All Forum Posts by: Seth Tipton

 LOL this would make for a great Monty Python bit. "Yes this is Italian marble but it's the worst one I could find!"

 Ah I see what you mean. That's interesting though. As an investor, or even as just a resident, I'd be arguing against raising the value of my own asset. Are the government appraisals different than the market values?

 So you can protest when the only reason for the increase is a new appraisal? What can the government do other than lower the tax percentage? Would they actually do that?

Thank you for the great feedback everyone. I am taking it all in.

Jim, about the Austin taxes one thing I am wondering is how are locals dealing with the skyrocketing home values? In CA, if your home goes up in value prop 13 protects you from getting taxed out of your home. In Austin, without some kind of protection, I'm trying to figure out what people do. Do the investors simply raise the rent? Do home owner residents without much income apply for a tax break or are they just forced to move? 

Yes I do know of some others who left. If we didn't have the house we would probably have to leave too and we are definitely considering it. I don't know if it is as simple as the picture I always hear that everyone is leaving. I read an article from the San Diego Union Tribune which stated that while 5 million left to Texas, Nevada and Oregon, 4 million moved in from New York and New Jersey. So it is a net loss but not exactly a hemorrhaging. Also, if prices do deflate, it could attract even more from those places to move in while the prices are nice. Not sure if I am allowed to post the article but it is an interesting read.

https://www.sandiegouniontribune.com/opinion/the-conversation/sd-california-losing-low-income-people-gaining-wealthy-people-per-report-20180221-htmlstory.html

 Thanks for the advice and yes it does make sense. As we learn more, a clearer and more realistic picture is emerging it it looks alot like what you describe. However, it's not off the table for us to move into the house. We wouldn't have rent at least. Just one of several possible plans we are considering. 

 Dennis, I looked into that and that is a good idea if we decide to keep the house. Also, I should mention that I inherited the house and according to CA law cap gains appreciation starts at the time of the decedent's passing. In my case, about 4 years ago it was 950k and now 1.3M. They give a 500k deductible for married ppl on top of that. One of the plans we had been considering is moving into the house and after 2 years that wipes out the cap gains tax I believe.

But when you say CA best days are behind it, I see where you are coming from. But, in my case, I put nothing into the house as an "investment" so any growth would be positive from that perspective, even if growth may slow down.

 The thing I like about California is Prop 13. As the value of the home rises, the property tax remains stable. The concern I have had about Texas is the high tax percentage and how that must constantly be balanced with raising rent to keep cashflow consistent (unless maybe there is another way I haven't thought about.) What do people do when they own a home and the value goes up 300 percent but not their wages? Seems like an impending crisis is coming there. In CA, they were facing the same problem which is why they passed prop 13 in the first place. When it comes to property taxes, they actually don't go higher at least for now unless they modify it.

The difficult choice I have is that I have a prop 13 on the house in CA from my grandmother keeping the tax at 40 dollars a month. That's a unicorn and we are lucky and selling that is a much more difficult choice because we would never get that again.

From what you are saying, we should get out of that immediately? Dennis, do you believe that the Silicon Valley and California is on it's way to an impending crash/decline making it worth it to sell a property like that? Most other investors on this thread have encouraged us to keep it.

What I get right now for the 1.3M house after Prop 13 and management fees is $2900mo about 2.7 percent. All research I've done, people I have asked has told me that's not that great. If we sold the house spent 275k on a house with a decent school, I'm trying to see if I could get enough cashflow from the 1M with maybe a rehab and rent plan to just limit savings/capital burn and just be able to live frugally in the meantime. I'm not looking for get rich quick.

Yeah I am basically learning that there is a give and take between appreciation and cashflow. The thing is, while I haven't been there yet, I've heard great things about living in Austin, but the most important thing to me is schools. So if I could find deals and rehab and rent and get a somewhat workable cash on cash, we could make it work. I'm not looking to be making bank on that part initially, just looking to get by and be happy and grow from there.