All Forum Posts by: Becca F.

EDIT: to my recent comment

Prop 19 has confused many people. If there is a parent child transfer and the child moves into the parent's primary residence:

"Prop. 19 now only allow heirs to keep the family’s old property tax basis if they reside in the home (don’t rent it out) and if the property has gained less than $1 million in assessed value." (in the link above)

Previous to Prop 19: adult children could inherit the property tax basis of the primary residence and rental properties (which could all be low if owned for decades). Now rental properties or any second homes (vacation homes or vacant properties) will be reassessed at market value. 

So basically children are stuck in difficult place:  all the adult kids move into the parent's primary residence OR take the step up basis and sell and own no California property (especially on a rental/second home) or keep the properties and pay the massive property tax on the new assessed value. 

This is separate issue from the Section 121 capital gains $250k/$500k exclusion of IRS tax code. I was going to create a separate post about Prop. 19 but wasn't sure what forum to post it in

Really interesting discussion. I didn't know the $250,000/$500,000 capital gains exclusion has remain unchanged since 1997. 

More specific to California, as far as older people (boomers) moving out of their homes so younger people can move in, I don't think that's the major reason, capital gains tax (of people I've talked to so obviously I don't know millions of people in CA). Ex: Someone bought a home in the Bay Area for $50,000 in 1970 and now it's worth $2 million. Many of them that I know  don't want to leave a familiar area that they've lived in for 40 to 50+ years and move out of state or elsewhere in CA. These were middle class people when they bought. I haven't talked to any older person in a rush to move to Arizona, Florida etc out of the Bay Area although there probably are many of them. 

Despite all the "California has high state income taxes, high cost living etc" if you have a paid off property, low property taxes, a retired person with low expenses, a decent pension, retirement savings and a little Social Security can live a comfortable life here. Our health care is rated B. 

https://medicareguide.com/best-states-for-elderly-healthcare...

For the people buying homes currently it's mostly high income earners especially tech people paying $1.5 to $3 million for SFH and they will bid up on a desirable home especially on the Peninsula/Silicon Valley. Those price ranges are much too high for anyone with a lower salary such as retail workers, teachers, etc. We have state programs and private programs (they get part of your equity though) to help first time home buyers.

Separate from the capital gains tax issue is CA's low property taxes from Prop. 18. Before heirs could inherit the parent's property tax basis on the parent's primary home and for additional properties they're exempted the first $1million value of the home. (Ex: House A market value is $2 million but child is paying $2000 property tax based on parent's $110,000 assessed value but market value is $1.8 million). And recent Prop. 19 passed in 2020. This did away with that unless the child moves into the parent's primary home but it allows seniors (or severely disabled or a natural disaster victim) to transfer their low property tax basis to buy a new home elsewhere in CA. I didn't vote for Prop 19 - there have been efforts to repeal it. Now I have to do some maneuvering of my estate so my kids aren't hit with a massive property tax increase when I die. 

https://abioproperties.com/market-news-trends/californias-pr....

There's unfairness everywhere depending on who you talk to. We can't make everyone happy. 

What are people's thoughts about raising the capital gains exemption to $500,000/$1 million? 

You are so right! I've tried to encourage younger people to invest in RE. Many of them were told the work for 40 to 50 years at a W2 job and put money into a 401k (nothing wrong with that if you love your job). There are so many resources and opportunities to network and learn now - local meet ups, webinars, etc.

I'm training my own kids in RE - I pointed out that look at who else is giving you financial advice. If they're broke, might want to question what they're doing. Do they have a successful business? RE portfolio? Or did they just do the pay off the mortgage and save money strategy (what I was taught growing up)? 

 I know older women in their 70s who had to go back to work because their widow benefits from Social Security and pension from deceased husband wasn't enough to live in with high costs now - they didn't have the benefit the internet and networking to become financially savvy when they were young. I just also wanted to encourage young women to invest 

Nevada should have made this list. No state income tax, one of the lower property tax rates in the USA, more landlord friendly than California.

My proposed strategy is to buy a home to rent in NV (Reno or Las Vegas) then move into the home in the future and semi-retire. Still need to do multiple visits to see if this is feasible.

I have traveled to Florida but considered investing there - high insurance costs made me look elsewhere. And I don't like extreme humidity. I guess you could find deals in FL now. 

Would also look at how senior health care is rated in different states - some of the states mentioned for usual retirement places are rated a C to D. Here is one source I looked at:

https://www.seniorliving.org/research/best-states-senior-hea...

And proximity to hospitals, doctor's offices, probably don't want the property to be in the middle of nowhere. 

If you're looking to rent out to retirees, people have so many different preferences for where they want to live. It might be within 2 hours of where you currently live.

For San Francisco, this article used a 111.5% appreciation over a decade, with 7.79% per year.

https://www.doorloop.com/blog/san-francisco-real-estate-mark....

In 1990 the median home price in S.F was $258,920. It was $1,398,750 in Feb. 2025. 

https://compasscaliforniablog.com/what-bay-area-home-prices-...

