All Forum Posts by: Jacob Hartman

@Jen L. thank you! Do you have any other metric for job growth other than the unemployment rate? I don't completely trust the seasonal unemployment numbers myself, but at the very least it tells me which states have better employment than others. Population growth is an easy number to measure and verify. When I see "150,000 jobs added" it is hard to verify.

Population growth is why I like a state like Texas or Colorado which have grown 10% from 2010 to 2016.

@Bill S. As far as Denver metro goes, what if I had $50k and could find 10% or better financing? What if also I prepared for 6% closing costs, kept 6 months in reserve and had $5k+ for improvements, all just in case? Seems to me that $50k could do that in certain parts of the metro.

I actually haven't made up my mind about New Hampshire. Out of all 50 states it most closely matches my values-system. I would definitely live there. That being said, I would hesitate to to build a portfolio of 20/40/80+ homes there if the property taxes are going to eat tens of thousands out of my bottom line relative to a better-suited state.

@Andrew Johnson I appreciate the simple answer! We could spend hours diving into details. I'm sure it's hard not to expound on your answer because you don't want to mislead a newbie like me but I promise I'll be careful not to depend too much on what you had to say!

Thanks @Account Closed! I really like looking at the bigger picture and your data complements the data I've collected on property and income taxes. I will add it to my spreadsheet. I also look at current unemployment rates, population growth, %age under 18, 18-35 as well as data relating to how each state fared in the last recession. I also have to look at median home values since I wouldn't be able to generate enough cash flow or make the down payment on a $350k, 1800 sqft 4/2 in inland Southern California.

@Ryan Sullivan I appreciate the answer, Tennessee is one of my picks for the reasons you suggested as well as some other things I have taken into consideration.

Filing a yearly income tax won't stop me from investing in any state. That small amount of work would be worth it to invest in a favorable state economy.

@Kevin Coggins I was just throwing numbers out there. What I meant was $100-200 minimum. The reason I said that is because I want experience. Onec I invest beyond a single house I will be shooting for returns of 15%+, if not 20%. Otherwise if that wasn't possible I would skip all the effort and buy index funds.

The experience of going through this process is very valuable to me. The cash flow will be much better in the future. I do not expect it to be great at this market top.

@Joseph McGranaghan I am highly interested in New Hampshire. It's in my top 5 of states to settle down in. My 16-year old brother wants to move there. It fits out values. 

In fact, New Hampshire is the reason I am asking this question. It seems to me that property taxes in NH can add $200 or more per property per month in expenses relative to a state like Delaware. That could be an extra $100k if one were to own 40 SFH. On the other hand, it has zero income tax.

Let's say I had a line graph. The x-axis is [# of SFH]. The y-axis is [Property + income tax]. Let's say I compare two states on that graph, New Hampshire and Delaware for example. One state has no income tax and high property tax. The other state has low property tax and medium property tax. Those two lines will eventually cross, and one state will be far superior when the # of SFH approaches 100... which state is that, isn't it Delaware?

@David Faulkner ... I plan on learning the business by starting with a single house. I can handle a single house no matter how many thousands of miles away it is.

It being located far away will definitely have an impact on the cash flow. I will likely need a manager. Somewhere in the vicinity of $100/month give or take a few 10's. There will be a few other costs due to the distance, but I will be taking every precaution that the property will still cash flow at least $100.

I'm confident, more confident than anybody my age putting their money into Index funds. Most of my friends aren't doing jack to begin with.

I have established networks in specific places and that will certainly factor into my decision. My financial future will not depend on this single house or a manager.

I mixed my question up a bit by combining my current situation with my future goals. My future goal would be to own 10's of houses near an area I live in. Would it be better to own 10's of houses in a state like Texas where there is no income tax? Or would it be better to own 10's of houses in a state like Colorado where the lower property taxes can be 100's less a month per house than Texas?

Hi there!

I have the means to invest about $40,000 dollars (down payment, repairs, closings costs etc.) into a 3/2 SFH in a desirable state with a buy-and-hold strategy. In addition to state income tax, property tax, and state unemployment, there are other variables that I have taken into consideration which have helped me to narrow down the states I would want to invest in. With $40,000 to invest, I should be able to get a home that is priced <$180K currently.

I am 23-years-old and this will be my first rental property. I am reluctant to make this investment at a market top. My desired strategy is to access a substantial amount of capital that I will use to buy depreciated homes a few years into a recession. However, I want to have the knowledge to be able take advantage of such a situation when it happens. Therefore, I am willing to make this first purchase as a means to learn about the process.

The states I have narrowed it down to are Colorado, Texas, Tennessee, Delaware, and New Hampshire. My question to you is: what has a bigger impact on your income as a landlord, state income taxes or property taxes? I understand that this question is nuanced. My guess is that with a single-house portfolio, income tax will have a bigger effect when job income is taken into consideration. However, on the scale of 100 houses, property taxes will have a bigger effect. This is just my guess. The impact of property vs income tax is hard to calculate when income tax brackets are progessive. I also have no idea how rental income is taxed state-by-state.

The location of this first house does not have to be the same location where I will buy a cluster of houses in the future. My goal with this home is to be able to pay down the mortgage with at least $100-200 cash flow. I expect it to depreciate if a recession were to hit. But it doesn't matter much to me as long as the home is occupied, the mortgage is being paid down, and I am seeing at least a small cash flow. I have a great spreadsheet calculator that accounts for everything (inspired by Brandon from BP).

I have listened to many BP podcasts (100+), read at least 5 books, and done plenty of my own spreadsheets.

Thanks for the answers!

Sincerely,

Jacob Hartman - Murrieta, CA