Buying Long-Term Real Estate Investments –California’s Ideal!
To place your long-term real estate investment dollars, “California, is the ideal state for it. Not only has California provided enormous capital growth for real estate owners over the past four decades, but moving forward it has some remarkable features that make it somewhat attractive to property investors. If you do your homework you should be able to locate properties that make a compelling solid investment, but please don’t assume that you can just carelessly buy any investment property in California and build wealth. Here are my thoughts on this.
Shortage of valuable land: The main cities or counties — Los Angeles, Orange County, & San Francisco, — are all facing the same issues. Because of the dearth of land, the projections are suited for property values going up over time. Within a reasonable distance from the main employment centers, there is exceedingly little land available for development. In fact, most sought after city areas of the state only a couple large parcels are left within a short drive of the city, and most all of that land is being developed. Fewer than 30,000 parcels of all the land in the county is for the most part built out. So this constrained amount of vacant land means prices to buy “land” “as well as existing homes” should amplify over the long hall.
Property tax limits, Proposition 13: Dissimilar to how most states’ property taxes work. In most states, taxes go up each year subsequent to increases in property value, so if the property value rise, so will the taxes. But it is different in California, and that’s an enormous plus for real estate owners in the state. Investors that invest in any property “in California” have established property taxes @ 1 percent of the sales price. So on a $200,000 properties you would pay $2,000 per year in regular property taxes (In some areas, there may be a small additional county bond levies or Mello-Roos taxes). Back in the late 1970s Californians passed a measure that limited property taxes and property tax increases, they were exhausted of consistent hikes on property tax levies.
Hurdles to develop: Due to the paucity of available land, developing in California is extremely difficult. Between groups battling the developer over lower density of units on the parcel; a reluctance owner not willing to sell his or her property; and exorbitant city building permit fees. These all impede further development, increasing the housing supply and lowering property values. I think most all will agree that a moderate supply most likely increases property values.
Expanding population: If you have been paying attention to the media, they predict that the population in the U.S. to increase during the next five decades. So with the population expanding over time, then mix-in the sought-after weather in California, and throw in folks always prefer to live “in the coastal areas” it is more than likely that California property prices will continue to grow.
Fundamentally an investor must target investments with moderate prices and positive cash flows. Primarily and investor still need to be well-informed and invest wisely, so they reduce hassles and maximize profits. Basically, there’s an excellent chance if you have invested “in California” you own some of the best “dirt” in the nation which helps any retirement picture.
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