If I did a deeper dive into the neighborhoods in S.F. the median prices would differ with higher prices in more desirable areas.  People were moving out during COVID and in 2023 to suburbs or out of state. 

In Santa Clara, median sales price in 1990 was  $245,670  and in 2024 it was $1,900,000 (the AI boom was a factor, according to this data). People really like suburbs near Silicon Valley. 

https://www.compass.com/marketing-center/editor/v2/flipbook/...

Some of graphs have it labeled the dot.com boom around 1999-2000, with 32% increase, then the subprime crisis of 2008 to 2009 with -20%. There was a 9% increase in 2024. 

There are many more graphs and data but I won't bore everyone lol

I agree with househacking as #1.

#2 Long distance investing - do a lot of research on prospective locations, visit multiple times, talk to local investors (someone unbiased not trying to sell you anything). Things look much different in person than in photos and MLS/Zillow listings and video.

As far as cash flow on a long term rental at 7% interest rates, there is none. If you can do rent by the room, mid-term rental or Short Term Rentals (AirBnb), your cash flow numbers may improve. Or some type of value add but again doing construction/renovation from far away could be risky for first time investor. I've talked to lots of California investors who have lost money buying cheap out of state properties (myself included). 

#3 Syndications - you need to be an accredited investor and know how to vet who's a good or bad operator. 

https://www.sec.gov/resources-small-businesses/capital-raisi...

I talked to 3 syndications. Ex: one whose project was to build apartment complexes in land constrained Southern California. It sounded good but I passed. I wasn't ok with losing $100k or having a a syndication do a capital call (ask investors for more money). As a limited partner (LP) you have little control. I'd rather own my own property. If I want to do passive investing I'd put $100k into index funds, at least I could liquidate it quickly if I change my mind. 

Without having any other information such as purchase price ranges, I like Option #2 buy multi-unit and house hack using FHA or 5% conventional.

Option #1 but you mentioned that you and your wife aren't too thrilled about having people renting out rooms in your house. Option #3 relocating if you don't mind moving away from wife's family.

With layoff concerns, is that for you or you and your wife? Would you be saving $100k each year beyond the $80k saved? Go through worst case scenario and how would you make the monthly payments especially if you move out of house hack #1 and have a second property along with other expenses, if laid off. 

@Marty Shawn

If you're still on here, I don't know anything about the Boise market except that a significant number of Californians moved there during COVID with remote work. 

I agree with Nicholas L and Peter W.'s comments.

If house hacking works with your lifestyle and financial situation, I would favor that. Could you invest within a 2 hour drive, some were not as expensive as Boise? And still continue to pay your $1250 rent if HH doesn't work?

As far as OOS investing, it depends on where you're looking and what property you're buying. If it's in a nice suburb with great schools (Class A to B+), you may be able to reduce your risks with tenant issues, repairs.  I've talked to dozens of California investors who have lost money with inexpensive markets with "cash flow on paper" properties (Class C). Many of these are older homes with deferred maintenance or badly done renovation. I'm -$300 to -$500 a month on a "it's close to 1% cash flow" home in Indianapolis most months out of 2 years from constant repairs. My Class A Indy home which I bought over 10 years ago is doing better. 

Be careful of "turnkey" companies - they can range from great to terrible and ask many questions about who did the renovation and tenant screening (if they place tenants). I would fly out to the areas you're considering and do multiple visits, and talk to local investors (unbiased parties) - if you just look a numbers on a spreadsheet or whoever is telling you their numbers, verify this info.

As far as passive investing, meaning syndications, I would do a LOT of research on these (do a search on this on BP and see how many people have lost money). As a LP (Limited Partner), you have little control.  This is not a beginner strategy. You usually need to be an accredited investor. I talked to 3 syndications...huge pass for me. I asked myself if I'd be ok with losing $100,000 if the syndication went south or if they need to do capital call (ask investors for more money). I'd rather own my own property and have more direct control. 

Btw, I'm not an agent, wholesaler, syndicator, lender etc  and have nothing to sell you. Good luck. 

Negotiating a difficult deal, whether it's on the buying or selling side

My other choices: disagreements with tenants, managing the property manager, auditing the financials of the properties with a PM

You should attend local meet ups in San Diego. You can talk to investors who buy in California as well as out of state (OOS). I would also get to know about construction - some of those investors or contractors might let you walk some properties. That's the best way to meet someone. If you're looking for a mentor, is there some skill you could share with them (e.g. you're a CPA or something)? Don't pay thousands of dollars for a mentorship program. 

Just as a cautionary tale, if you tell people on BP you're in CA, you'll probably get lots of messages, suggesting you buy OOS, specifically in inexpensive parts of the Midwest or parts of the South.  I talk to dozens of CA investors who have lost money buying cheap "cash flow on paper" properties OOS (myself included). Or worse you open yourself up to being scammed. 

You posted this in the Classifieds section. Some of the forums on there don't get much traffic, like this one. The General Real Estate Investing and Starting Out forums get more responses. Good luck.