Out of state rentals

[Rafal Soltysek]

I am based in Las Vegas ,NV  -- was thinking about acquiring some rental properties in mid-west, possibly TX, AR, TN as well....what your take on it?- if you had to pick one location/state - what would that be?,... thanks raf

[Becca F.]

@Rafal Soltysek

I invest in the San Francisco Bay Area and Indianapolis metro area. I personally would stay local or within 2 hour driving distance. From my brief research, Nevada and Arizona have low property tax rates.  When I looked at Nashville Tennessee the property tax rates seemed a bit high to me as well as Texas, although I do know California investors buying multi-unit in San Antonio (an apartment complex).

I should have bought in the Vegas area. I know a couple of beginning CA investors who have done this. Here's my experience summarized about the Midwest. 

https://www.biggerpockets.com/forums/48/topics/1165499-whats...

The "cash flow on paper" for Class C Midwest (which is almost non-existent with 7% interest rates) will cost so much in repairs, capital expenses, tenant issues and it won't appreciate enough to make up for the losses. My Class A Indy home is doing better but I've owned it for 10 years so not a recent purchase. My property taxes in Indianapolis metro area (2.77% and 2.78% for different counties' rates) increase with no limit (confirmed with agents and local investors) vs. California max 2% increase a year (unless doing significant renovation like adding rooms, an ADU where it's reassessed)

I talked to a very honest Indy property management company who said the people who do well with Class C buy in volume (not your typical beginning investor) because the good properties offset the losers. That just sounds like a huge headache to me, having 20 to 50+ Class C SFHs/2-4 units. I'd take 2 to 4 solid properties in CA or Vegas over that anyday. Good luck!