Look, I love California, I lived there for 25 years — but there’s no way in hell I’m going to invest in apartments there.
People have always wondered how come I own $5 billion worth of real estate yet I don’t own any multifamily properties in California.
Well, there are three major reasons why California is and will stay off my list.
The 3 Big Problems with Real Estate in California
1The state is broke
And I mean “financially broke”. Did you know that California, the most populous state, had the largest amount of total debt in America in 2019?
They are broke. And as they are broke, they will rob from people that have money.
I learned this the hard way in 2008. Back then I owed $52 million to the bank. So what did the bank do?
They called me and asked me to pay the $52 million back.
Now, why did they call me and didn’t call other people? Because they knew I had money sitting around. They knew I was liquid at the time.
That’s when I decided that the next time this happens, I ain’t gonna have a bunch of cash for them to get. I’m gonna have assets they can’t touch. Because they can’t make me sell my assets.
2California’s Tenant Protection Act
This law is the number one reason why I stay away from California.
Because when the law tells the tenant that they don’t have to pay yet they can stay, I don’t own the property anymore. The government does.
If you can’t tell a tenant to leave and he’s causing problems, that causes problems to all the other tenants that are paying. That tenant is ruining the property for everybody that lives there.
You knew this one was coming. Taxes in California are simply ridiculous.
Again, it’s because the state is broke and they’re doing all kinds of ridiculous stuff to pay their debt.