Am I crazy to want to leave CA?
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Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
12yThe thing about the Bay Area is that rents are high and property is high. Appreciation rates are high and rent growth is high. THAT is a fact. There are high paying jobs in the Bay Area. If you are making minimum wage or the same pay that you would get in Podunk then you are probably better off living in Podunk. But if you can command the higher salaries that the Bay Area offers then with a little smarts and sacrifice then you can benefit from the high cash flow and appreciation that the Bay Area offers.
If you NEED the 3,000 sf house for $100,000 then Podunk is your place. If you NEED the acre lot with the snow mobile and jet ski and motorcycle in the three car garage then Podunk is your place. If you need equity to cover you $200,000 a year long term care then the Bay Area is where you need to be providing you invested in the Bay Area.
I've had friends who bailed with their equity after ever boom since the seventies and ALL the younger ones have regretted the move. Those that sold at $200,000 and see the same place selling for $400,000 ten years later and then $800,000 ten more years later almost cry. Friends that have bailed after retirement usually are only happy if they have extensive family in Podunk. Others complain about maintaining large houses that they feel are necessary because they are trapped in them most of the year.
84 Replies
- Investor · Hampton Roads, VA · Member since 2014 · 1k+ posts · 418 votes12y
I grew up in Cypress and Fallbrook. I left in 1996 and will never go back. CA has amazing features, but at the end of the day $100K+ a year goes a LOT further in other states. All my family still lives in the Bay Area, Newport Beach, and San Diego ans it's always the same thing... Cost of living, taxes, crazy politicians etc... I'm good with not going back.
- Whittier, CA · Member since 2014 · 3 posts · 2 votes12y
If the weather in SoCal wasn't some of the best in the world, I may already be gone. Summers, winters, or both in most other states are terrible. On top of that, most have the chance to earn a much higher wage in CA than somewhere in the Midwest. So, I would say unless you have the opportunity to make the same money you are now or more, then it may not be worth it. If you have a lot of money saved up, then it is something to consider.
But also consider this... my parents bought a house in SoCal in 1992 for $200,000 and just 3 weeks ago it was appraised at $815,000. It was worth even more than that in the mid 2000s. Contrastingly, my Aunt who lives in Georgia bought a house during the same early 90s period for $110,000 and by all accounts it's not worth more than $120,000 today. So, you either choose to live where life stays pretty much the same and it forces you to be the standout to succeed above and beyond everyone else or you live where you can make money simply by paying your mortgage and staying in your house for a number of years. I don't believe I'll ever leave SoCal, and why would I? It's the #1 Industrial Real Estate Market in the country year in and year out. I'll stay where the money is, even though it cost me $550,000 to buy an 1,100 SF entry level house built in the 70s.
- Whittier, CA · Member since 2014 · 3 posts · 2 votes12y
Originally posted by @Ray Slack:
Everyone makes good points.. It's all about why you are leaving.. I moved from Maryland to Miami Beach to escape the cold 20 years ago.. The cost of living is much higher in MB than MD.. I have discovered that also the average cap rate investors are getting and seeking is MUCH lower in Miami Beach.. Investors buying in Miami Beach are happy with 5-6% cap while in Maryland nobody touches anything below a 10% cap in the good area and in the bad areas like baltimore you can get 20-25% cap rate.. So, after 20 years I'm selling my Miami stuff and re-investing in property in Maryland.
25% Cap rate!!! Jeebus, haha. Fully leased NNN retail properties here sell at 4% Caps all day long
- Residential Real Estate Agent · Fort Worth, TX · Member since 2014 · 53 posts · 42 votes12y
Sounds like you're trying to decide both for a place to invest as well as a place to live. If you want somewhere that is good for both, I live in Fort Worth and I am sure you have heard of this area. Cost of living will blow away CA.
Funny, I work with CA investors all the time. I just had a meeting with one, and my client asks "well, wait, what are your rates?" He almost blew up the phone, "WHAT!? That's cheaper than private money out here!" I was surprised myself, "wait...how much is private money in CA?" It is amazing to me that hard money could ever be cheaper than private money anywhere. Whoever is lending private money out there is banking hard.
Some other markets to consider are Atlanta, Philadelphia and I've heard a bit about Minnesota (Minneapolis/St Paul). I was born in MN and it's a decent mid western state in terms of living. Pretty safe and great suburban areas like Eden Prarie. Big growth potential in my opinion and solid demographics for starting a business.
