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But it's not just generic "like type" situations. It's V8Vega buying a house in the SFV in probably about ~1975 and holding it until present day. So we are talking 45 years.
I'm sure V8 won't give us his number but my mom's first house in CA was a 3/1 in Valley Village for $40,000 in 1973. It's worth about $1M today.
Property tax with prop 13: $1,250 per year.
Property tax without: $12,000 per year
You can go and calculate the equivalent in Dallas, but I already know the answer. The Dallas owner will be getting taxed through the nose right now in 2020 and have a crappier asset at the end of the day. Anybody that bought ANYTHING in populated parts of California prior to about 1995 hit the jackpot and is protected by prop 13.
No doubt if you bought in 1975 then that changes everything.
Not the case simply everywhere in Dallas. For example if you bought in 1975 in the city I am currently in that house/property would probably also be worth $1M and honestly probably far more since you would have gotten a ton of land back then.
Having said that most people don't buy a house and hold onto it for 45 years. Most people I know are in a house they are in or have been for likely less than 10 years. The days of buying and staying 30+ years are long gone. Sure it happens but not like it used to.
Anyone who bought in 1995 in the Dallas area in 1995 also hit the jackpot so to speak as there taxes have not gone up to nearly the levels the property is actually worth, plus the exemptions they get and of course on a side note the 25 years worth of income taxes they have avoided. Even my current house is only assessed at around $875,000 even though it is worth $1.2-$1.3M. Other family members in the area who bought a few years before are assesses at around $775,000 and theirs is worth $1.35M. While we don't have Prop 13 the values your are taxed at do lag behind actual values.
Simply put in this day and age if someone wants to compare property as to what they have bought in the last few years (which is the mass majority of buyers) it will take 45+ years to break even in CA even with Prop 13 when looking at like type situations.
Almost every post dealing with property taxes discusses having to choose between buying (today or soon) in CA vs some other area like Dallas and you always see the same mistake of saying TX property taxes are high which is just patently false. We moved here for one reason being very low property taxes since they are about 1/3 of what equivalent of CA gets you.
Crappier asset phrase also makes no sense. If Asset A is worth $1M and Asset B is worth $1M then they are equal assets.Had your mom taken her $40,000 in 1973 and bought $40,000 worth of property in my current city she would have gotten a house with about 20 acres or so. She could sell that house with 20 acres for about $6-7M today which would likely be turned into a subdivision.
No doubt CA is worth it to see people but this game of comparing different cities without any context of what truly is can lead to false data.
Last edited by Bolanders; 04-12-2020 at 01:34 PM..
No doubt if you bought in 1975 then that changes everything.
Not the case simply everywhere in Dallas. For example if you bought in 1975 in the city I am currently in that house/property would probably also be worth $1M and honestly probably far more since you would have gotten a ton of land back then.
Having said that most people don't buy a house and hold onto it for 45 years. Most people I know are in a house they are in or have been for likely less than 10 years. The days of buying and staying 30+ years are long gone. Sure it happens but not like it used to.
Anyone who bought in 1995 in the Dallas area in 1995 also hit the jackpot so to speak as there taxes have not gone up to nearly the levels the property is actually worth, plus the exemptions they get and of course on a side note the 25 years worth of income taxes they have avoided. Even my current house is only assessed at around $875,000 even though it is worth $1.2-$1.3M. Other family members in the area who bought a few years before are assesses at around $775,000 and theirs is worth $1.35M. While we don't have Prop 13 the values your are taxed at do lag behind actual values.
Simply put in this day and age if someone wants to compare property as to what they have bought in the last few years (which is the mass majority of buyers) it will take 45+ years to break even in CA even with Prop 13 when looking at like type situations.
Almost every post dealing with property taxes discusses having to choose between buying (today or soon) in CA vs some other area like Dallas and you always see the same mistake of saying TX property taxes are high which is just patently false. We moved here for one reason being very low property taxes since they are about 1/3 of what equivalent of CA gets you.
