Buying Real Estate Rental Property – Best Investment Strategies

More and more people are choosing to buy rental property as a lucrative way of receiving passive income, with many opportunities for further investments, massive profits, and a life of luxury and opulence. There is much to consider and research before you make any investment in rental property, but you’re likely going to be quickly looking at cash flow and a realtor lifestyle you could only have dreamed of.

Is Buying a House to Rent a Good Investment? Advantages Disadvantages of Rental Property

There is not one clear answer to whether buying rental property is a good investment. It depends on many factors such as location, the behavior of the market, the tenants, unexpected costs, etc. Therefore it is impossible to say whether it is a good investment for you until you inform yourself as best as you can, and make an educated decision.

Advantages of Rental Property Investments – Tax Deductions, Financial Security

Being a landlord often sounds like a dream job. Essentially you’re being paid because people are living somewhere. It is the most famous and infamous source of passive income. This is perhaps its biggest advantage. In terms of how much work you have to put in per dollar earned, it can be extremely lucrative. Another advantage is that the real estate market tends to be quite stable, which means that the majority of properties (bought in good areas) increase in value. That means, while you’re making a passive income, one day the mortgage will be paid, and despite having made money off of your investment, you can sell it at a higher price than you bought it!

Rental Property Taxes – What Taxes do Landlords Pay?

For one, rental income is not subject to social security taxes. The social security tax rate is currently 12,4% split by employer and employee, meaning that when owning rental property you are paying 6,2% less taxes.

Disadvantages of Rental Property Investment – Difficult Tenants

The biggest downside is dealing with difficult tenants. These can be those that are harmful for the atmosphere (e.g. by being loud), those that damage property (high repair costs), and those that do not pay their rent on time. Another downside is also that you are legally bound quite heavily, as renters are strongly protected by the law. That means that difficulties can arise, and cause a lot of stress. Of course it’s important to decide in what real estate to invest, because if you buy a house, these issues tend to be less serious.

• Damaging Tenants
• Tenants who do not Pay Rent

What does a Landlord Do? Tasks, Responsibilities when Owning Rental Property

In short, a landlord is in charge of general upkeep. That means repairs in the house such as plumbing or electricity which the landlord has to fix. Other things include maintaining the more general facilites. For example, if you own rental property you have to make sure common areas are cleaned, the doors, elevator, etc. all work, and more. Then comes the problem of rent. Some tenants can be quite a hassle when they don’t pay rent on time, in which case you have to contact them and collect the rent yourself.

• Repairs in home
• Maintenance of Property
• Collecting Rent

Financial Planning for Becoming a Landlord

That means paying off all debts, making sure you have enough saved up for a downpayment, and securing your finances for the long-term future. It is also probably a good idea to secure a separate business account.

• Save enough for a Downpayment
• Job Security

Six Steps to Purchasing Rental Property – Buy House, Apartment

The five steps to owning rental property begins with your finances. Next, research and strategy. Where do you want to invest, how is the market in that area, what type of real estate you want to invest in, the general turn of the economy and much more! Now your strategy with short-term vs long-term rentals, buying a house or apartment, etc. Step 4 is finding the property you want to purchase. Step 5 means buying the property (and getting a good deal!). And lastly, perhaps most difficult, find tenants!

1. Order your Finances
2. Research
3. Strategy and Investment Planning
4. Find the Property
5. Purchase Property
6. Find Tenants

Step 1: Order your Finances – Landlord Bank Account, Savings

The most important thing before buying a house or buying an apartment is to get your finances in order. That means having paid off all debts, or nearly all, having a good credit score (otherwise get ready for mortgage insurance). Then, you will want to open a separate account. This can of course be done by registering a real estate LLC in which case you would buy the property over the company. Otherwise you will have to open a new account.

Step 2: Research – Where to Buy, When to Buy Rental Property

This is an important step, as you will need to get a lay of the land of where you want to invest and how. There is no universal manual because, e.g. if you buy a house in New York, it’s different than if you buy an apartment and then even more different if you buy an apartment in L.A. It’s also critical to know about the more specific location, there are always up-and-coming neighborhoods in every city. The top USA real estate neighborhoods are spread out all over, and you could be living near one without knowing! We’ve tracked down the best locations for the biggest players in American real estate:

• Top Neighborhoods: New York
• Top Neighborhoods: Los Angeles
• Top Neighborhoods: San Francisco
• Top Neighborhoods: Miami
• Top Neighborhoods: Las Vegas

Step 3: Strategy, Investment Planning – ROI, Value

The typical question for real estate and rental property investment is the ROI. ROI means return on investment, which is typically expressed in a percentage. It just tells you how much money you make in proportion to how much money you spend. You should know that, unlike stocks, or REITs, rental property will not be valuable or a good investment because it is constantly rising in value. Rather it is an additional income on the side, apart from your normal investments.

