All Forum Posts by: Alex Craig

Quote from @Dennis Li:

Quote from @Alex Craig:

There are so many. Start my a place you would want to visit so that you can take a mini-vacation.  Look for cities with low taxes, no state income taxes and friendly landlord laws. I put those criteria into ChatGPT and came up with. BTW, the list TN. I live in West TN and have build a nice size portfolio,  but if you can find a deal in East TN, I would jump on that. 

If you're seeking states with no state income tax, low property taxes, and landlord-friendly laws, consider the following options:

1. Wyoming

• State Income Tax: None.
• Property Taxes: Effective property tax rate is approximately 0.56%, among the lowest in the U.S. Real Wealth
• Landlord Laws: Wyoming has no rent control ordinances, allowing landlords to set rental rates freely. The eviction process is relatively straightforward, typically taking about three to four weeks. Real Wealth

2. Texas

• State Income Tax: None.
• Property Taxes: While Texas has no state income tax, it compensates with higher property taxes. The effective property tax rate ranges from 1.6% to 1.8%, depending on the county. MarketWatch
• Landlord Laws: Texas is considered landlord-friendly, with laws favoring property owners in areas like eviction processes and rental agreements. LawDepot

3. Tennessee

• State Income Tax: None.
• Property Taxes: Effective property tax rate is around 0.64%, below the national average. Real Wealth
• Landlord Laws: Tennessee has favorable landlord laws, including no rent control and a streamlined eviction process. Real Wealth

4. Florida

• State Income Tax: None.
• Property Taxes: Effective property tax rate is approximately 0.83%, slightly below the national average. Real Wealth
• Landlord Laws: Florida is known for its landlord-friendly regulations, with no rent control and efficient eviction procedures. Real Wealth

5. South Dakota

• State Income Tax: None.
• Property Taxes: Effective property tax rate is about 1.22%, close to the national average. Real Wealth
• Landlord Laws: South Dakota has favorable landlord laws, including no rent control and a straightforward eviction process. Real Wealth

 Thanks for the suggestion @Alex Craig! Maybe I'm worrying too much, but I have one concern over the criteria you have here: "no state income tax, low property taxes, and landlord-friendly laws". There is no consideration of population/job growth.

In my opinion, economy is the foundation of a market. If an area has continuous population decrease or negative job growth, I wonder why that is a good place to invest. As an example, Memphis's population has been decreasing since year of 2000. What makes Memphis an attractive place for long term rental?

@Dennis Li  it’s my backyard, which definitely makes it easier. I always recommend investing in your local area if you can. I’ve been purchasing rentals here since 2006 and have built up a sizable portfolio. While Memphis has seen some population decline, most of that is to the suburbs, with higher-income individuals seeking newer construction. There’s also been an shortage of inventory in the $500,000+ price range. For me, Memphis has been a great place to invest because I don’t have trouble finding renters. Even with more rentals coming on the market due to private equity buying up properties, my homes rarely sit vacant for long. I make sure to renovate and maintain them upfront and during tenant turns. The homes I manage for others that experience extended vacancies usually do so because the owners want maximum rent without putting in the necessary work to make them competitive to others in the immediate area. Memphis is, and likely always will be, a blue-collar city. It’s a strong renter’s market, even more so now with declining homeownership rates. While we may not be the “next big thing” like Austin or Nashville, you don’t need an explosive market to succeed in real estate. If you can identify that next booming market, go for it—get in early before prices skyrocket. For example, we opened a Gus’s Fried Chicken in Knoxville six years ago and another one last year; when we opened doors back in 2018, Knoxville was an emerging market, and we bought a couple of homes there for rentals that worked out well. We bought low, collected rent for a few years and then cashed out. Now, the real estate market has exploded, and there’s little left to buy that can cash flowl Meanwhile, I keep building my portfolio in Memphis and Little Rock. These markets are consistent and easy to cash, making it easier to grow my portfolio compared to chasing the next big thing. We’re also opening a Gus’s in Chattanooga, and while I’ve found a couple of decent deals there, the cash flow is not as good as what I get in Memphis or Little Rock. Any purchases in Chattanooga will be speculative—if they cash flow even a little, that’s fine with me. This was a very long way of saying, Memphis cash flow’s and I can rent my houses out reasonably quick. It has worked for me for 17 years. Several of mine are not paid off and many more will be over the next 5 years. I turned 48 this year and chasing speculative markets is not going to be my thing. I am past that. Now looking for stability and cash flow.

I love Podio. It is customizable and you can create workflows to trigger actions.

@Jay Hinrichs which BTW, 6% is high. Certainly more areas with lower property taxes. With insurance rates going up, best to find areas with the lowest operating cost. Midwest cities with populations under 300,000 typically have cheap property taxes.

