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Texas property tax makes it very difficult to be successful from a cash flow perspective
Don’t have insight into other states
Agreed, that’s why I specified cash flow - you have a bit more “levers” to pull when your property tax is a lower part of your expenses, such as paying down the property, lower overall mortgage.
Property taxes are an ongoing expense you have very little control over
My family did well for a long time living in Texas with no income tax and renting properties in places with low property tax. The world is more sophisticated now and they’ll chase you for where the revenue is generated.
Ultimately you got someone else building equity for you in a property that you want to be going up in value quickly. You want to be early to mid gentrification, get in low and make necessary improvements with sweat equity. Hold while it goes up and then roll over. If you can also cashflow while that’s going on then you’re in good shape. So, you want to be targeting what are the states everyone is moving to, and what cities, why. How would they do in a downturn.
Real estate is one of my first loves and a great way to make money on the side building your residuals to the point you can walk away from the day job. Love it. BUT… the market is a mess right now. Rates are way too high to be playing this game. It’s super high risk to have your money locked up in an unpredictable market. Like anything else, it’s about buy low sell high. So don’t buy at the top when there’s a decline likely ahead. Position and wait to strike at the bottom of the market. Do other stuff in the meantime. If you love real estate you could be cycling hard money loans on select projects for short turnarounds while you wait
Yes. Thats my concern as the property tax is too high in texas and that will eat big chunk of the rent
My recommendation - build a model that targets your criteria. Check a couple states, including all factors + travel + personal preference /strategy and go from there
Insurance in that area is also costly and hard to get great storm coverage.
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Red states.
Look up the fastest growing metro areas and/or fastest growing states by population. Then compare to landlord / tenant law rankings (you want landlord friendly states). That intersection is what you want.
The only time it made sense to invest in Texas is Pre-2020, and even then it was more so duplexes to at least offset things. Texas’ taxes are absurd.
I’m confused how everyone is buying 600-800K personal homes that’s almost 1200-1500 on top of the mortgage just due to taxes, which makes NY feel like a steal at that point😂
Homestead exemption gets that a bit under control. Becomes more like 950. All in total cost of ownership is maybe around 6k on a 650k home. And that’s probably 4-5bed 3500-5000+ sf with nice finishes in an upscale neighborhood. Which makes sense at a 250k+ household income.
Real estate is a hyper local investment. It’s absurd to say that any one state is “good” or “bad” for real estate investing. Although some are certainly better than others when it comes to tenant protections. I’d never be a landlord in CA or NY outside of an institutional-level opportunity; one bad tenant can bankrupt a solo landlord by refusing to pay or move since it can take years to evict in some areas.
Sure, but you start with a wide net and narrow down. You need to have the taxes/etc figured out as part of the ROI scenario. That changes things significantly on a state to state level. Then you narrow. Property tax in Texas is not the same statewide. It varies considerably from place to place. There are multiple zones in a single county. Then you start looking at normal real estate factors. Which is what you’re talking about. But it’s all part of the formula.