• ROI = Return on Investment
• Real estate is about cash flow

Step 4: Find the Property – House Hunting, Realtors

Next step is to find property, this can turn out to be quite difficult or quite easy depending on the region. Typically this is also the point where you will decide whether you choose a fixer-upper or a ready house. For experienced investors this is a normal thought, but if you are just starting out, a fixer-upper can be extremely risky and bankrupt you. Unless of course you want to get into flipping houses.

• Fix-Up or ready house?

Step 5: Purchase Property – Mortgage, Cash, Downpayment

Of course with a cash purchase you can circumvent a lot of the additional real estate purchase costs, but not all (think mortgage tax and transfer tax, and moving expenses). Still, as soon as you purchase with a mortgage you will be paying more in the form of mortgage interest. There are different opinions on the specifics, but it is always important that even if you are absolutely in love with a house, to let cooler heads prevail. There are many reasons to buy a house for rental property, but these are all related to finances and strategy.

• Real Estate Closing Costs
• Logic should decide whether you buy

To learn more about what happens when you get to the point of actually buying a house, you can take a look at our article on all the taxes you will pay when you buy a property or real estate.

Real Estate Purchase: All Taxes

Step 6: Find Tenants – Advertising, Location

This is the point that it can get very very frustrating, or very comfortable. If you’re living in a place like L.A., this can be quite easy with very high demand making a good tenant easy to find. In other places you may have to wait for the right one. Important though, if you get the feeling that the fit isn’t right, don’t sign a contract! It is near impossible to force a tenant out legally, and one more month without the extra income won’t make the difference.

• Don’t rush the search
• Easier in bigger cities, with higher demand

Top 5 Tips for Buying Rental Property! LLC, Saving Taxes

There are many things to be aware of, and things to take into account for buying rental property for real estate investment. It’s important that you research a lot so as to make a smart decision. Still, there are a few secret tips that are very important to ensure quick profit from rental property!

1. Do the Math!
2. Landlord Insurance
3. Found a Company
4. Buy or Finance?
5. Go out of State

Do the Math! Research, Calculation of Costs for Rentals

This is critical. Of course, before investing in rental property the most important thing is extensive and intensive research. This does not only consist of informing yourself about e.g. mortgage or mortgage interest, and a downpayment. The main question is: for each dollar that you invest in this real estate rental investment, how much will you get back. Factor in the time, and then compare to your finances. It is possible that your investment strategy only offers returns after two years. Can you hold out that long?

For each dollar you invest, how much will you gain? When is your investment profitable?

Get Landlord Insurance! Recover Lost Rental Income, Liability Protection

There are going to be accidents, unwanted injuries and more on your property. You need to protect yourself from this. One possibility is with a limited liability company or the similar s corporation (see below), but this is not going to protect you legally, rather than just make sure that a legal action does not bankrupt you. So you have to get landlord insurance! A landlord insurance covers lost rental income (great for the rare difficult tenant), damage to the property, and of course, as mentioned liability protection against injuries or worse on your property. Remember, itemizing insurance costs is one of the top methods of real estate tax deductions!

• Protection against lost rental income
• Damage to property
• Liability for injuries on property

Found a Company – LLC, S Corp or C Corp

As mentioned above, it’s important to protect yourself from possible liabilities. Even with landlord insurance, you should likely put in the effort and cost to found a real estate entity which owns the buildings in your place. The main examples are the LLC, S corporation, C corporation, and Limited Partnership. These all differ in the degree to which they protect you from liability, but also to the degree in which they prevent double taxation, a common problem with other real estate investment entities.

• LLC
• S Corp
• C Corp
• Limited Partnership

Buy or Finance? Mortgage or Cash for Rental Investments

You will hear many voices insuring you that the only smart choice for buying a rental property is to finance it, in other words to buy it using a mortgage. This is true in most cases, but if you have the money available, buying cash can be even better. No mortgage interest, no uncertainty, and you profit right away. Of course you’ll be a few thousand dollars lighter, bt this comes in with rental income over time. It’s also seemingly forgotten at times that a house purchased with a mortgage still requires a substantial downpayment, as well as significant additional costs buying real estate, which means even with a mortgage, where, e.g. a 20-year plan can hound you for years, you have some saving to do before starting to invest and reap profits.

• Buy with mortgage
• Consider alternative cash options

Go out-of-state! Rental Investments Far away – Is it Profitable?