Funny side note: Someone from Dallas told me about how he's buying up all these properties in Detroit and I still don't see how that is a good idea, esp. when you live in one of the hottest RE markets? Still don't get it.
Here is a solid Forbes' list:
- Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes12y
Originally posted by @James Park:
I think your thought process is correct. Where you live can definitely make a difference in how fast you can retire. There were only two places where I wanted to live in U.S. either Irvine, California or the northern suburbs of Georgia. It was important for me to move to a place with entrepreneurial soil. I wanted to move to a place where I could build my real estate brokerage and invest in my backyard and build my A-Class SFR 401k retirement portfolio.
I read somewhere in Tom Stanley's book that a person with average net worth of $1,493,804 lives in a home with average value of $404,240. A person with a average net worth of $3,416,267 lives in a home with a average value of $620,779. $400k does not buy you much of a home in SoCal or even in the inland empire.
You should check out the north suburbs of Atlanta, especially Johns Creek. The life style and weather is very good here and Atlanta is becoming the melting pot of all cultures like LA, SF, and NY. I do see a lot of California transplants in the Johns Creek area, and they are very happy here.
Interesting James, you mentioned Irvine, CA i noticed. Its very expensive here in Irvine and often home owners with out kids find them selves paying subsidies linked to local districts that are levied upon the home owner with out any kids so its probably better to live in areas with out education linked taxes like Mello Roos.
How are the state income tax rates in Atlanta?
How is the cost of living as compared to Irvine from Johns Creek area?
Are the homestead laws better than CA where only 75k of your equity is protected from creditors?
Thanks for the insights!
- Lender · Bellevue WA & Orange County, CA · Member since 2013 · 2k+ posts · 1k+ votes12y
Originally posted by @Andrew M.:
I live up in the Bay Area, have a nice job and a wonderful house, but still with a wife and two young kids, feels like you can't get ahead here because its so expensive. Also hard to do any real estate investing when everything is so pricey and low cash flows up here.
I'm thinking life would be much less stressful if I moved to the Midwest (ex. had an opportunity in Omaha that I passed up), got a similar job, a much cheaper house and cost of living and was able to take the cashed out equity on my house here and start doing some serious real estate investing that could allow me to retire 10-15 years earlier than I might here in CA.
Has anyone done this move out of CA, and how did it go. Am I crazy to even consider leaving the beautiful weather and so forth in CA?
I've decide also to live in WA the predominant part of the year while staying in CA the lesser portion of the year. This way I get the beautiful summers of WA and the sunshine of CA. There is some overlap since I need to predominantly be in WA most of the year where I get 2-3 months of gloomy season but typical for the state. Its a trade and there are a lot of pro's and con's of each.
- Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes12y
- Real Estate Broker · Johns Creek, GA · Member since 2009 · 870 posts · 664 votes12y
@Greg Carr
Awesome Chart! Thank you.
Originally posted by @Greg Carr:
Sounds like you're trying to decide both for a place to invest as well as a place to live. If you want somewhere that is good for both, I live in Fort Worth and I am sure you have heard of this area. Cost of living will blow away CA.
Funny, I work with CA investors all the time. I just had a meeting with one, and my client asks "well, wait, what are your rates?" He almost blew up the phone, "WHAT!? That's cheaper than private money out here!" I was surprised myself, "wait...how much is private money in CA?" It is amazing to me that hard money could ever be cheaper than private money anywhere. Whoever is lending private money out there is banking hard.
Some other markets to consider are Atlanta, Philadelphia and I've heard a bit about Minnesota (Minneapolis/St Paul). I was born in MN and it's a decent mid western state in terms of living. Pretty safe and great suburban areas like Eden Prarie. Big growth potential in my opinion and solid demographics for starting a business.
Funny side note: Someone from Dallas told me about how he's buying up all these properties in Detroit and I still don't see how that is a good idea, esp. when you live in one of the hottest RE markets? Still don't get it.
Here is a solid Forbes' list:
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
your talking about Lake County correct ??? Nice,, Lucerne those areas?
How bout Willits ?
- Real Estate Investor · Santa Cruz, CA · Member since 2009 · 267 posts · 73 votes12yAnswer to your original question: yes.
- Investor · Plano, TX · Member since 2014 · 21 posts · 9 votes12y
It's always better to move to something than to move from something. Why? Because once you're away, your motivation disappears and you're in a "okay, now what?" phase after the honeymoon period subsides.
