First Investment Property

[Renee Lindgren]

My husband and I are looking for our first investment property. Our goal would be to buy 2 investment properties in 2021. We live in Southern California, but are looking in Austin, TX or Sacramento, CA. Any advice on pros/cons? Both areas I suspect would have growth for a buy and hold strategy. Texas worries me because the high property taxes. Would that be a reason alone to not select that area? Any advice would be great.

[Mark Brown]

@Renee Lindgren

Renee, congratulations on taking your first steps into the rental market. Texas definitely has higher property taxes compared to California.  But remember, there is no state income tax for you to file and pay tax on your profits here, so that should factor into your cash flow analysis. Second, a lot of "new" subdivisions have municipal utility districts ("MUDs") here.  These are taxing entities that reimburse the developer for the cost of installing utilities. As @Marlen Weber alluded to, these tax rates go down as the improvements are paid off.  BUT, you can always buy an investment home in an area that does not have any MUD and avoid about 1% or show of additional property taxes. Of course your realtor can tell you if a prospective house is located in a MUD district, but if you like, you can also view a map of all MUD's in Texas on this website: https://www.tceq.texas.gov/gis... 

Best of luck finding a great real estate deal! I'm in the Houston area, but if I can be of any help, let me know.