Many first-time investors make the decision to buy close to home. They hear a great offer for a house nearby in an up-and-coming neighborhood and choose to buy because it’s just a few minutes drive away. It’s true of course that this has its advantages; if a renter has an issue or a repair, you can come by quickly and fix it, you can give personal house tours with no problems, etc. At the same time, it’s a calculation game. There are extremely profitable neighborhoods in many parts of the country. Buying a rental there can give you much larger profits in much shorter time. These profits would offer the possibility of a property manager, reduces your involvement and makes the now-larger income even more passive.

• Advantages to buying nearby
• Far away can be much more profitable

Gross Rental Income – Top Tip for Saving Taxes

Easily explained: rental income is taxed as your normal income would be taxed. That means you add it to your salary as you would a normal job. Rental income can include the following types of payments: Advance payments of rent, non-returned deposits, services provided in exchange of rental income. Now we know what the income consists of, but the question is how can you pay less of it?

What can be Deducted from Rental Income? Itemizing Tips

You can deduct more than you think from your rental income. That includes things like the mortgage interest of your property, the insurance costs and property taxes. Along with these it is also typically possible to deduct fees such as those for advertising your properties, and those for legal assistance and for the Homeowner’s Association.

• Depreciation
• Property Manager Payments
• Mortgage Interest
• Insurance Costs
• Property Taxes
• Advertisement Fees
• HOA / Condo Fees
• Legal and Professional Fees

There’s so many more tax deductions you can use when you own real estate, whether as residence or as a landlord!

Real Estate Tax Deductions

Best Gross Rental Income Deduction! Depreciation

The most important concept here is depreciation. Depreciation is the answer to every time you wondered why real estate moguls and landlords pay so few taxes. Large items bought for business purposes can be deducted from your taxes, but not all at once. That means e.g. a property worth $250.000 which is deducted from taxes over a 27,5 year period, leads to a reduction in your taxable income of

$250.000 / 27,5 y = $9.090

per year! Add that to all the other possible real estate tax deductions, and many owners pay no taxes on their rental income!

How to Deduct Property Taxes – Save Money on Tax Bill

It is possible to deduct your property taxes! That’s because the government wants to encourage homeowners, and support them financially. Therefore, we have created this easy to use guide to show you the best ways to deduct property taxes, and pay less in taxes from your paycheck! Property taxes, along with mortgage tax, and real estate transfer tax, is also one of the three taxes when buying a house!

Property Tax Basics – Meaning, Definition

Property tax is often confused as being a tax on real estate property. Yet this is a misconception. The largest proportion of property taxes come from real estate, because this is the most expensive property most people own. Yet property taxes can also be levied on airplanes, computers, furniture, etc. In short, it is a tax on owning very expensive things. These are for most people real estate, which is why property taxes are also often called real estate taxes. New York property taxes are among the highest in the country!

The USA has a property tax rate of on average 1.11%, which are paid once a year on April 15th. To learn more, read our easy-to-understand guide:

Property Taxes USA

Write Off Property Taxes – Steps, Easy Guide

To write off property taxes you need to follow specific steps and meet certain criteria. These are not difficult though, and with minimal effort, you can also save a lot of money writing off your property taxes! Depending on how you pay your property taxes the steps can differ. Some people pay it semi-annually, while others use a monthly payment to an escrow account. Escrow accounts are also typically used as part of the additional closing costs when buying a house!

Criteria for Deducting Property Taxes – Types of Property

There are many types of real estate, and not all are eligible to deduct off your tax bill. What you can deduct are importantly taxes you have already paid. That means you cannot deduct taxes that are still outstanding. You also cannot deduct property taxes on assessments for various types of property. What is deductible are your home (whether primary residence or vacation home), property even outside of the country, Cars, RVs, boats, etc., land, and even co-op apartments.

• Home (Residence or Vacation)
• Property outside USA
• Cars, RVs, Boats, etc.
• Land
• Co-Op Apartments

How much Property Tax can you Deduct? Maximum Amount

You can deduct a maximum of $10.000 a year. This is then a combination of state, federal and local income taxes. This makes sense, considering New York property taxes are vastly different from Florida property taxes for example. Also, if you are married and filing separately, this is reduced to $5.000 per person.

• Up to $10.000 a year – Filing as Single
• Up to $5.000 a year – Married filing separately

Steps for Writing off Property Taxes – Guide, Checklist

These are the main steps to write off your property taxes. Importantly, you deduct your real estate taxes with the schedule A form from the IRS. First, you get a record of your tax bill, this is so that you know exactly what you are paying. Next, use the schedule A of the IRS form 1040 for itemized deduction from the IRS to file your deduction. One last thing is important, you can only deduct your property taxes in the year that you pay them! Meaning that if you pay a bit earlier, you can still deduct it from this year!

