Originally posted by @Kevin Fox:
Originally posted by @Chris Isaacson:
Originally posted by @Kevin Fox:
Originally posted by @Chris Isaacson:
Originally posted by @Jerry Padilla:
@Chris Isaacson
I never lived in CA, but have lived in Denver, El Paso and now Rochester. I think one of the most important factors to consider, is not only the price of the property, but the real estate taxes that go along with the property. Real Estste taxes here in NY are some of the highest in the country. Property taxes I will pay forever, with no built equity from them. My principle payment, I will however get back, hopefully when I sell, eventually. I think a good thing to consider is appreciation. Real estate in other parts of the country don't appreciate like CA.
@Jerry Padilla I do understand property taxes can kill margins and that is why we began to remove certain areas off of our list. I know CA and 1% property tax sounds alright but there are ways they go around prop 13 to ensure they get their money, one of them is Mello Roos. We have a city here called Lincoln (once the fastest growing city in the nation) that is notorious for MR, it tacks on close to $300 in some areas where the home prices average $300k.
$300/year in Mello Roos on a home purchased for $300k is effectively only a .1% higher tax rate. In San Diego, for instance, regular property taxes are ~ 1.115%; so, even with this additional .1% in MR, you would only face an effective tax rate 1.215%. That is still just 60-70% of the rate you see in states like Texas, Jersey, Illinois, etc.
I realize in my post I didn't specify this but it is $300/mo. if anybody is curious about this, google Lincoln Ca Mello Roos or Placer County Mello Roos. Side note I have no interest in Jersey or Illinois.
Well, although that does make a HUGE difference (1.2% vs .1%); I am not sure how this, in and of itself, would make in-state investing unfeasible. Also, keep in mind that Mello Roos is not an ad valorem property tax, so it is assessed independent of value (MR is the same for a 300k home as it is for a 600k home in the same community). Are there not more expensive homes in the area that help to mitigate the impact of the MR assessment?
Per your advice, I did a quick Google search and Wiki says that Lincoln County is only 20 Square Miles. So, in regard to the original topic at hand, this is certainly not a reflection of the CA market as a whole.
In your case, though; there must be other areas in the surrounding counties where Mello Roos is much less of a factor, no?
As for you having no interest in Jersey or Illinois, I was merely using those for comparative purposes. By the sound of your response, it seems like you do have an interest in Texas, which if I'm not mistaken has one of the highest property tax rates in the Country just below 2%. I believe CA's effective tax rate is actually somewhere around .7-.9% due to prop 13 so, even with that outlandishly high Mello Roos, the rates turn out to be right around the same.
There are areas in the surrounding communities that have zero Mello Roos, I am not stating that this makes or breaks people. It was a reply to another poster who was stating that property taxes are something to watch out for and I said yes, another thing to watch out for are bonds such as MR.
Yes, Texas is of interest even though the property taxes and insurance are high. Due to growth, diversified economy and current price to rent-value it is still on my list.
For CA investors who are under the impression I am saying you cannot make money here, that is not the case. I do feel like I can scale quicker in some other markets but my goals are to move out of CA for personal reasons, since I plan to move anyway it would be nice to have boots on ground in a market that I have interest in.
