All Forum Posts by: AP Horvath

@Carlos Ptriawan

"But those folks will be replaced by a new young energetic high ambitious workforce again soon anyway......."

is totally backwards and couldn’t  be more wrong. 

The "new young energetic high ambition workforce" as you call it is actually *moving away*. It doesn't make sense, except for a select few, to stay in California past a few years as a young person. The second you want to get married and get kids, you are priced out of good residential real estate. 

Your options then become buying in the Central Valley and commuting to the Bay Area --- if you need to buy in the Central Valley, you might as well as move to Texas. The weather isn't that different and the schools are better in TX. 

This is literally why Oracle opened up a new HQ in Austin. Their director and senior manager level people simply couldn't afford to buy in the Bay Area. 

The changes in California's population has less to do with the change in absolute numbers of people and a lot more to do with the socio-economic cohorts coming and going. 

The middle class is fleeing California. Yeah, that middle class might be replaced with low income helots -- but this isn't a good/stable socio-economic structure for California, and in fact, it is far worse than previous times. 

Post WW II California will be seen as peak California (best weather, strong economy, good schools, good jobs, relatively low population) and I envy the boomers who got to grow up in that time/space. 

C'est la vie.....

@Dan H.

If California were a product, you'd notice that every year it gets a bit worse and costs a bit more. 


@Scott England

The move from California to Texas (by young families) was already underway back in 2005. 

@Alex Bekeza

The middle class will continue to leave California for a long time. It is simply to expensive to start a middle-class family, if you don't have a trust fund.  

@Carlos Ptriawan

California is without a doubt, the most beautiful and interesting place in the United States --- but it is *NOT* a "hardworker dreamland". Taxes are brutal, real estate too expensive. 

@Andy Eakes -- You're wrong, California hasn't always churned people.  

Post WW-II, California was a a beautiful Everyman's Paradise with a strong economy, and lots of middle class jobs, good schools and affordable real estate and plenty of upward mobility. 

This is no longer the case. 

Today, the middle-class is being squeezed out of California -- and California is rapidly becoming Brazil: 1% media/tech/politico wealthy with the rest 99% poor. 

This middle-class destruction is a global phenomenon, but Calfornia is a bellwether for the rest of the country. 

Young families are leaving California (as well as other places in similar conditions) in droves given that the price of real estate in any place with good schools is just brutal -- this is what is seeing families move to places like Austin and Boise etc etc -- simply put: the ability to buy the white picket fence dream in a good school district. 

Not to mention, companies are leaving California b/c of this same reason --- it's hard to keep talent if that talent cannot afford a home+good schools in the area.

I say this as a lifelong Californian who loves California and knows the state inside and out -- but have moved to Texas about six years ago. 

It is true that California coastal weather, from San Diego to Santa Barbara is the absolute best in the world (I used to live in Newport Beach and loved it) and that California has some of the best natural beauty in our country be it deserts, ocean, forests, mountains -- but the reality is that the California economy is not in great shape and getting worse, and it is getting incredibly expensive to raise kids there. 

Treu story: I turned down a $400k +bonus job with a brandname company b/c it would have had me moving back to LA. I love Southern California and even the coastal parts of LA -- but $400k in Los Angeles isn't that great of a gig. 

I suggest reading what Joel Kotkin has written about California's economy and demographics:

https://joelkotkin.com/is-the-...

https://www.ocregister.com/201...

https://www.city-journal.org/b...

@Ronald Rohde - gotcha. Thanks. 

@Joel Owens - I see. And how does one find these sweet spot deals in TX? Through you? I am in process of listening to your podcasts. 

(I mean that sincerely, not meant to come off as snarky or sarcastic.) 

@Joel Owens

If one is an inexperienced buyer in NNN deals, how to ameliorate risk against the sharks? What sort of NNN deals should one make?

@Logan Hartle -- presumably, this is virtual? If so, how does one join? 

I have a 1-acre lot in Central Texas that I have rezoned for commercial and plan to build 13k SF of office-warehouse product, in 2k SF unit increments. 

I paid cash for the lot, and am currently working through the entitlement process (which I am also paying cash out of pocket) -- I estimate that  once I am fully entitled and fully permitted to build, I will be $400k cash into the deal.

I estimate site prep/grading/construction etc etc will be around $1.2m. The local bank likes the project/product and would like to finance it. They have suggested that I contribute my equity as the down payment for the construction loan.

So, if we were to take $400k cash in against $1.2m, my loan would be $800k and LTV would be 67%.

So let's fast forward a few months --- I am $400k in and have a fully permitted shovel-ready project --- presumably, the bank would have me pay for an appraisal to determine the value of my project at that point.

Stating the obvious, the higher it appraises, especially above and beyond my cash-outlay, the better for me. 

For example, $500k against $1.2m, my loan would be $700k and LTV would be 58%. If that were the case, I could either take a bit of cash out or simply have a lower debt payment. 

Any suggestions on what I can do in the project to make it appraise better/higher post-entitlement pre-financing? 

@Andrew Flanagan

Still working on it. I purchased the lot and successfully rezoned it. Have a prelim site plan and am working on getting the project fully permitted, pre-leased and "shovel-ready". 

@Bryan Noth @Jordan Moorhead ---- rest assured, that the communities around Lake Travis (Bee Cave and Lakeway) and unincorporated areas to the west, down Hamilton Pool Road into Hays County (Dripping Springs) are seeing incredible growth too. 

The Lake Travis area and areas to the west have two discint advantages: it's all Hill Country so it is pretty, and schools are excellent -- and yes, it is getting expensive fast. But plenty of housing coming online soon too.