1. Get a record of your tax bill
2. Use Schedule A of Form 1040 from the IRS
3. Deduct property taxes in the year that you paid them!

Real Estate Tax Deductions

The federal government has many ways to make it easier to pay less in taxes on real estate. There are three taxes when buying real estate, and all three can be minimized! There are more ways that you could be paying less for your taxes now! Of course you’ve heard of founding a real estate LLC, or manipulating your capital gains taxes, but there’s much more to learn! Make sure to read up on how you can take advantage of

• Real Estate Tax Deductions

Miami: Florida Real Estate and Property Investment

Miami may be synonymous with celebrities living in multi-million dollar mansions, some of the world’s best nightlife, and beaches, but it’s a lot more. There’s a massive cultural scene, there are great schools, and much more. For these many reasonss Miami is considered a future star of the American real estate market. Take a look below, what living in Miami’s super luxury can mean for you. Whether you want to buy a house or buy an apartment, Miami can give what you’re looking for.

Miami Mega-Mansion House Tour – $17.9 Million Beach Mansion

This ultra-modern luxury mansion is on the market for a whopping $17.9 million. For good reason though, as it has everything you’d want. Located on the man-made Venetian Islands, this place is everything your wildest dreams could imagine.

Located on the Venetian Islands, this is a home you want to have seen at least once in your life. A massive 7 bedrooms, and 7,5 bathrooms also mean that you can have as many guests over as you’d like, and you won’t run out of room.

• Location: 825 E Dilido Dr, Miami Beach, FL
• Price: $17.9 mil.
• Bedrooms: 7
• Bathrooms: 7,5
• Square feet: 8.048

What are Miami’s Industries? Miami Economy Explained

Miami is a somewhat wealthy economy. It has massive sectors of retail trade, service industry (hotels, restaurants, etc.), and construction. Miami’s current unemployment rate lies at 3,2%, which is below the US average, and much lower than e.g. Los Angeles, with 5,1%. You also cannot forget the massive tourism industry which takes charge in this city. The massive airport, prime vacation activities with everything from yacht, golf, and country clubs, diving, some of the world’s best restaurants, and so much more.

• Retail
• Service
• Construction
• Manufacturing

Where does Miami Rank in Cost of Living – Is Miami Expensive to Live?

In the cost of living index published by Numbeo, Miami is ranked 24th (77,49), New York and San Francisco are miles ahead, taking spots 2 and 4 respectively, while America’s other party city Las Vegas is comfortably in 79th place. The average restaurant trip here will cost $15,00 and a loaf of bread $2,99. In addition to rent, which is on average $1.325-$1.1.884 (1 Bedroom apartment) or $2.527-$3.688 (3 Bedroom apartment), basic utilities for a month cost $146 and the average internet plan $68. This is all to be taken in relation to the average salary, which is $3.362 a month after tax. To see how LV stacks up against other big metropolises, take a look below:

• Hamilton, BE (147,00) – 1
• New York City, NY (100,00) – 2
• San Francisco, CA (94,17) – 4
• Los Angeles, CA (81,31) – 15
• Miami, FL (77,98) – 25
• Las Vegas, NV (68,24) – 79

Rent Index – How Expensive is Rent in Miami?

Rent in Miami is quite high, ranking 16th highest for North American cities with a rent index of 62,01. The rent index tells you the relative price of rent. With many workers in this city passing through or only staying for a few years, rent can be an important thing to take a look at. Miami has very high rent, and a comparatively low average salary. Take a look at the ranking below, with rent index and position for North American cities:

• San Francisco, CA (116,48) – 1
• New York City, NY (100,00) – 2
• Los Angeles, CA (75,17) – 10
• Miami, FL (62,01) – 16
• Las Vegas, NV (38,99) – 64

Miami – Beach Drone Flight in Florida

One of the most famous ocean cities in the world. This is a beauty to look at. Some of the most modern architecture, and the decadent style which the U.S. is so famous for worldwide. Pure elegance.

Real Estate Investment: Luxury Properties in Miami

Miami is one of the hottest cities in the USA, and therefore, no surprise, it is also one of the hottest real estate markets in the country. Filled with super high-end condos, luxury villas, and more, this is an enticing market for the wealthy.

Rent Prices Miami – Should I Rent or Buy in Las Vegas?

