With the appreciation of the last few years, you have considered trading into a building out of state. Is it right for you? Well, it depends on a number of things. What kind of property will you buy? Who will manage it? What are the long term prospects for this investment?

WHY DO INVESTORS LOOK OUT OF STATE? Many investors are concerned about California rent control. With additional concerns, such as the moratorium on evictions in Los Angeles City and County, some investors are looking for greener pastures.

HOW LARGE OF A BUILDING CAN I PURCHASE? If you are going to consider a building out of sate, it should be newer, in a great area with substantial demand for rentals and a year-round economy. Some places experience more of an exodus during the year because of extreme summers or winters. It should be large enough to support a bonded management company. Saving a small amount per unit, may not be worth the risk.

OTHER FACTORS TO CONSIDER. We have property taxes in California which are based on the last sale price. Usually about 1.25% to begin. There is no reassessment until the property is resold. Other states have a higher percentage . Texas, for example is around 1.8% at the start and some even higher. New Jersey at 2.49% is the highest.! Another problem is that in most states, your building can be reassessed anytime. That may cause another increase which would adversely affect your cash flow.

OTHER OPTIONS. There are group investments-Real estate syndicators purchase large buildings and raise money from investors to purchase. They then manage and usually improve the property, hold it for a few years and then sell. These investments may not be as liquid, but may be safer for smaller investors. There are also REITS (Real Estate Investment Trusts) which are usually publicly traded, like stocks, allowing for more liquidity. Also DST’s (Delaware Statutory Trusts) which may help defer taxes if exchanging.

Always consult with your CPA and your real estate attorney before making a move into a new type of investment. It may suit your needs now or possibly in the future. It is always good to know your options.

What we at PRS PROPERTIES CAN do for you, is give you a good idea what your current multi unit property is worth in todays market as compared to other similar properties. We can review your profit and loss statement and suggest changes that may allow you to get a higher value than you may have thought. We can help you to get the maximum value for your property, should you decide to sell.

We currently have a number of investors who are looking for “off market” properties and we have put together many, many transactions which involve properties that are not listed for sale. Many buyers prefer to buy “off-market” buildings because they feel that they are getting something not available to the general public. If you are thinking of selling, give us a call.