Though the Los Angeles real estate market is very hot at the current point in time, many investors have decided to look elsewhere to continue building their real property portfolios. Many California investors that have done quite well in flipping foreclosure properties over the past few years in LA, as the market has rebounded from historical lows, have recently started to re-create their business model in other cities across the nation.
Why California Investors have decided to invest in San Antonio & Austin
When really digging into the hard numbers, one can easily begin to determine exactly what is driving savvy investors to other hot markets like Austin, Dallas, and San Antonio TX. The real question that one needs to ask is what is the main figure that an investor looks for when deciding to purchase investment property in Los Angeles? Is it price per square foot, after repair value, days on market? The answer is quite simple, neither. You see, investors are usually quite motivated by one number, and that’s ROI. They want a high ROI over all else. A good RIO is achieved by buying low and selling high, all the while keeping labor costs low. Home owners that need to sell a house fast in Austin, are some of the absolute best motivated sellers to buy houses from, because not only is property less expensive in Austin TX than Los Angeles, but a steeper discount can be had due to dealing directly with a home owner.
The same is true in the San Antonio market, but better returns can be realized in San Antonio, than one can achieve in Austin, why? Because in San Antonio, foundation movement is ridiculous. It’s common for a house in San Antonio to need thousands upon thousands of dollars to repair a shifting foundation. What does this mean for the homeowner? Well, it means that they either shell out the cash to fix for re-sale, or they can sell it as-is to an investor at a discount. That’s where LA investors can come in with their fat wallets and know how, and pick up a low priced property in a hot market. Cash is still king, anywhere you decide to invest. The best returns can be achieved when a house is first purchased with cash, because the most favorable terms can be negotiated when financing isn’t needed, and Los Angeles investors that are cash rich know this all too well.
An Interview with an Investor on the Ground (San Antonio, TX market)
In fact, David, a local San Antonio real estate investor said “when we buy houses in San Antonio these days, we end up paying a little more for the house than we did a few years ago, and we know it’s due to other out of state players entering our market”. He’s right, and he knows that they’re coming from areas such as California, Las Vegas, and other high-end areas of the nation, because he networks with other big players.
Investors know that California Home Owners Get More Bang for Their Buck in Texas
It’s no secret that home owners in Los Angeles and other surrounding cities in California are sick of the high cost of living. Yeah, sure, the ocean and weather is second to none, but taxes are among the highest in the nation, and how can anyone take in the nice ocean breeze, when the they have the thought of paying more than 3 times the price for their residence there, than they would in a place like San Antonio & Austin TX?
Is it worth sacrificing some good weather to enjoy some of the finer things in life more often, because you’re saving a literal boat load money month in and month out on your housing expense? I think so, and so do most home buyers that are relocating to Austin & San Antonio in droves. They want their dollar to stretch further, especially in retirement, and to do that, you must bring your expenses down. Moving to Texas accomplishes that need, while still being able to live a very plush lifestyle all at the same time. It’s a win win, and it’s the main reason why most retail home buyers as well as savvy investors are doing business in the Lone Start State.