It’s always important to look at the prices when thinking about whether to buy or rent. You should also think about two other things though. Your preferences, and the permanence that you want from your living situation. If you have a preference to let other people take care of major things, like cleaning public areas, etc. renting may be a good option. Additionally, with a job where you are likely to relocate frequently or have an uncertain job situation, renting is the clear best option. The average rent is $1.708, with an average apartment being 887 square feet. This comes out to

• Average Rent: $1.708
• Average Apartment Size: 887 sq. feet

What type of Real Estate Should I invest in?

Types of Real Estate Investment

Is Miami a Good Real Estate Investment? Property Investment Miami Overview

Miami is a growing market at the moment. At least in terms of prices: in the greater Miami area, median sales price increased by 5.5%! At the moment, there is little movement though, with a demand being met by an equal supply. Ideally, for investment a buyer would hope for more supply which would drive down prices, but a balanced market is also a good sign because that means sales are being met at about asking price. In fact, in Miami, at the moment, most sales are occuring at 3% below asking price, meaning many buyers are getting a good deal. Some numbers:

• Median Sale Price (Miami-Dade): $410.000
• Median Sale Price (Broward): $400.000
• Median Time to Sale (Miami-Dade): 92 Days
• Median Time to Sale (Broward): 73 Days

How Expensive is Real Estate in Miami?

On average, a property in Miami costs $678.000. This is higher than the median sales price, which indicates that there are some extremely expensive homes being sold which are driving this average up.

• Average Price: $678.000

Most Expensive Neighbourhoods in Miami – What is the Richest Neighborhood in Miami?

The most expensive real estate in Miami is found in Miami Beach. This small island makes up a large part of the luxury real estate market. Also popular are the Venetian Islands, manmade islands with some of the east coast’s most exclusive properties. Another area to keep in mind: Fisher Island, another of the famous islands lining Miami’s coral-blue waters. The most expensive neighborhood in Miami is Indian Creek Island. You basically can’t get more high class than this, and may not find it on other lists as these properties won’t be sold over zillow. These are the richest neighborhoods in Miami:

1. Indian Creek Island: $15.000.000 – $47.000.000
2. North Bay Road: $7.500.000 – $45.000.000
3. Star Island: $7.100.000 – $28.000.000
4. Hibiscus Island: $1.200.000 – $14.200.000
5. Venetian Islands: $1.000.000 – $25.700.000

Miami Taxes – Property Taxes, Income Tax

If you live in Miami you’ll likely need to pay taxes here. As it is not one of the USA’s top tax havens, this may also be more expensive than you’d like. Let us take a closer look at tax rates in USA’s most unique state in Florida, and its star Miami. Thinking of buying? Don’t forget the buying real estate taxes.

Miami Tax Rates – Are Taxes High in Miami?

Miami, as it is in Florida, is one of the metropolises, along with Las Vegas, to not have an income tax. This makes it attractive to high earners, who will have to give away less of their income to the state

• Income Tax: 0%
• Sales Tax: 7,0%

Miami Property Tax Rates – Florida Rankings

Miami may not have income tax, but like so often, this is compensated via other forms of tax. This may explain an effective property tax rate which is higher than most other US property tax rates. Compare it to Los Angeles at 0,75% or New York property taxes at 0,86%. Take a look below to see what you need to know about miami property tax rates:

• Avg. US Property Tax – 1,1%
• Avg. Florida Property Tax – 0,94%
• Miami Property Tax – 1,04%
• Miami-Dade County – 0,97%

Want to learn more about property taxes, how they work, and how high they are in Florida, how high they are in Miami?

Florida Property Taxes

Safest Neighborhoods in Miami – Lowest Crime Rates

What are the safest areas in Miami? We’ve taken a look at the crime rates, and found that a few neighborhoods stand out among the rest. The safest area is certainly Brickell Hammock. Take a look at the full ranking below!

1. Brickell Hammock
2. Highland Lakes / Sun Swept Isles
3. SW 136th St / SW 99th Ave
4. SW 127th Ave / SW 56th St
5. SW 54th Ave / SW 80th St
6. SW 102nd Ave / SW 128th St
7. Kendale Blvd / SW 88th St
8. Krome Ave
9. Krome Ave / SW 12Th St
10. SW 42nd St / SW 162nd Ave

Top Miami Neighborhoods – What is the Best Neighborhood to Live in Las Vegas?

