All Forum Posts by: Matt Mason

It doesn't make any sense to buy in San Diego if you are moving to Seattle in two years.

Good luck Rick. Keep in mind if you call Long Beach, South LA, you are going to offend Long Beachers...

@Marco Santarelli said

Not necessarily true. I get this form our investor clients often. If you based your decision solely on the property taxes as a percentage of the property value in Texas, you may never invest there. That is myopic in my opinion because there are tremendous deals in Texas markets like Dallas, Houston, San Antonio, etc.

I agree one shouldn't base their decision solely on property taxes, but it does have a major effect. People on the West Coast may look at a Texas house getting 1.25% of purchase price in monthly rents and see that as a better deal than a 1% house in Oregon or California, but with the way property taxes work in the three states, I would take the Oregon or CA property.

The property tax issue gets worse as time goes on too. A Texas property may have a 2.5% property tax, but in Oregon or CA, the property tax is not only much lower but also capped at between the lower of CPI or 2% in CA or 3% in Oregon. This makes a big difference over time as property values increase, which is the long term goal of any investor.

For an example, I purchased my primary residence in 1999 and now pay property taxes of approximately 0.6% of market value. In Texas I would still have to pay the 2.5% (I know it can vary from 2-3% approx.). That means I'd be paying over 4 times the expense if my home were in Texas. That would be over $16k more in taxes every year and growing!!! Not insignificant by any means.

The fact that Texas doesn't have an income tax is nice, but has no effect for out of state investors other than not having to file a tax return.

@Stephen Masek , you of course can get sued just the same if you have no debt on a property as much as the guy who has a mortgage. That is no protection. Also, if you are worried about getting sued and have a ton of cash, why not just invest in notes. Probably better returns in most cases and no risk.

Massive new supply of apartments in Southern California??? Not sure where you are getting this as it certainly is not the case in Los Angeles. In Los Angeles, there is no raw land available for any development. The city is almost completely built out. There are a few new apartment complexes coming on line, but they are very very expensive to build and at much higher price points than all but the most luxurious existing properties. You are talking $350k - $400k+ for units.

As for the "article", no offense, but not sure why a newspaper would print that. It is just a rant not an article.

I'd agree strongly with @J Scott in his characterization of this. It is dangerous to display everything in terms of black and white and nothing in between. No nuance = ignorance.

@Stephen Masek I am all for having reserves and you def. need some. I just don't think similar deals with one done all cash is a home run, while the other that is financed is terrible.

In some ways the all cash deal is more risky, because more capital is at risk in case of an area going Detroit. For instance if a house becomes unrentable the entire $115k is gone versus less than $30k in the financed version.

@Mark S. , I'd make sure you have reserves before getting into this. If you building the duplex, I would think you'd have quite a bit of time to do this possibly.

3 multifamily properties would easily scale as well as 10 SFR. Of course all depends on the market. I personally would rather have the 3 multifamily props. Over having 10 houses, but again depends on the market.

Nice work getting into Venice in 2010. I live not too far away and remember when parts of Venice were quite dangerous in the mid 90s with quite a few murders in the Oakwood section. If you told this to all the Google employees now they probably wouldn't believe you.

Looks like the other CA investors above don't realize how you can have any equity in 3 years, but when you buy at the bottom and the tech industry starts hiring really high paid positions like crazy, it is not hard to imagine a $300k gain.

Congrats and good luck going forward.

@Mark S. , I would think if you buy at $170k, you might be able to argue that is the worth and thus assessed value, but depends on jurisdiction.

@Mark S. , I'd double check the property tax amount. Just because the builder is paying that amount now doesn't mean you would and now you are looking at a $170k amount I'd bet it is different. All depends on how your property taxes work in your locality. Shoud be easy to research.