@Jay Hinrichs you are correct and that is the difference in 41,888 post and my 1,444 post. :) 

Quote from @Hector Espinosa:

Hi @Alex Craig,

This would be my first property and as I mentioned before I think numbers looks good but something is causing me trouble is the high crime rate in the area.  

My initial plan is hold the properties for at least 5-10 years so for now I'm not doing BRRRR.

I feel high crime rate can be overstated at times. Typically, crime is going to be present in a lot of the areas where #'s make sense, but the key is making sure the house you are buying does not have obvious crime ridden houses in the immediate area. I have a lot of houses that my friends with say is "high crime", but that is because it is areas they would not live and do not understand. Place good residents, make sure the block is nice (just not the street) and you should be fine. There are good people who, if they could, would choose to live in Class B neighborhoods, but they can only afford class C....that is your target resident. 

Most wholesellers I have some across are sketchy. Really, if the #'s work, then they work. The title company will make sure the title is clean. I once paid a $53,000 assignment fee; I can say, it was extremely upset when I got to the closing table, but even with that $53,000 assignment fee, I will still buying at at .40 on the dollar. I renovated the home and made $30,000 to a first time home buyer.  The real loser in the deal was the individual who gave his home way. Focus more on the #'s rather then the whoeseller and let the title company make sure the title is clean--which I would say 30% of the contracts we get from wholeseller die during title underwriting. 

That is a good cash flow. I think it all depends where you are starting in your career. If you are just starting, I would think on a leveraged purchase, $200 a month in todays market, that is assuming the home is fully renovated and capex items are fairly new. If you are doing a BRRRR and leaving older items in place, not updating electrical and plumbing, I think you need $300 t0 $350 if you are just getting started. I have close to 100 doors, thus I will pick up something even if it is barely cash flowing so that my other cash flowing assets can pay down the mortgage reasonably quick. I started that strategy when I got to 10 doors where I would pick up homes that barely cash flowed, but good homes that were fixed up well. Those newer pickup's individually did not sustain themselves, but typically had the mortgage paid off within a few years.

Quote from @Eli Fazzo:

Hey Bp family,

I’m looking to move to Lexington, South Carolina area within the next year or so. I would like to start investing in real estate once I get situated down there. My plan is to sell my primary home in New York and purchase a house to live in South Carolina. I also have three other investment properties in New York. I would like to 1031 exchange these properties into investment properties in South Carolina. From the research I’ve done so far, it seems that South Carolina taxes investment properties at 6% which makes a tax bill quite high compared to a primary home. This worries me a little. The high tax eats away a lot at the cash flow. Is it still worth to invest in the area?

Also if anyone has any contacts in the area and would like to share, I would greatly appreciate it. I don’t have any In the area at this point. Tax accountants, investor friendly agents, 1031 exhange experts etc. Thankful for any response or input.

 Just go a tad to the NW. Tennessee has 0% tax. There are great big and smaller cities to invest (Not Nashville -- to expensive)

Quote from @Jordan Ray:

Quote from @Dennis Li:

Quote from @Jordan Ray:

Quote from @Dennis Li:

Hi BP!

I'm new to real estate investment, and plan to invest in long term rental properties. I live in Los Angeles so I'm looking for out-of-state properties. Would really appreciate to suggestions on which area/market I can research on!

Here are some of my wishes:

1. Positive cashflow, ideally if more than $200 per door

2. Purchase price less than 250K

3. Landlord friendly

4. Locations with good potential for future job growth and non-fragile economy, diversified industry/business

5. Locations OTHER THAN Columbus/Dayton OH or OH in general (I'm checking the area now, but would like to know places in other states too:) )

I've looked at Tucson and Tempe but the price seems too high. Las Vegas maybe suitable, still researching...

Thank you very much for any suggestion! If any of my bullet points are not clear or too naive, please let me know!

You just described Memphis TN! 

 Thanks Jordan! Could you give a more concrete example on what kind of cash flow is possible in Memphis? Maybe from a deal you recently closed?

Almost every single deal I close either with a client or for myself has at least $200 -$500/month in cashflow. I will message you.

 Jordon-- I invest in Memphis. Please send me a deal that gets me consistently $500 a month. 

Elisha -- strongly recommend you visit the market. If you do, go with your house seller. If he insist going in the early part of the AM, then that is a redflag. After he shows you the property, drive by there at 9PM on a Friday night. See if the neighborhood has changed at all. PM in these parts can be much different AM.These mid-west homes and neighborhoods can be deceiving. I live and invest in 2 similar markets. They are great deals in markets like this, but if you get in a bad neighborhood, you can loose a lot.  Are there any safeguards to reduce your risk from the property seller?