California Vs Out of State (really, but why?)

[Osazee Edebiri]

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

[Osazee Edebiri]

Quote from @Chris John:

@Osazee Edebiri

Here's my argument against California (besides the obvious regulation and rent control).  If I were going to invest $1M, I wouldn't buy $1M worth of property.  I would leverage it and buy $4-$5M worth of property.

At that point, I wouldn't expect to be able to cashflow that in California currently, so I'd have to make up some of that $3-$4M worth of mortgage payment out of pocket (not happening.  I'm just a teacher!  haha.) 

However, I could buy properties in Jacksonville that would cashflow (and most likely appreciate too).

The problem with appreciation is that it doesn't help if you can't hold onto the property long enough to realize it.  Some of us need cashflow too...

 Fair points. But why not just buy a property cash and refi, out, you can create a cash flowing property even here in California. If that is your investment strategy. Basically your point is you would just need to cover debt service, to make sure you don't loose the property. 

Not sure that means the properties you buy in Jacksonville will produce better results in 15 years because they cashflow.

[Osazee Edebiri]

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

I will agree with you Matthew, there are some cities that have Endless regulations, but many cities in other states have those problems too.

You're incorrect here. I understand you are biased towards Cali, and that's ok as long as you realize that. But there are no other states with the over regulation that Cali has. Zero. I lived and owned many businesses and properties there for over 40 years, longer than you've been alive.

And if someone decides to squat in your Bay Area Mansion the State Law will protect them, it's a State issue and then County, not neighborhood. (Although I get that you're saying that rich areas will treat it differently, the elites never follow their own rules)

 The whole premise of this question is to hear why another state is better and while likely out perform a Cali investment in 15 years, most of the responses are just negatives to California. I definitely love California, but if someone can give me good reasons to invest somewhere else of course I would do it. Reasons are two sided. Cali's bad laws, eviction practices, etc and the benefits to another state.

Eviction is very much county to City here. Evictions happen, but realistically if you are renting a Bay Area Mansion, the tenant you put in matters. I value your longer than my lifetime experience, that's why I here for these conversations. I did property management for 5 years, time again the the tenant screening is one of the most crucial parts to success. Then for small landlords the relationship with the tenants or how the property management maintains the relationship. 

And yes to the areas where there are "elites" as you say, I believe those are the areas that will out perform most other cities in other states.

[Chris Mason]

Markets find equilibrium. There's no better or worse, it depends on goals etc.

If you want cashflow next month, you buy a dumpy little $100k place in a midwest warzone with a monster cap rate and nominal cashflow. You need the cashflow to patch the bullet holes. It's worth $100k today because it doesn't appreciate, it was also worth $100k (in inflation adjusted terms) 10 years ago.

If you want wealth 10 or 15 years from now, you buy in a ritzy California location (San Jose, Hollywood, whatever) and watch one of our regional engines of the global economy lift all boats. Prop 13 is the icing on the cake, I've seen more than a few >$1m homes with annual property tax bills below $2k. Pair that with a fixed rate mortgage and rents trending up over time, and you've got the ultimate inflation hedge. A rental home per kid is a really good college savings plan.

Most people don't have, or want to have, the dial entirely set to either extreme. It's not fun to bleed cashflow for a decade with a-paper self-employed tenants who cannot qualify for a mortgage because they, like many higher income people, cheat on their taxes, nor is it fun to dodge bullets while posting eviction notices. 

Somewhere in the middle is where most fall, where the goals are aligned. The upper half of that dial, modest cashflow, lower maintenance tenants, with stronger than average appreciation, California has aplenty. The lower end of that dial, strong cashflow but weak appreciation, and high maintenance tenants, is where much of California comes in weak.

For people that go multiple directions at once, mixing it up for diversity early on, laziness eventually compels them to shift more towards the modest cashflow with lower maintenance tenants and higher appreciation direction. Or maybe they just get older, want to hustle/evict/etc less, and have more things in life on auto-pilot, or at least closer to it. Or maybe they got sick of property tax increases outpacing rent increases in locations without something similar to Prop 13.