Crappier asset phrase also makes no sense. If Asset A is worth $1M and Asset B is worth $1M then they are equal assets.Had your mom taken her $40,000 in 1973 and bought $40,000 worth of property in my current city she would have gotten a house with about 20 acres or so. She could sell that house with 20 acres for about $6-7M today which would likely be turned into a subdivision.
No doubt CA is worth it to see people but this game of comparing different cities without any context of what truly is can lead to false data.
Thanks for making my point. You would have a $60,000 a year annual property tax bill. That's a bit more than $1200. I get it. Real Estate isn't your thing. Lol so now we're speculating about buying raw land. That's hilarious.
Hows business on the traveling circumcisions going? Since all elective surgeries are done have you filed for your unemployment yet?
Thanks for making my point. You would have a $60,000 a year annual property tax bill. That's a bit more than $1200. I get it. Real Estate isn't your thing. Lol so now we're speculating about buying raw land. That's hilarious.
Hows business on the traveling circumcisions going? Since all elective surgeries are done have you filed for your unemployment yet?
No you missed the point. That is not a like type property and wasn't back then. A like type property would have probably run $5000 or so back then.
Funny that you couldn't figure that out. I said had your mom not spent $40,000 there and spent $40,000 here. Or she could have spent about $5000 or less here for a like type situation.. Maybe less at that time as data is hard to find.
Anytime you want to compare who has made more in Real Estate let me know. I got out at the height in CA while you did not. Of course you won't say what city you live in and I gladly will. Anytime you want to compare who has more in RE holding IN CA let me know if we want to talk abut RE not being my thing. Since we still own multiple commercial properties it is crystal clear.
Currently in TX I pay $21,000 in property taxes per year. It would run me $50,000 in property taxes per year in CA to live.
Also never done circumcisions in my life. Are you that obsessed by penises because you sure bring them up a lot? I do work with some Urologists who do circumcisions and anytime you want to compare paychecks with them let me know. I'll let them know you think of it as an insult to do circumcisions and find their work demeaning. A few make millions per year.
Funny you say you live in CA but won't ever say what city you live in.
Last edited by Bolanders; 04-12-2020 at 02:27 PM..
No you missed the point. That is not a like type property and wasn't back then. A like type property would have probably run $5000 or so back then.
Funny that you couldn't figure that out. I said had your mom not spent $40,000 there and spent $40,000 here. Or she could have spent about $5000 or less here for a like type situation.. Maybe less at that time as data is hard to find.
Anytime you want to compare who has made more in Real Estate let me know. I got out at the height in CA while you did not. Of course you won't say what city you live in and I gladly will. Anytime you want to compare who has more in RE holding IN CA let me know if we want to talk abut RE not being my thing. Since we still own multiple commercial properties it is crystal clear.
Currently in TX I pay $21,000 in property taxes per year. It would run me $50,000 in property taxes per year in CA to live.
Also never done circumcisions in my life. Are you that obsessed by penises because you sure bring them up a lot? I do work with some Urologists who do circumcisions and anytime you want to compare paychecks with them let me know. I'll let them know you think of it as an insult to do circumcisions and find their work demeaning. A few make millions per year.
Funny you say you live in CA but won't ever say what city you live in.
Explain why cap rates are lower in California than Texas. You're a real estate expert right? Should be an easy question to answer.
Mr. Wannabe MD, JD, MBA. Let's hear it. What's the appropriate discount rate to use on a single family investment in California vs Texas if you're doing a DCF? What's a reasonable preferred return for a JV capital partner investing in multifamily real estate? How about for industrial? What's the standard leverage for a nonrecourse construction loan? For spec? What about a BTS?
See I actually work, breathe, and live real estate. Step off and go back to your world where people actually eat up your BS.
Explain why cap rates are lower in California than Texas.
