Investing in California vs. other landlord-friendly states: What should I do?

Question

Hello Guys!

As the post shows, I am "starting out" on my investing journey. I currently have my previous home for rent but the property was unfortunately trashed by the Tenant. Following the laws has been a "process" to call it nicely. I wanted to ask if anyone who was originally an investor from CA moved to other landlord friendly states like NV, AZ, TX and found their market and how that has been.

Any feedback would be appreciated!!

Eric Gerakos · Answer

I have invested in California for 23 yrs with 0 evictions. Like any other state you need to know where and how to invest.....

Mike Paolucci · Answer

I'm originally from San Francisco, one of the more liberal and anti-landlord cities in the state. Landlord laws was the main factor why I chose to invest out of state and have been happy with my decision to do so.

Tenants will trash your property, regardless of what market you choose to invest in. It's the unfortunate reality of real estate investing. That is what makes finding good tenants (pay rent on time, take care of the property and let you know when things need to be fixed) so important. Once you do find them, do what you need to do to take care of them and keep them as long as you can.

Ohio, from my experience has been a pretty good state when it comes to landlord laws. You have actual rights in comparison to CA and the process is much easier. Toughest part will be figuring out what market you want to target, what teams to trust and employ to manage your properties for you as I wouldn't recommend trying to manage the property yourself. It'll take time to develop the boots on the ground but a good PM will help speed that up.

Julia Lyrberg · Answer

Hi Csingh, Sorry to hear about the tenant issues—that can definitely be a difficult experience. Many investors from CA have found success in states like NV, AZ, and TX due to their more landlord-friendly laws and growing markets. Texas, for example, has strong rental demand and easier eviction processes, making it appealing for landlords. If you’re considering expanding your portfolio, those markets could be worth exploring.

Bradley Buxton · Answer

@Csingh Singh

You can have bad tenants in any market and lose money on bad deals. It's not a location issue. As you have experienced CA has laws that can be taken advantage of by tenants and evictions can be very difficult and costly. There are also many rental success stories in CA. Out out state can offer other advantages but CA is still a desirable place to live. Tight tenant screening is always a key factor in preventing costly evictions. You can invest in both CA and out of state and experience what works better for you and your lifestyle and goals.

Jimmy Lieu · Answer

Hi Csingh, I'm sorry to hear about your frustrating experience. I'm not from CA but I'm from Portland OR and moved to Columbus OH to pursue REI. You might want to consider Columbus OH - evictions are quick and won't take 12 months and we have good landlord protection laws. The economy is also pretty diverse and strong - lots of growth in population and the job market and there is strong rental demand. We still see 1% positive cash flowing deals with appreciation potential. Happy to send over some resources regarding the Columbus Ohio market and why it's a great market to invest into!

Samuel Diouf · Answer

Hey Csingh, A lot of investors based in markets like California and New York are choosing to purchase their investments OOS in the Midwest because of the affordability and numbers making more sense.

Bruce Woodruff · Answer

You can make money anywhere. It's just that with Cali, there are many additional hurdles between you and success. As long as you know that and are prepared for that, fine. But don't think the Cali is the same as AZ, NV or the Midwest. It's not. Be careful, be very careful......

Colby Fryar · Answer

Anywhere but California my friend!  Even New Mexico is better and that is a big stretch.

Robert Carmody · Answer

There are many advantages and upsides to real estate investments in New Mexico. I have worked with many experienced investors from Southern California, Las Vegas, Phoenix, Tucson, Denver, and other large metro areas in the southwest and west coast, with seasoned investors that still live in all of those great cities but have shifted most of their real estate investments out of those higher cost or higher risk markets into ours.

1) Compared to most cities in the SW and West, home prices in the Albuquerque metro are relatively affordable. Newly built homes start in the $270s in suburban communities, like Los Lunas and Belen, or low $300s in class A neighborhoods in Rio Rancho and NW Albuquerque. All are within 30 minutes of major employers.

2) Like most metro areas in the surrounding states and regions, we've had an inventory shortage for more than 5 years. It is improving, meaning sellers and builders are facing a little more competition, but there is still a shortage of housing units in the region.

3) Rental prices are strong and single family homes and townhouses rent very quickly. Rental prices for a 3bd/2ba/2cg home 1500-2000sqft can easily range from $1,800-2,600 per month.

4) Major employers in Central NM include Sandia National Labs, Los Alamos National Labs, Kirtland Air Force Base, FBI, US Federal Government, State of New Mexico, ABQ Public Schools, University of New Mexico, Central NM Community College, Presbyterian Healthcare, Blue Cross Blue Shield, Lovelace Healthcare, UNM Hospitals/Cancer Center/Level I Trauma Center/Regional Medical Center, Netflix Studios & Film Industry, Solar Panel Manufacturing & Renewable Energy Industry, Meow Wolf, Amazon Fulfillment and Distribution Centers, etc. These employers frequently attract new residents and create a steady influx of good quality renters and prospective tenants.

5) The Albuquerque metro area and Central New Mexico enjoy over 310 days of sunshine and a mild climate year-round. Homebuyers and renters can comfortably move all year. Homeowners do not have major risks from natural disasters. We do not have serious floods, tornados, heavy snow and rain, frequent major hailstorms, big earthquakes, or extreme weather conditions. As an investment property owner, this means less maintenance and fewer unexpected expenses from storm related damage, often resulting in more affordable insurance premiums, less wear & tear on mechanical equipment, roofing materials or exterior surfaces. Most properties are landscaped with water conservation in mind and therefore you don't have the expenses or hassle of maintaining large lawns, high water bills, large tree maintenance, etc. Most homes have stucco exteriors, which are also relatively low maintenance compared to areas where wood and siding are common.

6) Stable and steady housing market. Historically, this market gradually trends upwards, with few dips, and less volatility in real estate purchase and rental prices.

7) The greater ABQ metro area and Santa Fe have a population of approximately 1,000,000. Average household income in Albuquerque is $83,000, with a median home price of approximately $365,000. Cost of living is about 6% below the national average.

8) Landlord/Tenant rights and laws are fairly balanced, and eviction rates are significantly lower than the national average (22% below national average). Over 52% of last  year's evictions came from the 10 largest apartment buildings, so evictions from single family rentals, condos and townhouses are not common. Evictions can be served between 3 and 30 days.

If you'd like mor information or input, feel free to reach out.

Investing in California vs. other landlord-friendly states: What should I do?

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