Every day that I look at potential investment properties, I think to myself "Darn, I could buy this place (either in cash, or with a mortgage that I can pay off within 2 years, and be able to stockpile my salary until the next job move." Note: I work a job where I have location flexibility as long as I'm near to an airport.
In the short term, given my personal situation, it makes sense for me to stay in NorCal (even with the exorbitant rents and pocket gouging tax rates). In the long term, who knows?
- Real Estate Investor · Madison Heights, MI · Member since 2014 · 693 posts · 216 votes12y
WOW not a lot of love for the mid-west here. You know we do exit and we also have our own culture that we enjoy.
I don't live in "Podunk". I was out there for 5 months and it never rained.
I missed all my lakes that I can go fishing on. I missed not being able to shoot off all my guns on our 12acres of land. I missed the LOC. I missed not having illegals ask me for money every time I left the house.
I did enjoy the weather. I did enjoy going to Hollywood Park, Delmar. I did enjoy going to all the casinos with all the great poker action.
I also enjoy buying 35k properties that I can rent for $800. I would never be able to invest far away from where I live.
In the end I will take Michigan and all the outdoor activities and
- Rental Property Investor · Douglas County, MO · Member since 2014 · 1k+ posts · 1k+ votes12y
Hubby and I left San Jose for Missouri in the early 80's when we were in our 20's. Best decision we've ever made. I agree with @Jacob Vincent though. It's better to have a goal in front of you than a fear or annoyance behind you.
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
you can emulate those experience's in CA no problem. Remember CA is not just LA or SF it is by far the most diverse state in the Union.. Beaches that are incredible think Big Sir Nor cal so cal.. mountains ski areas.. lakes all over the place.. Sports.. Giants A;s Angels dodgers, Chargers, 49ers, warriors Lakers and clippers... deserts High deserts. rain forests redwood groves.. Yosemite Tahoe skiing.. it just does not end.. there is no place on earth like CA in my opinion. I have done a lot of investing out in the mid west and spent a lot of time there.. I would often ask the locals WEll what do you do for fun around here since there are no real national forest's or much of anything else they had to think a while.
- Portland, OR · Member since 2014 · 19 posts · 4 votes12y
Hey Andrew -
We made the jump from Walnut Creek to Portland, OR a few years ago and never looked back. Part of the primary reason we left was cost of living. We were able to buy a beautiful house just south of Portland in a neighborhood with great schools for essentially the same amount you would pay right now for the house we still own in a not so great area in Concord. We also recently bought some land to build a vacation home in a great resort area a few hours from here. That likely would never have happened at the rate we were going in the bay area. It is true that salaries are definitely higher in the Bay Area than where we are now but it doesn't feel proportional to the difference in cost of living (just based on our experience). We still own property in the Bay Area so we keep an eye on the market there. When we see what pricing is like in areas that would be comparable to where we are living now with great schools like Danville, San Ramon, WC, Lafayette, Moraga...we really can't imagine ever going back.
I agree with the other posters that mentioned the fact that once you leave though it is very hard to get back in and while there are certainly a lot of real estate opportunities here, California has provided us much higher returns overall in terms of appreciation on our properties to date. However, the cost of entry in Portland to buy SFR or even multi-family is WAY more affordable and we feel like ultimately will allow us add more properties here than we would if we were still in the bay area.
Best of luck as you figure out what might work best for you and your family!
David
- Thousand Oaks, CA · Member since 2013 · 21 posts · 2 votes12y
Hi Andrew,
I think it's more of a personal view. Saving more and earlier retirement are not everything. How are you going to spend the time in between, is more important. What keeps you here, friend, family weather, sea- you name it, is a very personal preference, of how you rather live your life, while working toward your goals. For somebody else, maybe this things will be less important, and moving will be easier.
I agree with everything you wrote about the financial situation in Cali, yes we all hear how much easier it is in Texas, for example. and I still miss the days when we lived in Florida, and did not pay income tax. ...The point is, and if you think you will have a fair chance of being equally happy, in another state, I would give it a serious thought. but do not leave a place that you have roots in , and you love, just because it is harder. difficaulties can take many forms.
Remember, the journey is more important than the reaching the destination.
