All Forum Posts by: Nicholas U.

Originally posted by @Michael Heisterkamp:

This will just continue to exascerbate their tax base erosion.  The problem California has in my view is they have a full time state level legslatiure.  These people have zero accountability regarding their actions and the impact it has on the population of the state becuase they are first in line to get paid at the taxpayers expense.  People are leaving, creating more shortfalls.  Instead of buckling down and tightening their belts they cave to the public sector unions and chase after more tax money rather than growth.  It doesn't matter if you raise the taxes to 100% if the pie is shrinking every year, you will run out of other peoples money at some point.

I have to disagree, it isn't taxes that is the major problem in California it is the cost of housing.  I have family that live in California and they don't complain about the taxes but the housing costs.  I am not saying taxes isn't a reason for slowed growth, but for a 1600 sq ft home you are looking at $700,000.00.  In my area you could buy a lot for that.  

To me it is the same reason why on BiggerPockets people don't talk about investing in California.  It has nothing to do with the taxes but the cost of housing.  If housing costs were cut in half I bet you would see a huge influx of people trying to buy rental property.   

People like to live in California.  There are reasons that there are states with lower tax rates and it is to try to encourage people to come live or work there, but it doesn't seem like it always works.  California still attracts major companies.  

I live in Indiana.  I enjoy the lower taxes but hate the weather.  

@Drew Hoffos

So I am a similar type investor as you are.  First I would recommend you read up on tax laws, how best to deal with investment properties, etc.  Pulling money out of investment properties directly can be costly.  It isn't like your Primary Residence and you would be charged a lot of money to access it.  Most people do what is called a 1031 Exchange but even then think 2 years to avoid short term capital gains tax.

I am from Indiana and I know Indianapolis is a very attractive market, but there are a lot of risks and it is knowing where and how to invest that is important.  I would recommend asking around for who people use as a property manager in Indianapolis so they maybe able to give you advice and help you make wise purchasing decisions.

Finally, start slow and learn. Investment properties will require between 20%-25% down. Use some of that cash to buy a duplex or higher. Single Family Homes are good for BRRRR in my opinion but 1 bad tenant can result in major issues. The more units means that you can spread the risk out more.

I can get you in touch with my Property Management Company if you would like as he does manage Indianapolis but is cautious.  Message me if you are interested.  

1. I don't generally recommend using retirement funds or all your savings
2. Set your expectations realistically 

House Hacking and Flipping are good options but if we all could make $120,000.00 a year with minimal funds or effort we all would.  Real Estate is not easy no matter how some people make it sounds.  There is a lot of planning an analysis before you even have spent a dime.  Then once you bought a property it is a lot of management and understanding.

Best option is to do a House Hack for a couple of years and then move on to start building capital.  

You can use 1 percent rule to perhaps try and narrow down your options, but every property needs its own evaluation.

So this happened to me on a property I closed on yesterday...  Not same exact situation but appraisal under by about $15,000.00.  A few things you could do

1) File a disputed of the appraisal with the bank.  This sometimes works and sometimes doesn't.  In my case it didn't.
2) Talk to the appraiser, which you did so that is out.
3) Renegotiate Agreement.  So in my case my agent took a cut on commission.  I paid extra closing costs of $5,000.00 so that didn't go into equity but directly to seller and the seller took a cut too.
4) You could buy a percentage of the property but I don't do this myself. 

btw - the bank won't just get a new appraisal.  They hire outside groups to protect their interest and prevent conflicts of interest.  Very frustrating going through everything but best bet is to renegotiate.  

You can probably get the realtor in trouble if you file a complaint stating they withheld information.  Why working with same realtor is beneficial in many ways it puts more pressure on you to demand items in writing.  I have learned that myself backing out of a property recently.

People worry too much.  Most people here wouldn't be affected by any changes or would probably just be a minor issue.  If there is any legislation that passes that causes you to now start losing money then you probably weren't planning well.  

Yes a lot of people from California invest in Indy and Lafayette.  It is increasing costs on investment properties, but honestly the bad ones are the ones they scope up first.  If you live here you normally try to get them before they even hit the market.

Under estimating water...