Where is better for rental business: CA or TX

There are lots of conversation on where is better (CA or TX) recently in this forum. I think the purpose of this forum is to provide people with invest information. How to make money and which one is better to make investment.

 

I have rental properties in CA and TX and here are the comparisons that provide some information.

 

Scenario 1: $300k SFH. Bought last year.

            CA:  30 yr old, <2000 sqft. rent $1900, tax $200, insurance $60, net $1640/month, upper blue color tenant, middle-low level neighborhood. More appreciation potential

            TX: 10 year old, <3000 sqft. rent $2200, tx $500, insurance $80,  net $1620/month, white color tenant, upper neighborhood. Less appreciation potential.

Scenario 2: Target the same class of tenants (upper blue color tenant). $300k SFH in CA, 3 $100k SFH in TX

            CA:  30 yr old, <2000 sqft. rent $1900, tax $200, insurance $60, net $1640/month, upper blue color tenant, middle-low level neighborhood. More appreciation potential

            TX: 20 year old, <2000 sqft. rent $1200, tx $200, insurance $40,  net $960/month*3=$2880/month, upper blue color tenant, middle-low level neighborhood. Less appreciation potential.

Scenario 3: If property bought in 2005-2006, same quality of house. $800k SFH in CA,  $300k SFH in TX

            CA:  20 yr old, <3000 sqft. rent $1900, tax $700, insurance $160, net $1040/month, white color tenant, upper neighborhood. More appreciation potential. Current property value $400k

            TX: 10 year old, <3000 sqft. rent $2200, tx $500, insurance $80,  net $1620/month, white color tenant, upper neighborhood. Less appreciation potential. Current property value $300k

 

It is clear, if you are after cash flow, TX in scenario 2 is much better than in CA.

If you are after appreciation, scenario in CA has more potential (if you buy after the market crash). If you buy for appreciation in CA before the crash then, you know what happened. But appreciation has a lot of risk.

 

Conclusion: If you do rental investment and cash flow is your goal. TX is the clear winner compare with CA. Plus, TX is pro business while CA is pro tenant.

The reason that I bought a lot of properties in CA the last two years is that I want a balance of cash flow in TX and appreciation in CA.

 

所有跟帖： 

• Scenario 3 is wrong. -wxc1894- ♀ (925 bytes) () 08/03/2011 postreply 10:51:02

• thanks for input -jjj7- ♂ (124 bytes) () 08/03/2011 postreply 12:38:14