- Wholesaler · Arnold, MO · Member since 2013 · 348 posts · 183 votes12y
I would often ask the locals WEll what do you do for fun around here since there are no real national forest's or much of anything else they had to think a while.
Whaaaat? St Louis Cardinals, who beat the Dodgers. Royals, who beat the Angels. Mark Twain Natl. Forest, the Ozarks, the Rams, who left California for greener pastures. Also, the Arch, the world famous Zoo, the Science center, Botanical Gardens, Branson, and yes skiing! So much more! You really need to visit!
- Investor · Ukiah, CA · Member since 2014 · 196 posts · 83 votes12y
this thread is reminding me of a great TED talk on decision making and happiness, the main gist being that people have a strong tendency to talk/think themselves into being happy with choices that they make. So people who move out of ca would tend to be happy about that, and people who decide to stay would tend to be happy about that. Comments on this thread seem to bare that out.
- 12yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
to be fair I asked that question of a Realtor in Kokomo IND on a grey freezing butt February day.. pretty bleak looking that time of year in that part of the country.
And my Giants beat those Nationals so lets see what happens with the Cardinal series...
- Investor · Simpsonville, SC · Member since 2013 · 184 posts · 71 votes12y
It's clear you find your situation a challenge. I chose to leave California 2004 to pursue less expensive real estate investing opportunities in lower-priced market. Here's what I learned.
People are everything. Leaving my so-cal market also meant leaving my network. I had a small amount of credibility due to opportunities identified for other investors, connections made at municipalities, and a small deal put together with family. The value of your personal sphere, formal and informal, cannot be overstated. This also includes culture - and California culture is truly its own, glorious beast.
Cost of living stats are bunk. Outside of wall street the market is rarely anything close to efficient. There is a reason it is cheaper to live in those cheap cities you're currently considering. For many occupations the reason is salary - in Greenville, SC school nurses are paid less than 50% of what they earn where you live. Other factors (social, environmental, geographical, etc) also have an impact. We are surrounded by superfund sites, and every stream I've found has warnings about contamination.
Quality of life. What do you love/live to do when you're not in the office? Do you like your office? Weigh this stuff out carefully. I completely overlooked this aspect of my life. Since my 2004 move I've been living in the south. Don't get me wrong, there are many wonderful things about the south, it's just not for me. I don't get the culture or the old southern blue bloods. I don't enjoy millions of bugs, the constant stench of mold, and the always-wet air (I hate humidity). There's nothing inherently wrong with any of these things - it's just not a good fit for me.
Look long and hard at where you are considering - and also look long and hard at what you're leaving. I wish daily that I was still living in SoCal, not for the real estate but EVERYTHING else. I wish you the best in your decision. In the end, and as BiggerPockets so eloquently teaches, you can do real estate anywhere.
Have you read Acres of Diamonds? Could be relevant considering...
- Danville, CA · Member since 2014 · 13 posts · 5 votes12y
@Mark Vejnar thanks for the insights...so helpful! I will check out Acres of Diamonds, never heard of it.
- 12yJean BolgerPro MemberAurora, CO · Member since 2012 · 2k+ posts · 1k+ votes
I think a person with a reasonably healthy psyche can be happy any number of places. I also think it's really easy to get caught up in the "I can't possibly leave here because I'd miss out on...(fill in the blank)" mindset. There are a lot of great towns in the US that have great quality of life with out all the hassle/expense of the large coastal city areas.
I'd suggest do some talking as a family about what you really love to do. What makes you happy? What activities do you enjoy? What would a great fun weekend look like? How about a great workday? If you're telling yourself you are staying in an area for, say, the outdoor adventure activities but yet you never participate in those.... maybe you're not as into that as you think. Same with arts/culture events. (I know some people who live in NYC "for the culture" but they work so hard to afford living there that they never actually get to any cultural events!)
We want to "have it all" but the more you prioritize what you want the easier it gets to start having it.
- Professional · Rancho Santa Fe, CA · Member since 2014 · 26 posts · 16 votes12y
We moved from San Diego back to Minnesota (where we were from) around 2007. It was easier to invest in Minnesota, as we were just starting out and that worked for us. But we missed San Diego and moved back two years ago. Of course, in our situation the home prices were higher when we left than when we returned.
As much as the lower entry points elsewhere are tempting, having once moved from Southern California, I don't think we could do it again. We may invest out of state, but I doubt we'd leave here. There is a reason people move to California and when you leave it, you miss it.
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