There is a substantial difference between US states when it comes to investing in real estate. Do you know what they are, and how they can impact you as a mobile home park investor?
How Much Can Location Matter?
Most real estate investors are already well aware of the fact that location can play a notable role in the price of property assets, rents, vacancies, and appreciation. Yet, experienced property investors know that location can play a far more significant role in their finances and lives.
Different states, and even more minor jurisdictions can make a huge difference in the level of risk and liability involved in investing. And this can go well beyond the financial. Some states offer ease of doing business which increases efficiency and net profitability. Where you invest can substantially impact both short and long term net profitability, including the strength or lack of a resale market. All of these things should be taken into account when choosing where to invest.
So how do states differ?
Landlord – Tenant Laws
Landlord-tenant laws vary widely from state to state. Laws differ on the amount of upfront money and deposits that can be taken from tenants, the penalties for landlords failing to meet regulations, how easily tenants can sue their landlords, and the protections for landlords. In some states landlords are bound to all types of rules even when tenants aren’t paying and units are being illegally occupied. This can all clearly have a big impact on profitability.
In the Courtroom
The above can certainly carry over to the courtroom. Investors report that some jurisdictions consistently either side in favor of tenants or landlords. This is critical to know. You don’t want to burn your time and money going into court if you have little chance of winning.
The same applies to evictions. IN some states and cities it can take just days and almost no expense to get non-performing tenants and occupants that don’t have a lease out of your property. In other places it can regularly take months and hundreds of dollars, if not more. We’re talking about months of income that can be burned, or deposited in your bank account. Which would you rather deal with?
Business Friendly States
Beyond landlord-tenant law and relationships some states are clearly far friendlier toward businesses and business owners than others. That includes real estate investors and mobile home park owners. Business friendly states can have low energy costs, good talent pools, business friendly laws, and low business costs. A few even offer far superior privacy for business owners.
Taxes differ widely from state to state. This includes property taxes, corporate taxes, inheritance taxes, and personal income taxes. Note that at Amazon employees have territory maps including areas they are forbidden to even enter in order to avoid triggering taxes.
All of the above rolls over in the real estate financing. Clearly mortgage and business lenders are affected by the above items too. They certainly take them into account when choosing where to lend, and the costs they levy to offset the increased or decreased risk. This not only matters to those investing now, but for their ability to resell their assets later, and for how much.
This is not that complicated once investors choose their top preferred states and separate them from the rest. Just pay attention as these factors can change over time too.