But, yeah, that's the pattern. Young eager hustlers chase cap rate and cashflow, get wiser & more conservative as they age. Meme stocks are great when you're 23, not so much when you're 43, same thing.

[Osazee Edebiri]

Quote from @Dan H.:

Quote from @Matthew Crivelli:

California offers high property taxes, tenant friendly laws to a fault, ENDLESS regulations and more volatility than anywhere in the country. Old timer type wisdom would tell you to invest elsewhere and I would have to agree.

 California’s property tax is typically ranked as 15th or 16th lowest in the nation. 

Endless regulations still result in one of the lowest eviction rates and lowest rent delinquent rates in the country. 

Case Shiller shows the 3 best returns for residential property for this century are coastal California cities.  

neighborhoodScout has virtually every California coastal city as 10 out of 10 in appreciation for this century. 

Every reputable source shows coastal California has produced better returns for this century than other large residential RE markets. 

Volatility of coastal Ca is a myth.  Virtually every coastal Ca city has had few significant depreciation cycles.  The coastal Ca cities recovered from the Great Recession faster than the bulk of other cities.

Your old timer wisdom would not have served you well in the recent past.  Question is how would it serve you going forward.  My opinion, not well.  

 Thanks Dan, 

One doesn't even have to list these stats to see this in real time, if they actually have experienced living in California. 

People equate this state as whole, like it's not this massive state with a GDP trumps most countries. I live in San Jose and during every economic its like whatever is going on outside the bubble doesn't exist. Meanwhile, I wouldn't buy a property in Stockton, CA.

Now on to the facts you provided, I would like to see someone provide facts that another state will provide better results in 15 years. 

 

[Matthew McKee]

Quote from @Carlos Ptriawan:

Actually there's no such this as CA vs out of state.
This is all just mathematical equation dude. So lets have this exceltable how the house appreciation performs since 2009 :

Bay Area    6.9%
San Diego  6.5%
Kansas City 3.2%
Nationwide Average 3.1%
Typical Inflation every year 2.9%
..
Indianapolis,IN 1.8% (just for illustration ,not accurate)
Birmingham,AL  1.5%  (just for illustration,not accurate)

 There's a metro that's accelerating double in the inflation rate, that's where you see the highest acceleration. The highest acceleration is equal to a lower cap rate equal to lower cash flow.

In the other spectrum, there're cities where it's lacking appreciation, so you can still always have higher cash flow/higher cap rate in that city.

In another question: what makes the city appreciates a lot? economic booking and highest supply/demand ratio.

In the year 2300, if Silicon valley moves to Boise Idaho, Boise Idaho will appreciate double as well. 

So it's not about "where", but it's about "economy". Higher economic output triggers higher appreciation, it happened everywhere regardless it's San Jose, NYC, Singapore, Berlin, or London. 

It's a function of math.

this is an astute breakdown.

At the end of the day, no one has a crystal ball. If the numbers makes sense, a deal can work in any market but who knows what that market will become in 15 years. 

[Bill B.]

Well @Carlos Ptriawan. You did forget to put Las Vegas on your housing appreciation list from 2009 to 2022. We went from $209,000 to $480,000. 130% in 12 years. So I’m guessing we compared pretty favorably. Especially with lower insurance, lower property taxes, and no income tax. You might even say it woulda have been a better investment than any of your examples. The rent to price ratio is probably better and again, tax free. 

So I’m guessing you’d make more from the renting part of the investment because of lower costs and keep more of the net because of no taxes. Especially if you suddenly decided to sell the appreciated properties and compare the net gain after those taxes. And don’t forget. Nevada doesn’t hate landlords like California does. Though, as more and more flee the golden state for the silver state, that’s unfortunately slowly changing. They never remember what or why they fled. 

Again. My main point is if you lived in Florida or New York, Texas or Minnesota, you wouldn’t be saying the best place to invest in the country is California. 