We present the most important, hottest, and up-and-coming neighborhoods to keep in mind. They are a mix of hot, up-and-coming artists’ districts, as well as safe bets, luxury neighborhoods, and anywhere else where real estate investment is a good option at the moment. Our top Miami neighborhoods for real estate are:

1. Downtown Miami
2. Coral Gables
3. Little Haiti
4. Bayshore
5. Pinecrest
6. Coconut Grove

Downtown Miami – Tropical Manhattan

Hom to some of the most important finance institutions in the city, this area is also home to Bayfront Park, the InterContinental Hotel, and Bayside Market, so there’s plenty to see. There’s also some of Miami’s famous resstaurants here. Regarding real estate it’s a mixed bag, which makes this all the more attractive. Properties differ heavily in price-to-quality ratios, so you may have to be careful, but there’s tons of diamonds in the rough. There are a lot of alluring properties available. However, you should definitely do some research before committing to purchasing a rental unit in the south.

Coral Gables – The Undeniable Suburbia

Possibly the most prototypical Miami neighborhood, Coral Gables is known worldwide. It is extremely safe, beuatiful, and has beutiful real estate. Of course you can’t say it’s a hidden gem, but it is one of the safest investment options. Miami is growing, and its undeniable perfect neighborhood will become only more desirable with shrinking spaces.

• Median Price: $420.000

Little Haiti – Hip and Trendy Miami

This used to be one of the worst areas in Miami. Over time it has earned a reputation for its vibrant diverse cultural scene, with great food, a completely unique atmosphere, and away from the clean and sterile neighborhoods found on manmade islands across the water. Like Little Havana, you can expect this area to become a future superstar in the city. Median property here costs $373.000, so get it while it’s cheap!

• Median Price: $373.000

Bayshore – Miami’s Best Rental Investment

Some places you want to live, and in some places you want to rent out. Bayshore is where you want to rent out. Buying property here is comparably cheap to the rent that you can get from tenants. At the same time, prices for rent are increasing, while prices to buy are staying steady. Located on Miami Beach, you’re at a great position to get everywhere, and if Miami continues to grow as it has, prices will likely increase in the longterm as well.

Pinecrest – Area for Young Professionals

Pinecrest is a great compromise between the sprawling millionaire homes in Coral Gables or the Venetian Islands, and the rough and trendy of Little Havana or Little Haiti. It has great schools, is safe, and diverse, but it also has good nightlife and has many hip cafes and young professionals. If you’re 32 with a small family and a startup, this is the place to go in Miami, without a doubt.

• Pop.: 19.200

Coconut Grove – Raising a Family in Miami

Coconut Grove is exactly the suburban, family-friendly utopia that the name implies. It is beautiful, with eclectic and attractive architecture, as well as small streets and no highways passing through. The price reflects the quality though. With a median price of $930.000, not everyone will be able to afford it, but to live here is certainly the right decision if you want a quiet suburban home to raise a family.

San Francisco: Real Estate Investment in Silicon Valley

San Francisco is one of USA’s legendary cities. It is immediately next to silicon valley, was the birthplace of hippies, and is one of the most important cultural hubs of the 20th century. This is reflected in the real estate market though. There are many reasons why San Francisco is considered to be one of the most difficult real estate markets to get into. Not to worry though, we give you the full rundown of where you should invest in this metropolis. First we take a short look at the economy and the general real estate market though.

Why is San Francisco Economically Successful – Major Industries, Prediction

San Francisco may have started its fame with the gold rush, but nowadays it is a tech mega-city. While a lot of the action takes place in Silicon Valley, there’s a massive number of tech startups starting out within the city limits as well. Another important sector is finance, with the largest porportion of employment in the city. Next are business services like consulting, retail, and of course tourism.

• New Technology
• Finance
• Business Services
• Retail
• Tourism

Where does San Francisco Rank in Cost of Living? Expensive Luxury with Culture

In the cost of living index published by Numbeo, San Francisco is ranked 4th (94,17), with New York being two spots ahead at an index score of 100,00. The average restaurant trip here will cost $19,00 and a loaf of bread $3,80. If you’re looking to move here, remember that basic utilities for a month cost $166 and the average internet plan $69. Not to worry though, as the average monthly salary is higher than elsewhere too, with $7.777 after tax landing in your pocket. If you want to see where San Francisco ranks, look at a few select cities below, with their index and rank in US cities:

• Hamilton, BE (147,00) – 1
• New York City, NY (100,00) – 2
• San Francisco, CA (94,17) – 4
• Los Angeles, CA (81,31) – 15
• Miami, FL (77,98) – 25

Rent Index – Does San Francisco have the Highest Rent?

