Is California still a good place to invest? As you might remember from my last video, I mentioned that from 1980 to 2014, California has seen a market appreciation by 6%, while the S&P Index appreciated by 11.87%.The thing to remember is that the 6% is amplified four times because you put 25% down, so it’s leverage one to four. When you add a 6% or so cash flow in California to that, you wind up with somewhere around 30% return on your investment over time!
Houston, Texas, in the same 35-year period only saw an appreciation of 4%. This area encompasses Little Tokyo, the Art District, and some neighborhoods, like Walt Disney Hall and the L.A. Downtown Financial District. To that, you add Houston’s 8% cash flow to that number to get a final return on your investment of 24%. As you can see, Southern California has outpaced even the red-hot Houston market over the last three decades.
"All of this growth brings great opportunities."
Columbus, Ohio has seen an appreciation of about 3%. When you do the same math, accounting for the one to four leverage of a down payment, you wind up with a return on investment of 12%. When you add Columbus’s cash flow of 10%, you wind up with a return on investment of 22%. Again, Southern California’s 30% return on investment is higher than Columbus as well.
As you can see, California is still a great place to invest. Unless you are buying 100 units in Houston or Columbus, the value in those markets isn’t quite as great as only five to 10 units here in California.
If you have any questions about this or any other real estate topics, please don’t hesitate to reach out to me. I would love to hear from you!