Two old sayings:

1) It’s easier to fool people than to convince them they’ve been fooled

2) What’s the worst state to do business in?  And why did you say California?

[Carlos Ptriawan]

At the end of the day, no one has a crystal ball. If the numbers makes sense, a deal can work in any market but who knows what that market will become in 15 years. 

True. It's a game of predicting who will have the increased buying power in the next 15 years or so.

Elon Musk above is a good example. If Microsoft moves there too then Texas will have a rapid appreciation of home value. Roblox too I hope.

I think the next 15 years, it is still within 3rd wave of tech/energy sector explosion, just look at Cathie Wood investing.

I would be happy if Texas experienced what Bay Area felt today ($700k per-door 2BR Class A Apt ; rented for $4,500). :p

[Osazee Edebiri]

Quote from @Chris Mason:

Markets find equilibrium. There's no better or worse, it depends on goals etc.

If you want cashflow next month, you buy a dumpy little $100k place in a midwest warzone with a monster cap rate and nominal cashflow. You need the cashflow to patch the bullet holes. It's worth $100k today because it doesn't appreciate, it was also worth $100k (in inflation adjusted terms) 10 years ago.

If you want wealth 10 or 15 years from now, you buy in a ritzy California location (San Jose, Hollywood, whatever) and watch one of our regional engines of the global economy lift all boats. Prop 13 is the icing on the cake, I've seen more than a few >$1m homes with annual property tax bills below $2k. Pair that with a fixed rate mortgage and rents trending up over time, and you've got the ultimate inflation hedge. A rental home per kid is a really good college savings plan.

Most people don't have, or want to have, the dial entirely set to either extreme. It's not fun to bleed cashflow for a decade with a-paper self-employed tenants who cannot qualify for a mortgage because they, like many higher income people, cheat on their taxes, nor is it fun to dodge bullets while posting eviction notices. 

Somewhere in the middle is where most fall, where the goals are aligned. The upper half of that dial, modest cashflow, lower maintenance tenants, with stronger than average appreciation, California has aplenty. The lower end of that dial, strong cashflow but weak appreciation, and high maintenance tenants, is where much of California comes in weak.

For people that go multiple directions at once, mixing it up for diversity early on, laziness eventually compels them to shift more towards the modest cashflow with lower maintenance tenants and higher appreciation direction. Or maybe they just get older, want to hustle/evict/etc less, and have more things in life on auto-pilot, or at least closer to it. Or maybe they got sick of property tax increases outpacing rent increases in locations without something similar to Prop 13.

But, yeah, that's the pattern. Young eager hustlers chase cap rate and cashflow, get wiser & more conservative as they age. Meme stocks are great when you're 23, not so much when you're 43, same thing.

 Yes Chris, all true, everywhere is what you make of it. The question relates to most people would say California is a bad investment, and I just want them to give me an explanation of how somewhere else will out perform California in 15 years. Of course this is all hypothetical, but we talk about deal analysis all the time and factoring in future analysis is part of the process.

[Osazee Edebiri]

Quote from @Darius Ogloza:

@Osazee Edebiri I actually ran something close to your hypothetical back in 2004. I took a $400,000K HELOC from my primary residence in Marin County and purchased eight properties in Rochester NY - mix of a duplexes and SFR's on the theory that California property served as a kind of "stock" and that I needed some "bonds" in my portfolio. I ended up selling most of the Rochester properties in 2014-15 at a rough break even point as there was little appreciation on most and the cash flow was mostly eaten up by capital improvements and repairs. Had I used the $400K to purchase another Marin County fixer I would be up another seven figures today. Easy. Of course, one example proves nothing but I here's a data point/some food for thought.

P.S. nothing against Rochester.  It's a great place to invest but you have to run the numbers and then run them again figuring that the weather and taxes are going to have an effect on your bottom line.  

 Thanks Darius,

This is my thought process exactly, I think Cali will beat anywhere apples to apples investment in 15 years.

