Where to Invest (Part 2)

Welcome to another edition of the Coast to Coast Real Estate Investor. In this edition we’re on to Texas and the far west!

In the last edition, I mentioned Texas briefly. I want to start this episode by going back and looking in some more depth at the state. Texas, in my mind, represents the best investment value in the continental United States. Prices are among the lowest in the country, and you get good value for the money. And, that fact is coupled with an amazing quality of life

Now, understand that Texas has come into the sights of all those speculators who wrecked the Las Vegas and Phoenix markets, sending them sky-high. As those markets got too expensive, those same investors turned their attention to Texas because of the perceived value.

Personally, I don’t think the same thing can happen in Texas because there’s simply too much land – to much room to build. However, Texas is attracting a lot of attention, and prices are rising steadily, fortunately at sustainable rates. Appreciation is solid, but it’s not hyper-appreciation, and that makes a difference.

San Antonio and Austin are attracting the most attention – Austin is attracting the most attention because of its culture. It’s the state capital, home of the University of Texas, home of Dell and other high-tech businesses, and has a very hip young culture. You have great selection of properties ranging from inexpensive in-city condos, to country property, to recreation communities near Lake Austin. No doubt, with all of these factors present, Austin will continue to be a hot spot for people relocating.

San Antonio is…well, to say beautiful probably doesn’t do it justice. You’d never know, from impressions, that San Antonio is the 4th largest city in Texas. The best way to understand San Antonio is to experience it – to go on the world-renown Riverwalk and experience the unique ambiance. Housing values are extremely good, and new construction abounds in the greater market area – with some new builds starting under $100K

If being too close to the city is not your thing, there are a myriad of smaller towns & cities nearby that have great investment potential. Consider San Marcos, Bexar, Canyon Lake (which is a golf and lake community) and New Braunfels.

The obvious two cities – Texas’ largest are Dallas and Houston, and well worth considering.

The Dallas – Fort Worth metroplex has an amazing amount of real estate available – and at decent prices. Prices for single family homes can go as low as the 70’s even in decent neighborhoods. Condos can be had as low as the 30’s, and I’ve even seen units in the 20’s! Dallas has some very nice recreational areas around the various large lakes such as Lakeworth and Lake Lewisville.

Houston stretches from clear inland locales to bordering the coast of the Gulf of Mexico. The Bay Area Houston region in and around Clear Lake in the south east of the city is a water-oriented area bordering the Gulf. Areas like The Woodlands and Lake Conroe at the opposite end, on the north west provide planned communities, golf, and lakes for water recreation.

While looking around Houston, don’t forget the Texas coast – the one area of the country I know of where an average family can afford waterfront property! If you can handle the hurricane issue, consider looking at Galveston, Corpus Christie, and the towns that dot the area in between.

Other areas in Texas also hold interesting situations. Small towns and small cities abound, and at bargain basement prices. El Paso, for those of you who are interested in desert living is quite similar in geography to what you’d find in New Mexico, but at about 2/3 of the cost. Many of the more rural towns are getting more cosmopolitan as retirees are taking up residence, but not to the extent that prices are flying high.

As we move west into New Mexico, I’ll point out the beautiful small city of Las Cruces. The Mexican and Native American influences that so often draw retirees and people traveling to the desert SW are present and visible in Las Cruces, but the city still represents a tremendous value. Las Cruces is very close to El Paso, TX, has a university in town, and is only an hour in to Mexico, so it benefits from the presence of those features. There are other small towns nearby, such as Alamagordo, which are also attracting attention of retirees looking for small desert towns.

Albuquerque still represents good value, although the prices have climbed pretty steeply in the last 3 or so years. The way to consider Albuquerque in your mind is to see that, as place like Phoenix and Las Vegas get out of reach for most people, attention turns to Albuquerque because it consistently has lower prices. Thus, it’s an alternative of choice for people seeking the desert lifestyle.

With that in mind, let’s move into Arizona and talk about Phoenix. Once upon a time, Phoenix was a bargain-priced city as far as housing goes. Today, it’s one of the most expensive markets in the country. Can someone still get a ‘buy’ in Phoenix? The answer is yes. For one, condo conversions – where a developer has taken an apartment complex and converted into condo units – abound, and in fact, have been overbuilt. It’s very common to find developers offering no down payment, no mortgage payments for 6 months or even a year, no 1st year taxes or condo fees. I’ve seen incentives on a $120,000 condo of up to $8,000!

Look also to the region 30 minutes south of Phoenix – Queen Creek, Florence, Casa Grande, and Coolidge. Today, in 2007, these areas are still considered to be far enough outside of the city to be inconvenient, but at the same time were overbuilt. As a result, the prices are almost half of what they are in the metro area, but the region is destined to grow and become more populated.

Tucson has always been a couple of steps behind Phoenix in terms of attention. In fact, until about 2005, Tucson wasn’t really much on the radar of investors or retirees. That’s not the case now – not since Phoenix went sky-high. Appreciation is running 10-12% per year as I write this in 2007. That said, reasonably priced property is still available, but continues to climb. Now is a good window of opportunity, because Tucson prices are driven by what’s happening in Phoenix and it’s not going to be long before Tucson and Phoenix are on par.

Another great area in Arizona is the town of Lake Havasu, which is on the border between AZ and Ca. It’s a recreational area, with a lot of water activity. Condos are readily available in the low $100s and single family homes can be had in the upper $100’s.

In Nevada, you see the same forces in Las Vegas as you do in Phoenix. Condo conversions are a best-buy because they were overbuilt and incentives are generous. Condos are about the only property you can buy in Las Vegas for under $200,000. An alternative to pricey Vegas is Laughlin, which has some of the same characteristics of Vegas (such as casino gambling, shows, and large world-class hotels), but is smaller, is a safer environment, has a riverfront and more reasonable pricing. Bullhead city, close by, is another choice.

I’ll wrap up this edition by talking about one last desert area, and that is Palm Springs, California. Believe it or not, the Palm Springs/Indio/Cathedral City area of California still represents a solid value in desert resort real estate and will no doubt continue to appreciate as people choose the area for relocation & retirement. As areas like Las Vegas and Phoenix get out of reach, areas like Palm Springs, Lake Havasu, and Laughlin will be next in line for substantial growth and appreciation.

I’ll wrap up with that – next time, I’ll continue with the examination by moving through the West and into the Pacific Northwest.

Have a great day, and live your real estate dreams!