Being an out of state landlord

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Submitted by dumbrenter on August 5, 2016 - 12:17pm

I am considering buying a rental property (SFH)in NV and TX. Am not a resident of either of those states now.
Have been reading up on state specific taxes, hiring a property manager etc.
Are there any specific things to watch out for or budget for as extra for being an out of state landlord?

Can you share your experiences of how hard (or easy!) it is being an out of state landlord?

Submitted by spdrun on August 5, 2016 - 12:37pm.

(1) Don't hire a parasite ... I mean property manager
(2) Get to know some tradesmen (electrician, plumber, handyman) that you can call if your tenant has problems
(3) Vet tenants yourself. You need the kind of job where you can take a week or two every few years to check on the places.
(4) Tenant quality -- grad students and self-employed are best. The former are likely to stay for a defined term and tend to be less rowdy than undergrads. The latter have every incentive to stay since they might have problems with other landlords being small-minded about non-W2 work.
(5) After buying the place, fix everything that might break in the next year or two. Replace any dodgy appliances, water valves, etc and so forth.

Submitted by flu on August 5, 2016 - 12:52pm.

Sure, why not ?

I think that would be a great decision. Nothing can go wrong with being a first time landlord and trying to manage properties out of state at the same time.

I think I would be even more successful if I absolutely knew nobody in those states I wanted to try my first time landlordship in

Submitted by spdrun on August 5, 2016 - 1:03pm.

It's not rocket science if you have half a brain for business.

Submitted by FlyerInHi on August 5, 2016 - 1:32pm.

spdrun wrote:
It's not rocket science if you have half a brain for business.

I agree with you. But a lot of people have families and commitments; and they stress out easily. If everyone could deal with things independently like you and me, the real estate industry would be cut in half.

Submitted by dumbrenter on August 5, 2016 - 2:53pm.

spdrun wrote:
It's not rocket science if you have half a brain for business.

Thanks! Would a tenth of a brain do?

I find it interesting you recommend the exact opposite of what most books/internet articles say with respect to hiring a property manager.

Submitted by joec on August 5, 2016 - 5:50pm.

I think it would be a bad idea to be an out of state landlord in those areas...My parents have rental prop in TX and with land being what it is in TX, they actually can't sell and would have a loss...even though they have considered selling now.

Without Prop 13 like in CA, taxes keep going up so trying to be cash flow positive is a lot harder I think in TX.

As you prob know, prop tax in general is also much much higher in TX so any prop gains you have will be gone.

As for NV, I think there's too much land there too...

Personally, I'd stick to smaller places in CA and try to cash flow...maybe pick places a bit off like Merced (weakest UC there) or maybe gentrification areas or put enough cash down that your monthly's manageable/cash flowing.

Submitted by flu on August 6, 2016 - 7:59am.

If you want to try to be a long distance rental, I'd try by picking something small in riverside county first. Prices in riverside county you could probably still cash flow if you look...Or you could even try Chula Vista.I've been told that there's a lot of demand for housing in Chula Vista, especially because there are so many border kids coming here. And since they aren't going to be buying, there should be a steady stream of renters there. If you can't handle just a 1-2 hour away rental, you probably won't be able to handle an out of state rental. My limit was 1 hour away for anything that might require some involvement, especially if the renter quality went down a bit.

Submitted by dumbrenter on August 6, 2016 - 9:17am.

You are correct in that the property tax rate is higher but the $ amount of tax is lower than in San Diego.
Travis county has about 2% tax rate but 2% on 200K is less than 1% on 700K.
In your rental prop case, if you don't mind me asking, did the rent increases track the increase in prop taxes? Or were they uncorrelated?
Thanks

joec wrote:
I think it would be a bad idea to be an out of state landlord in those areas...My parents have rental prop in TX and with land being what it is in TX, they actually can't sell and would have a loss...even though they have considered selling now.

Without Prop 13 like in CA, taxes keep going up so trying to be cash flow positive is a lot harder I think in TX.

As you prob know, prop tax in general is also much much higher in TX so any prop gains you have will be gone.

As for NV, I think there's too much land there too...

Personally, I'd stick to smaller places in CA and try to cash flow...maybe pick places a bit off like Merced (weakest UC there) or maybe gentrification areas or put enough cash down that your monthly's manageable/cash flowing.

Submitted by flu on August 6, 2016 - 10:19am.

you are way late to the party. If you can't make it with rentals in CA, you're doing the exact same thing the previous "investors" did right before the RE markets tanked by trying to go out of state who had know prior knowledge/experience in those out of state areas, how the local economy works, and the rental dynamics of that area. Classic example of trying to fit a square peg through a triangle hole when one feels limited in investment options locally...

Also, if you current rent instead of own, and are on a W2 salaried paycheck and not a re professional, it makes even less sense to buy an out of state rental before buying your own home. You get no tax incentive to being a renter, and your positive income from your rental ends up being taxed, and if you were planning on a passive loss to offset your income elsewhere...it won't work if your household income is above $100k.... you can't exactly write off all of your rental paper losses against any other forms capital gains or income. That writeoff starts to get limited at $100k and completely phased out when your MAGI is $150k/year

What spdrun and briansd aren't telling you is neither works at a full time job like you do, in the traditional sense.