[Osazee Edebiri]

Quote from @Wale Lawal:

@Osazee Edebiri

California is called the Golden State for many reasons. Plenty of sun, the gold rush, and extraordinary past opportunities to invest in real estate. While California is still an ideal setting for certain people, it is quickly becoming more difficult to justify buying property there. This is especially true because there are, arguably, 49 other states with more attractive real estate investment incentives.

For people who have only known California as home, it can be a little difficult to think about shopping for property anywhere else. Try to counter this bit of nostalgic grief by framing real estate investment properly. It helps to keep an open mind about a smart relocation. Here are five benefits that accompany property ownership outside of California.

1. Living More Comfortably, While Chasing Other Economic Opportunities

It is no secret that the cost of California acreage is only surpassed by certain select metropolitan properties in places like Manhattan. For the price of a simple home and plot in California, a small ranch can be purchased in many other states. Plus, the tax burdens in these places are much more manageable. Also consider states like North Dakota. Property prices there are also rising, but there is much more raw land available. Industry growth is also producing income opportunities that are setting records.

2. Investing Beyond Ballooning Markets, or Scarcity Fears

Investing in real estate simply because the market is volatile is not a secure plan. Try to remember 2007. Places like Utah and Colorado have balanced housing market statistics. Though there are upward trends, they are not only occurring because cities are running out of room.

3. Exploring States with More Resident-Friendly Governments

Sometimes, when reading California news, it seems as if the state government doesn’t actually like the job of managing its population. This is especially true when it comes to the act of finding affordable property in a safe neighborhood. Consider economically unique shifts like those in Wyoming. This state has just provided home buyer and business incentives for people using money vehicles like Bitcoin. This is a no-nonsense move to attract people who want to make the state home.

4. Escaping the “Nanny State”

Freedom is a huge issue with property buyers, regardless of age and class status. New California legislation, like the recent home solar power mandate, is the last straw for many people. There is a renewed desire for personal liberty in modern America. This is precisely why a state like Idaho is one of the fastest growing. In a city like Boise, new residents can enjoy metropolitan attractions, untouched wilderness areas, and private acreages with simple municipal laws to “homestead.”

5. Being Part of a Place with Growing Attractiveness for the Future

While a state like California has nearly endless attractions for visitors, most property owners would say that it is headed in the wrong direction. Why invest in an area that has an uncertain social and economic future? Bottom line real estate profits are only one factor in finding the right property. Take the time to learn about markets in areas that will likely remain popular for decades to come.

Good Luck!

 Thanks Wale, 

I have traveled the world, even lived in China for a stint. You started out by mentioning California is the Golden State then mentioned cities like Wyoming. Sorry, I mean of course Wyoming has incentives their population is barely larger than the city of Oakland. SF and San Jose are almost double.

You seem to represent major metros in Texas, why haven't you moved to North Dakota? Most people don't want to live in those states and it's just very clear given the population size difference. Now, that's not to say they don't make for good investments and I like that you mentioned some markets but you didn't really provided anything that suggests purchasing in those areas will out perform a California investment.

[Osazee Edebiri]

Quote from @Shiela R.:

Colorado has the third lowest property taxes in the US.  Boulder has a housing cap (limited supply) and steady demand.  So not unlike geographical limits to supply on the CA coast.  And as many have said, the state of CA has some issues regarding landlord tenant laws. I was recently speaking with two different people who live outside of CO. One an accountant in PA and the other a water law attorney in Utah and we  are astonished that there isn't more talk of the American Southwest running out of water. Is anyone else concerned about lack of water in CA and the rest of the Southwest?  Would this be a contributing factor to not invest in these areas? 

Yes, that would be a big concern. I have heard people mention, but doesn't seem to be too much chatter about it. Maybe I focus on the Bay Area, we have Tahoe water. 😬

But seriously, if that does happen it would be a nation-wide problem because California produces a lot of produce.