It is also possible to look at the rent index. This gives information about the relative price of rent. Considering that San Francisco is considered by many to be the most expensive city to rent in, it’s no surprise, that they rank first in the most expensive city for renting. This also demonstrates the unique position which San Francisco has, where its cost of living generally is not higher than other cities, but its rental price is. Take a look at the ranking below:

• San Francisco, CA (116,48) – 1
• New York City, NY (100,00) – 2
• Hamilton, BE (94,98) – 3
• Los Angeles, CA (75,17) – 10
• Miami, FL (62,01) – 16

San Francisco Views – Drone Flight

San Francisco is obviously most well-known for the Golden Gate Bridge. It has so much more beauty though, and this is captured by drone in the video below.

Real Estate Investment: High San Francisco Real Estate Inventory

Real estate in San Francisco is legendary. Not always in a positive way, but legendary nonetheless. From impossibly luxurious apartments, to the infamous rowhouses on its hills, and impossibly high rent, this real estate market has it all.

Real Estate Prices San Francisco – Overview

If you’re looking at investing in real estate, you can expect to pay an average of $14.485 per square meter in the city centre. Outside the city centre it’s less, but still a strong $9.989. Comparing that to a rental price of $3.224 for a 1-bedroom apartment, or $7.100 for a 3-bedroom.

• $14.485 per Square Meter
• $3.224 for 1-Bedroom Apartment

San Francisco Real Estate Market Guide – Is it a Good Time to Buy in the Bay Area?

In January of this year, the amount of sales were 67% higher than in the year previous. A remarkable increase. This is likely not going to continue increasing as heavily, but it is indicative of the positive change in the Bay Area. What’s important is that the San Francisco real estate market is incredibly complex, with prices varying quickly, and by location. At the moment the market is marked by very high inventory, and low sales. That means it is a good time to buy in San Francisco at the moment, especially single-family residentials!

• Yes, right now is a good time to buy, with low prices thanks to many houses being on the market

Most Expensive, Cheapest Neighbourhoods in San Francisco – Real Estate Prices

The most expensive real estate in San Francisco can be found generally in the North of the city. These are places like Presidio heights, Cow Holow, and Russian Hill. Central San Francisco is home to a broad range, with e.g. Ashbury Heights being among the most expensive, while Monterey Heights ranks lower. The cheapest can be found in Southeast San Francisco (Visitacion Valley, Bayview, or Silver Terrace).

The Top 5 Most Expensive Neighborhoods in San Francisco – Real Estate

If you’re buying a house, the most expensive place to do it is in Presidio Heights, with a median sales price of $7.350.000. Next up is Pacific Heights with a median sales price of $5.600.00, and Sea Cliff at $4.672.500. The full ranking of the top 5, by median sales price is below:

1. Presidio Height – $7.350.000
2. Pacific Heights – $5.600.00
3. Sea Cliff – $4.672.500
4. Cow Hollow – $4.296.000
5. Russian Hill – $3.850.000

Top 5 Cheapest Neighborhoods in San Francisco – Real Estate

If you’re looking for something a bit more affordable, but still in vicinty to the city, you’re still going to be forking out the cash. The cheapest area in San Francisco is Hunter’s Point, where you will still be paying around $825.000 for a house. Next up are Visitacion Valley ($910.000), Bayview ($920.000), and Oceanview ($935.000). The full list, from cheapest to more expensive below:

1. Hunter’s Point – $825.000
2. Visitacion Valley – $910.000
3. Bayview – $920.000
4. Oceanview – $935.000
5. Bayview Heights – $937.000

San Francisco Taxes – Property Taxes, Real Estate

San Francisco taxes are a complicated matter. It of course depends on if you’re in San Francisco County or San Mateo, and many more issues. Let us take a deep dive into San Francisco taxes, and what you can expect to pay.

San Francisco Tax Rates – How much Taxes do you Pay in San Francisco

In general the state of California has income tax rates between 1% and 12,5%. Also, for large businesses, the city of San Francisco has an additional tax for expenses of large businesses. This is a 1,5% gross receipts tax on payroll expenses. Additionally, in San Francisco there is a total sales tax of a massive 8,5%.

• Income Sales Tax: 1%-12,5%
• Sales Tax: 8,5%

San Francisco Property Tax Rates – California Rankings

California property taxes aren’t simple. In California, the average rate of property tax is 0,77%. Each county has their own regulations and expenses, therefore it is important to also look at the amount you will pay in San Francisco County. Here, the average property tax is 0,65%, compared to Los Angeles at 0,75% or the neighboring San Mateo County at 0,66%.