I have a rental in the Bay Area, and while it cash flows around $2000000000000000/month, it can be a pain in the assss some times. Just this week there's numerous of plumbing repairs that need to be done due to old age, and finding an available handyman/repairman is like 3-4 weeks out. It's going to be cheaper if I fly up there and do the work myself, of fly a handyman I have here up there. I don't mind doing this because it's the Bay Area and I can hang out up there and work from my remote office up there....Wouldn't want to do it if it was in the middle of Texas.

Texas is crap. There aren't enough walls, and aren't enough lizards, and really, neighborhoods have far flung starbucks coffee shops. That is immediately going to depreciate your rental property's home worth.


Plus, you might want to consider the possibility of Texas secede from the U.S. In their constitution, they can legally separate into 21 million different regions and withdraw from the U.S. anytime. It's really going to happen this year. And property values are going to change drastically as part of that


Don't forget Texas has terrible weather. A tornado is going to destroy your rental property the moment you buy it. In fact, I don't know why anyone in their right mind would want to sell insurance in Texas

caveat emptor caveat emptor caveat emptor caveat emptor

But it sounds like you want to hear what you already made up your mind to.

Good luck. And in case you missed it, caveat emptor caveat emptor caveat emptor caveat emptor.


Submitted by bearishgurl on August 6, 2016 - 10:12am.

The "real" BG spells and punctuates much better than bullishgurl does. Just sayin .....

Submitted by flu on August 6, 2016 - 10:14am.

.

Submitted by flu on August 6, 2016 - 10:15am.

.

Submitted by dumbrenter on August 8, 2016 - 11:11am.

bearishgurl wrote:
The "real" BG spells and punctuates much better than bullishgurl does. Just sayin .....

BG, it is not that hard to see who is writing this juveline piece of crap and attempting to shit on other threads.
Not sure what this person got against you but sure does have time to spend here!

Looks to me like you got an online stalker!

If we dont' learn to ignore each other, it takes only 3 more individuals to act like this to drown out everything else on the forum (staying within the forum guidelines of course).

Thankfully many here do not have the time or the childish attitude to do this and am betting on that fact in hope it stays this way.
Look at what happened to patrick.net

Submitted by flu on August 8, 2016 - 11:35am.

Dumb renter, you come here asking for advice. You come here with no landlord experience. And are you still a renter here? If so you have not had to deal with any maintenance issues on real property and then you come here and ask people if it's a good idea to buy and out of state rental, with no prior experience managing.

You choose to listen what you want to hear by those that say no problem...and yet you ignore the fact that briansd doesn't work at a traditional salaried job to have time constraints you do. And spdrun that owns a 1/1 low maintenance condo in San Diego unlike a sfh you are considering. And btw, he is self employed with a much more flexible schedule.

Objectively, take a step back..do you want to hear what you want to hear and just want affirmation of the decision you already made or do you want a realistic opinion, and everyone that doesn't say what you want to hear an idiot (mind you, you missed the boat here in San Diego)? If it's the former, why bother asking then? You already made up your mind.

And the sort of negative type of reply that you don't like to hear is exactly the same thing that BG would normally post on any other thread, despite have 0 experience with rental property. The difference? Ask yourself why you feel you will be more successful in Texas very riverside county?

That said, if you've made up your mind go for it. I am sure if it does t work out for you, it would be easy to ditch rental properties just like investments like stocks...or not...

Submitted by flu on August 8, 2016 - 11:50am.

.

Actually, there was one person here that bought multiple properties in Texas that could actually help give you a fair assessment of what's it like to tackle it. He use to visit here in the past. But since youre a dick about it... you certainly don't need to get a hold of him because you already made up your mind.

Good luck.

Submitted by La Jolla Renter on August 8, 2016 - 12:45pm.

The one thing I like about my one out of state rental, that I have had for 15 years, is that I don't do any of the repair work myself. Doing a facetime with the tenant or contractor shows me pretty much all I need to see to stay on top of issues.

Vs my San Diego rental, that I find myself being too hands-on to save a buck.

With that said, I wouldn't advise owning out of state unless you vacation there or are getting a crazy deal.

Submitted by dumbrenter on August 8, 2016 - 1:05pm.

Is the thing with the vacation to get a double hit on the same travel?
Or is it more about knowing the neighborhood?

La Jolla Renter wrote:
The one thing I like about my one out of state rental, that I have had for 15 years, is that I don't do any of the repair work myself. Doing a facetime with the tenant or contractor shows me pretty much all I need to see to stay on top of issues.

Vs my San Diego rental, that I find myself being too hands-on to save a buck.

With that said, I wouldn't advise owning out of state unless you vacation there or are getting a crazy deal.

Submitted by La Jolla Renter on August 8, 2016 - 5:54pm.

dumbrenter wrote:
Is the thing with the vacation to get a double hit on the same travel?
Or is it more about knowing the neighborhood?

All of the above.

Submitted by FlyerInHi on August 9, 2016 - 11:16am.

I just figured out an intractable AC problem
The AC is in the ceiling in a condo, not attic so you can't really see. The drain was partly clogged which caused the condensate to rise in the drip tray. The float would stop tthe AC every so often. That happens only when the AC runs a long time. Unclogging the drain line was kinda gross.

Ah, the joys of ownership. In the long run RE investing is worth it but a pain sometimes.

Nevada has lower real estate taxes, less humidify and less maintenance issues than Texas

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