[Osazee Edebiri]

Quote from @JD Martin:

Quote from @Osazee Edebiri:

Quote from @Todd Rasmussen:

@Osazee Edebiri

Where is dictated by how you want to invest and how much you have to place.

For me, 1 million dollars does better in TN than CA over 15 years. If there was substantially more to invest or I wanted to be more passive, then CA would be more appealing.

Yes, I definitely agree, I mean just being more familiar with an area is an advantage. But this question is based on what would perform better. So let’s say we took a person who had no ties to California or Tennessee, how would there million dollars perform better and why?

I'm in TN. For cash flow and general wealth building I love investing here but historically there's no comparison between here and most of California in terms of housing appreciation. Even our markets that are getting "expensive", like Nashville, are no comparison to most of California's prices. 

That of course comes with a caveat. As a landlord there's no way I would want to be a California investor because I don't want to work that hard for the extra return. It's the same reason I don't own C/D class housing - there's much better returns there but I don't want to work that hard.

Return and risk are strongly correlated. One of the reasons you have historically had better returns on investment property in California is because you face a lot of hurdles and aggravation that I don't face here in TN.

 I like that. At the end of the day path of least resistance even if it doesn't net a higher return. Though I do think once you get to a certain level, there is less work to deal with, no matter where you invest.

[Osazee Edebiri]

Quote from @Carlos Ptriawan:

Actually there's no such this as CA vs out of state.
This is all just mathematical equation dude. So lets have this exceltable how the house appreciation performs since 2009 :

Bay Area    6.9%
San Diego  6.5%
Kansas City 3.2%
Nationwide Average 3.1%
Typical Inflation every year 2.9%
..
Indianapolis,IN 1.8% (just for illustration ,not accurate)
Birmingham,AL  1.5%  (just for illustration,not accurate)

 There's a metro that's accelerating double in the inflation rate, that's where you see the highest acceleration. The highest acceleration is equal to a lower cap rate equal to lower cash flow.

In the other spectrum, there're cities where it's lacking appreciation, so you can still always have higher cash flow/higher cap rate in that city.

In another question: what makes the city appreciates a lot? economic booking and highest supply/demand ratio.

In the year 2300, if Silicon valley moves to Boise Idaho, Boise Idaho will appreciate double as well. 

So it's not about "where", but it's about "economy". Higher economic output triggers higher appreciation, it happened everywhere regardless it's San Jose, NYC, Singapore, Berlin, or London. 

It's a function of math.

 Ok fair enough. So modify the question, using your math. What state would be the best to $1m in, performing the best in 15 years?

[Osazee Edebiri]

Quote from @Aaron Gordy:

@Osazee Edebiri I think that one of the richest folks currently: Elon Musk has kind of led by example by putting down billion dollar roots in Texas. He left California. 

Haha, am I ok to say that's a very Texas answer. I love Austin btw. I went to a bachelor party there, ACL, and stayed in an STR that gave me some ideas for how I would want to theme one in the Bay.

When I am a billionaire, I will make moves like that. If Cali gave Tesla a better incentive to stay they would have never left. It's not really comparable at my million dollar example.

[David Song]

Quote from @Osazee Edebiri:

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

This question has been debated on BP for over a 

[Osazee Edebiri]

Quote from @Carlos Ptriawan:

Quote from @Aaron Gordy:

@Osazee Edebiri I think that one of the richest folks currently: Elon Musk has kind of led by example by putting down billion dollar roots in Texas. He left California. 

 We need more people like  Elon Musk.

When these techies move to different places, the new place suddenly has price appreciation, good for realtor :-) 10 years later, people start complaining 'why everything is so expensive here, lets's move to Florida or Alabama'.

 Definitely good for shaking up an economy. 