What are you specifically looking for? Personally I look at the cap rate of what I am investing in and couldn't care less what the cap rate on average is. I do commercial in CA and own no more single family in TX or CA other than what I live in. Who said I was a JD or an MD or an MBA? I have never once said that.
Are you asking why the cap rate in CA is around 6% and about 7% in TX?
You work in Real Estate. I own Real Estate. I couldn't tell you a thing about leverage rates when investing in commercial Real Estate because I have none. I write a check and its mine. I don't do debt. There are a lot of Realtors who could sell all of my Real Estate. There are very few that can actually buy it.
Last edited by Bolanders; 04-12-2020 at 03:24 PM..
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by PerditaPanthera
Nah, family members don't know what they are talking about. Shadowmoses is young. Now is the time to fly out of the nest. Explore. Too many young people lack courage and independence. Can't grow up and be counted among adults if you can't learn to make your own decisions.
Well I did discover that poster is 30 so they are young. I just don't know if they can afford California as they consider themselves ordinary working folk-whatever that means. Doesn't sound like a high wage earner.
What are you specifically looking for? Personally I look at the cap rate of what I am investing in and couldn't care less what the cap rate on average is. I do commercial in CA and own no more single family in TX or CA other than what I live in. Who said I was a JD or an MD or an MBA? I have never once said that.
Are you asking why the cap rate in CA is around 6% and about 7% in TX?
You work in Real Estate. I own Real Estate. I couldn't tell you a thing about leverage rates when investing in commercial Real Estate because I have none. I write a check and its mine. I don't do debt. There are a lot of Realtors who could sell all of my Real Estate. There are very few that can actually buy it.
Ok great you own commercial in CA. So why is it that you choose to buy in California over Texas? Cap rates are lower in California. Why is this.
Ok great you own commercial in CA. So why is it that you choose to buy in California over Texas? Cap rates are lower in California. Why is this.
Honestly., it is because I bought them pre Texas living. When we bought we still lived in NoCal which is why both properties are in Nocal. We have sold 2 and have 2 left. Cap rates are really easy to calculate. It is painfully obvious that cap rates are lower because for the amount you spend in CA the net income on them is lower. The like type property in CA tends to cost/be worth more but the net income is not linear.
For example the kindercare that is on one of ours cannot charge 3x more for daycare than the one in TX event though the property is likely worth 3x more in CA. We have thought about buying some commercial in TX but haven’t pulled the trigger yet.
Honestly., it is because I bought them pre Texas living. When we bought we still lived in NoCal which is why both properties are in Nocal. We have sold 2 and have 2 left. Cap rates are really easy to calculate. It is painfully obvious that cap rates are lower because for the amount you spend in CA the net income on them is lower. The like type property in CA tends to cost/be worth more but the net income is not linear.
For example the kindercare that is on one of ours cannot charge 3x more for daycare than the one in TX event though the property is likely worth 3x more in CA. We have thought about buying some commercial in TX but haven’t pulled the trigger yet.
Yes exactly cap rates in CA are lower. I've said that three times now. The question I'm asking is WHY. Big real estate investors can buy anywhere in the world. They aren't limited to their backyards. So why would they buy in California if they only get a 5% cap rate if they can get a 7% in Texas or 10% in Montana?
Common man this is real estate 101. I'm sure you've got it in you!
Yes exactly cap rates in CA are lower. I've said that three times now. The question I'm asking is WHY. Big real estate investors can buy anywhere in the world. They aren't limited to their backyards. So why would they buy in California if they only get a 5% cap rate if they can get a 7% in Texas or 10% in Montana?
Common man this is real estate 101. I'm sure you've got it in you!
I just explained why as cap rates are easy to calculate . If you can’t figure that out then I don’t know what to say.
Again one reason we accept a lower cap rate in CA is speculate that appreciation will be higher in CA due to limited desired land with zoning etc.
Also I buy where I live.
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