Texas vs Massachusetts
in Multifamily Home Investing
Investors search for a variety of reasons to invest in a specific state in order to ensure a consistent and high return on their investment. Texas is one of the leading states to buy real estate in because it provides them with the desirable investment opportunities they are looking for. There are various factors of a state one should consider before investing in multifamily real estate. Today we are going to compare these factors between Texas and Massachusetts and find out which state is best in multifamily investing.
Your investment options are affected by your age, ethnicity, gender, median income, and population. If you are a landlord who relies on rental income, consider whether the population of the area where you want to invest is growing or shrinking. If it is booming, there will be more demand for potential tenants and occupancy rates will be higher. This would result in higher rents and an adequate return on your investment. If the population of a city is declining, rental properties can become vacant.
There will always be a market for rentals in a state like Texas. However, in recent years, a large number of residents from other states, for example Massachusetts, have relocated to Texas for a variety of reasons. High cost of living, taxes, a lack of available land, non-landlord-friendly rules, high housing prices, intense job competition, and other factors are among them. When you live in Texas, these problems ultimately get resolved..
Texas’ 2020 population growth was 29M which was a 2% increase compared to 2019. Massachusetts’ 2020 population was 6.9M, with 0.02% decline from 2019. Texas’ median income is $61,874 while Massachusetts’ is $41,812. For the sixth year in a row, according to the 2020 Texas Relocation Study, more than half a million people have relocated to Texas. So, when it comes to the issue of whether Texas is a good place to invest in rental real estate, the answer is yes. Its population growth simply answers this question with a resounding “yes.”
More than half a million people have relocated to Texas.
2) Economic Conditions
When it comes to multifamily investing, the state of the economy plays a significant role. If a city or town experiences a boom in job opportunities, the population will expand, and demand for rental properties will rise as more people move to the area where the jobs are. In an ironic twist, even though the economy worsens and unemployment increases, homeowners will be more likely to become tenants in search of more affordable housing. After all, everybody requires housing. According to the Massachusetts Department of Unemployment Assistance, Massachusetts unemployment rate is 6.8% while in Texas is 6.7%
If you’re looking for a great rental market, Texas is the place to go. This is primarily due to its excellent job market, which is a result of its incredibly strong economy. For a variety of factors, the current economic condition is favorable.
The most well-known is the state’s oil and gas boom, which has made it popular. Its vibrant economy is fueled by the presence of several Fortune 500 firms, tech companies, and a diverse range of work opportunities. This involves a sizable health-care industry, as well as manufacturing firms and prestigious colleges and universities. It’s also a great place to find secure blue-collar work, which helps to sustain the country’s base and backbone.
In Massachusetts, the cost of living can be very high. Cities like Boston, in particular, can be really expensive if you want to live in a clean neighborhood. The cost of living in Boston is estimated to be 48 percent higher than the national average. This leads to people moving to other less expensive states like Texas.
3) Income tax by property investors
Another feature of Texas that makes investing in real estate there such a good idea is the absence of state income tax. As a result, owning rental property in Texas will save you a lot of money while still increasing your bottom line. When it comes to federal taxes, it is inevitable that you will have to pay. As a result, it’s important to be aware of all the ways you can save money on taxes.
It’s no secret that Massachusetts homeowners pay a higher tax rate than the majority of their countrymen. In fact, Massachusetts has the seventh highest real estate taxes in the country.
At 1.21 percent, the state’s overall effective tax rate is marginally higher than the national average.
4) Geographical Area
Pay attention to the “where” you want to invest, or the “where” the business you want to invest in owns rental properties. Climate change has a huge effect. The Southeast of the United States has a much higher population density than the rest of the country. Warmer climates draw more tourists and more jobs, as more businesses move to comfortable climate conditions.
The climate in Texas is varied, ranging from arid and semi-arid in the west to warm and subtropical in the east. Summer and autumn in Massachusetts are well-known for their beauty. However, as winter approaches, the brutality of ice emerges. The state has one of the harshest winters in the nation. Last year, there were reports of ice cover up to 60 inches thick and three big storms raging through the state.
5) A landlord-friendly state
What makes Texas real estate so appealing? It is a landlord-friendly state. When deciding whether a state is a good place to invest in rental properties, this is the most basic factor to consider. It might not be worth going ahead with a contract if you don’t have the law on your side when it comes to landlord/tenant problems. Texas is notorious for being pro-landlord, believing that the landlord should have some important rights to their house, and with good reason: the property is yours, and you, not the tenant, paid for it.
You may be familiar with some of the disputes that can occur between landlords and tenants if you aren’t new to the game. When renting in a non-landlord-friendly state, one of the most problematic issues is making the state favor the tenant when it comes to evictions. When a tenant obviously breaches their lease agreement by failing to pay their rent, for example, the intention is to make the tenant leave as soon as possible before you fall further into debt. However, if your state isn’t welcoming to landlords, this can take months and cost you a lot of money in legal fees as well as your time. It can be a vexing experience.
In Massachusetts, the landlord is responsible for providing a dry, clean, and sanitary apartment in accordance with the Massachusetts Sanitary Code, as well as keeping any guarantees made in the lease or rental agreement. The occupant has the right to occupy the apartment regardless of the form of lease, and the landlord can only enter in certain conditions.
Factors like your age, gender, median income, and demography influence your investment decisions. Consider whether the population of the area where you want to invest is increasing or decreasing if you’re a landlord who relies on rental income.
When determining whether or not to invest in rental properties in a specific state, this is the most crucial element to consider. If you don’t have the law on your side when it comes to landlord-tenant disputes, signing a lease might not be worth it. Texas is known for being pro-landlord.
MarketSpace Capital, LLC is a Houston, Texas-based private equity real estate development firm focused on ground up developments and value-add investments throughout the United States.
Disclaimer: *For sold properties, actual sales price is reported. For active investments, the Estimated Current Value is based on the Managing Member’s estimate of current value. Recent acquisitions are generally valued at the acquisition price. Values may be internally prepared. This web-page/website is for informational purposes only and is qualified in its entirety by reference to the Confidential Private Placement Memorandum (as modified or supplemented from time to time, the “Memorandum”) of any offering of MarketSpace Capital.