[David Song]

Quote from @David Song:

Quote from @Osazee Edebiri:

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

This question has been debated on BP for over a 

This question has been debated on BP over a decade. About 10 years ago, I made the decision to stay in CA Bay Area, rather than OOS. Looking back, that decision certainly paid off big time. I am curious about those folks decided to go OOS 10 years ago, how are they doing. I am sure they are doing fine, with the nationwide appreciation in the recent years. But I would love to know if they regretted their decision.

[Osazee Edebiri]

Quote from @Matthew McKee:

Quote from @Carlos Ptriawan:

Actually there's no such this as CA vs out of state.
This is all just mathematical equation dude. So lets have this exceltable how the house appreciation performs since 2009 :

Bay Area    6.9%
San Diego  6.5%
Kansas City 3.2%
Nationwide Average 3.1%
Typical Inflation every year 2.9%
..
Indianapolis,IN 1.8% (just for illustration ,not accurate)
Birmingham,AL  1.5%  (just for illustration,not accurate)

 There's a metro that's accelerating double in the inflation rate, that's where you see the highest acceleration. The highest acceleration is equal to a lower cap rate equal to lower cash flow.

In the other spectrum, there're cities where it's lacking appreciation, so you can still always have higher cash flow/higher cap rate in that city.

In another question: what makes the city appreciates a lot? economic booking and highest supply/demand ratio.

In the year 2300, if Silicon valley moves to Boise Idaho, Boise Idaho will appreciate double as well. 

So it's not about "where", but it's about "economy". Higher economic output triggers higher appreciation, it happened everywhere regardless it's San Jose, NYC, Singapore, Berlin, or London. 

It's a function of math.

this is an astute breakdown.

At the end of the day, no one has a crystal ball. If the numbers makes sense, a deal can work in any market but who knows what that market will become in 15 years. 

 Right, but if that was truly the case people wouldn't associate such a negative connotation with investing California vs any other state. 

[Osazee Edebiri]

Quote from @David Song:

Quote from @David Song:

Quote from @Osazee Edebiri:

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

This question has been debated on BP for over a 

This question has been debated on BP over a decade. About 10 years ago, I made the decision to stay in CA Bay Area, rather than OOS. Looking back, that decision certainly paid off big time. I am curious about those folks decided to go OOS 10 years ago, how are they doing. I am sure they are doing fine, with the nationwide appreciation in the recent years. But I would love to know if they regretted their decision.

 Yes David, that is the question, if someone moved out of state was moving a better decision in terms of investment. Life might make someone move, but if they choose to move because they thought they would perform better, that's what I want to hear results for. 

[David Song]

Quote from @Osazee Edebiri:

Quote from @David Song:

Quote from @David Song:

Quote from @Osazee Edebiri:

I think the constant discussion of California vs anywhere else is intriguing. So I pose a question. Hypothetical, if a person had a  2 million dollars to invest, they purchased property with 1 million in California and 1 million in any other state, which would perform better after 15 years and why? 

This assumes anything and everything will happen, which is the real life case anyway.  I am not automatically assuming California will perform better just because I live here in the Bay Area. I think someone may have interesting incite to why another state could out perform California property in the next 15 years.

This question has been debated on BP for over a 

This question has been debated on BP over a decade. About 10 years ago, I made the decision to stay in CA Bay Area, rather than OOS. Looking back, that decision certainly paid off big time. I am curious about those folks decided to go OOS 10 years ago, how are they doing. I am sure they are doing fine, with the nationwide appreciation in the recent years. But I would love to know if they regretted their decision.

 Yes David, that is the question, if someone moved out of state was moving a better decision in terms of investment. Life might make someone move, but if they choose to move because they thought they would perform better, that's what I want to hear results for. 

I still remember the interesting debate 10 years ago. So many people wants to go OOS, buy cheap 50k house in Midwest. At that time, I was also debating whether I should go OOS. I visited Las Vegas a few times to check out their market. Not much better than Hayward at that time.

I decided at that time to stay local, buying 1-2 properties per year. That is what I did over the past 10 years. 

