states give you credit for income pax paid on investments in other states.  And then if the tax rate where you live is higher then you pay the difference.  So living in CA but having your investments in a tax free state like TX won't help.  But if you end up moving to a tax free state like TX and you have investments there as well or in another tax free state your net income will enjoy the difference as well.

    3. The claw back - If your investment properties are in CA now then you need to know that CA has a provision where even if you use a 1031 to move the property from CA to another state, if you sell it later you will have to pay CA tax on the profit attributed to that property while it was in CA.  You can't help it if your properties are in CA now.  But it ought to influence your thinking to sell and 1031 into CA.  

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  • Kumar Gaurav
    OP
    Member since 2019 · 258 posts · 35 votes
    6y

    @Dave Foster

    Thank you Dave and everyone who have shared their wonderful insights. I don't own anything yet in CA as yet so 1031 won't be a problem I guess.My investment goal and approach is geared more towards cash flow and don't want to rely on appreciation in markets such as ca where prices are already overblown.

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  • Pamela Sandberg
    Realtor / Attorney · Phoenix, AZ · Member since 2018 · 388 posts · 265 votes
    6y

    I second everything @Account Closed about the Phoenix markets. Lots of positive here! I will warn you that MF is a little tough in this market - lots of competition for little inventory. But there are great investment opportunities throughout the Phoenix area. Happy to answer any questions I can!

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  • Jim G.
    Investor · Bay Area, CA · Member since 2017 · 85 posts · 35 votes
    6y

    @Kumar Gaurav I just happened to have SFH properties in these states: San Jose (not SF, but close enough),Dallas, Phoenix and Raleigh, which are pretty much close to the places you listed. For a 10 years (or plus) horizon, the properties in San Jose have the best total return, if I don't discount that I manage the properties in san jose myself.

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