[Bonnie Low]

California is just too large and too diverse to be talked about as a single market. Where I'm at - in far northern CA - looks nothing at all like the metro areas south of me, be that Sacramento, San Jose or LA. Housing is actually very affordable, particularly in comparison to income levels. We live here, we invest here, and we also invest out of state so we know exactly how our area compares to other areas we've either invested in previously or are interested in now: Central and coastal OR, Northern CO, all of Idaho, Cleveland, Toledo, Dayton and Akron OH, Indianapolis, and the Texas hill country. In our area we can get solid cash flow using the BRRRR method on SFH's with an ADU. They will appreciate, but not at the rates you see in the bay area and other metros. While it's true CA has a lot of regulations that aren't business friendly, property taxes are actually very favorable - FAR better than those cities I listed in Ohio and even Idaho. Our property manager has done an excellent job of vetting tenants and we have no problem staying at market rates. Thankfully we haven't had to deal with an eviction but that has as much to do with tenant vetting as anything. A lot of people who don't live in CA or invest here have created a lot of stories that people love to repeat. I don't love the income tax bracket we're in. I don't love having to pay $850/yr per LLC. I don't love the extreme heat at this end of the state, but it's still a place that people want to work and live despite what the headlines or your neighbor Bob will tell you. Bottom line: real estate is local. So there's no one size fits all in this state.

[Bruce Woodruff]

Quote from @Osazee Edebiri:

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

I will agree with you Matthew, there are some cities that have Endless regulations, but many cities in other states have those problems too.

You're incorrect here. I understand you are biased towards Cali, and that's ok as long as you realize that. But there are no other states with the over regulation that Cali has. Zero. I lived and owned many businesses and properties there for over 40 years, longer than you've been alive.

And if someone decides to squat in your Bay Area Mansion the State Law will protect them, it's a State issue and then County, not neighborhood. (Although I get that you're saying that rich areas will treat it differently, the elites never follow their own rules)

 The whole premise of this question is to hear why another state is better and while likely out perform a Cali investment in 15 years, most of the responses are just negatives to California. I definitely love California, but if someone can give me good reasons to invest somewhere else of course I would do it. Reasons are two sided. Cali's bad laws, eviction practices, etc and the benefits to another state.

Eviction is very much county to City here. Evictions happen, but realistically if you are renting a Bay Area Mansion, the tenant you put in matters. I value your longer than my lifetime experience, that's why I here for these conversations. I did property management for 5 years, time again the the tenant screening is one of the most crucial parts to success. Then for small landlords the relationship with the tenants or how the property management maintains the relationship. 

And yes to the areas where there are "elites" as you say, I believe those are the areas that will out perform most other cities in other states.

Hey, I was the first one to say that coastal Cali will probably out-perform anywhere else. At least until a major paradigm shift happens, which I suspect it will. But not in the next 15 years.....

But...... now that I've had time to let this thought percolate, I will change and say that there are other areas that could outperform that area.

[Osazee Edebiri]

Quote from @Bonnie Low:

California is just too large and too diverse to be talked about as a single market. Where I'm at - in far northern CA - looks nothing at all like the metro areas south of me, be that Sacramento, San Jose or LA. Housing is actually very affordable, particularly in comparison to income levels. We live here, we invest here, and we also invest out of state so we know exactly how our area compares to other areas we've either invested in previously or are interested in now: Central and coastal OR, Northern CO, all of Idaho, Cleveland, Toledo, Dayton and Akron OH, Indianapolis, and the Texas hill country. In our area we can get solid cash flow using the BRRRR method on SFH's with an ADU. They will appreciate, but not at the rates you see in the bay area and other metros. While it's true CA has a lot of regulations that aren't business friendly, property taxes are actually very favorable - FAR better than those cities I listed in Ohio and even Idaho. Our property manager has done an excellent job of vetting tenants and we have no problem staying at market rates. Thankfully we haven't had to deal with an eviction but that has as much to do with tenant vetting as anything. A lot of people who don't live in CA or invest here have created a lot of stories that people love to repeat. I don't love the income tax bracket we're in. I don't love having to pay $850/yr per LLC. I don't love the extreme heat at this end of the state, but it's still a place that people want to work and live despite what the headlines or your neighbor Bob will tell you. Bottom line: real estate is local. So there's no one size fits all in this state.

Yes Bonnie, 

I went to Chico State and did a lot of dabbling in the “North State” as they call it, which is why I agree with you and think it’s funny the whole state is lumped into one thing.

[Osazee Edebiri]

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

I will agree with you Matthew, there are some cities that have Endless regulations, but many cities in other states have those problems too.

You're incorrect here. I understand you are biased towards Cali, and that's ok as long as you realize that. But there are no other states with the over regulation that Cali has. Zero. I lived and owned many businesses and properties there for over 40 years, longer than you've been alive.

And if someone decides to squat in your Bay Area Mansion the State Law will protect them, it's a State issue and then County, not neighborhood. (Although I get that you're saying that rich areas will treat it differently, the elites never follow their own rules)

 The whole premise of this question is to hear why another state is better and while likely out perform a Cali investment in 15 years, most of the responses are just negatives to California. I definitely love California, but if someone can give me good reasons to invest somewhere else of course I would do it. Reasons are two sided. Cali's bad laws, eviction practices, etc and the benefits to another state.

Eviction is very much county to City here. Evictions happen, but realistically if you are renting a Bay Area Mansion, the tenant you put in matters. I value your longer than my lifetime experience, that's why I here for these conversations. I did property management for 5 years, time again the the tenant screening is one of the most crucial parts to success. Then for small landlords the relationship with the tenants or how the property management maintains the relationship. 

And yes to the areas where there are "elites" as you say, I believe those are the areas that will out perform most other cities in other states.

Hey, I was the first one to say that coastal Cali will probably out-perform anywhere else. At least until a major paradigm shift happens, which I suspect it will. But not in the next 15 years.....

But...... now that I've had time to let this thought percolate, I will change and say that there are other areas that could outperform that area.

 Wait.., what areas and why?

[Bruce Woodruff]

Quote from @Osazee Edebiri:

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

Quote from @Bruce Woodruff:

Quote from @Osazee Edebiri:

I will agree with you Matthew, there are some cities that have Endless regulations, but many cities in other states have those problems too.

You're incorrect here. I understand you are biased towards Cali, and that's ok as long as you realize that. But there are no other states with the over regulation that Cali has. Zero. I lived and owned many businesses and properties there for over 40 years, longer than you've been alive.

And if someone decides to squat in your Bay Area Mansion the State Law will protect them, it's a State issue and then County, not neighborhood. (Although I get that you're saying that rich areas will treat it differently, the elites never follow their own rules)

 The whole premise of this question is to hear why another state is better and while likely out perform a Cali investment in 15 years, most of the responses are just negatives to California. I definitely love California, but if someone can give me good reasons to invest somewhere else of course I would do it. Reasons are two sided. Cali's bad laws, eviction practices, etc and the benefits to another state.

Eviction is very much county to City here. Evictions happen, but realistically if you are renting a Bay Area Mansion, the tenant you put in matters. I value your longer than my lifetime experience, that's why I here for these conversations. I did property management for 5 years, time again the the tenant screening is one of the most crucial parts to success. Then for small landlords the relationship with the tenants or how the property management maintains the relationship. 

And yes to the areas where there are "elites" as you say, I believe those are the areas that will out perform most other cities in other states.

Hey, I was the first one to say that coastal Cali will probably out-perform anywhere else. At least until a major paradigm shift happens, which I suspect it will. But not in the next 15 years.....

But...... now that I've had time to let this thought percolate, I will change and say that there are other areas that could outperform that area.

 Wait.., what areas and why?

Aha, I can't tell ya bro....you'll roll in with all your fat Cali money and buy it up.....

Why? Because I've been seeing it happen, at least in shorter term appreciation. And the trend looks to continue and grow.....