• Avg. US Property Tax – 1.1%
• Avg. California Property Tax – 0,77%
• San Mateo County – 0,66%
• San Francisco County – 0.65%

Interested in property taxes in California? Our full article on the matter should be interesting to you:

• California Property Taxes

SoMa to Ashbury: Top San Francisco Neighborhoods

There are too many neighborhoods to remember. Here we present the most important, hottest, and up-and-coming neighborhoods to keep in mind. Our top San Francisco neighborhoods for real estate are:

1. SoMa
2. Union Square
3. Sunset District
4. Nob Hill
5. Haigh/Ashbury
6. Pacific Heights

SoMa – Downtown Hub

This downtown San Francisco neighborhood is massive. If you’re looking for real estate, it’s a great catch though, South of Market (or SoMa for short) is still affordable. This is also in part due to the upcoming Central SoMa project which will create thousands of housing units and jobs.

Union Square – Lively, Exclusive City-life

Union Square is the pulse of the city, surely being among the liveliest and most exclusive parts of the city. Don’t forget luxurious shopping opportunities and swaths of hotels, restaurants and art galeries. It may be home to many tourists, but also to some of the best streets in the city

Sunset District – Suburban Dream

Sunset district is a massive neighborhood, in terms of space as well as population. It is the suburbia which many young American families are looking for. There are many schools and universities, it is safe, and with an unemplyment rate under 3%, it is also a financially healthy area. Not to forget are also the many parks, which make taking a stroll here a pleasure.

Nob Hill – Elegance and Style

While Russian Hill is still bustling with tourists due to nearby Ghirardelli Square, Aquatic Park and Lombard Street, Nob Hill is the elegant, exclusive side of San Francisco. This is the SoHo of San Francisco. Four of the best hotels reside here (Big 4), Grace Cathedral (a replica of Notre Dame, Paris) and beautiful parks, such as Huntington Park with the wonderful fountain of the tortoises.

Haight/Ashbury – Still in?

Haight Ashbury is still one of the hottest parts of the city. The former birthplace of the flower power movement, where legends such as Janis Joplin and Jimi Hendrix lived, is still the center of the alternative and creative scene in the USA. Here you can find many cafes and restaurants frequented equally by students, neo hippies, families and tourists. Although many expensive boutiques and high-end vintage stores have settled here, the flair as a former hippie stronghold is still palpable.

Pacific Heights – Best Quality of Life in San Francisco

When it comes to the quality of life, you can’t do better than Pacific Heights. This neighborhood is always described as the most expensive and exclusive part of the city, and for good reason. All around, there are unbelievable views of the coast. It is even home to what is called Gold Coast, one of the most expensive areas in the US inhabited by San Franciscos billionaires. For a more affordable area than gold coast, consider Western Addition which shares the luxurious atmosphere, without the sky-high prices.

Real Estate – All Taxes you Pay when Buying Real Estate

Buying a house is a massive investment, and most people are surprised by the many additional costs. To begin to understand all the extra costs which the purchase of a house brings, means understanding the taxes. That means, that the three types of taxes listed below are all the necessary costs which you will pay to the government in the area of the home you are purchasing.

Upfront Taxes – What are Pro-Rata Taxes?

When buying a home in the United States, you are typically required to pay 6 months of property taxes in advance upon purchase. That means six months worth of property tax, called pro rata. Yet, on the purchase of the property, there are only three taxes. Which makes this quite easy to understand. The property tax is the tax which an individual has to pay annually for owning property, the transfer tax is the tax on the purchase of the home, and the mortgage recording tax (where it exists) is the tax on the recording of the mortgage.

• Taxes you pay in advance!

Many of these taxes can be deducted from your federal tax sheet. Learn more:

• Real Estate Tax Deductions Explained

Do you have to pay Sales Tax on Real Estate?

No. In federal law, real estate such as homes, property, or land, are not subject to sales tax. Although some states do have sales tax on items which may be interpreted as being a home (e.g. a mobile home).

Taxes You Must Know – Most Important Real Estate Taxes

These are the taxes you have to know about when paying for your home. How each of these is calculated depends on the city, county, and state the real estate is bought in. The three relevant taxes which you will incur when purchasing a home are property taxes, transfer taxes, and mortgage registration tax. Not all exist in all states, and there are many intricacies to note.

Property Taxes – Do You have to Pay Property Tax when Buying a Home?

Property Taxes are ad-valorem taxes which you pay for owning property. Most typically, this property consists of land, as well as anything which is permanently attached, such as any real estate, but also, roads, docks/wharfs, pools, etc. In some states, the property tax even includes items such as boats. When buying a house, these must be paid in advance, and then received back from the seller. Property taxes are typically a rate which is multiplied by the estimated value of the property. This value is estimated by an appraiser, and takes into account location, age, etc.

Avg. US Property Tax: 1.11%

To calculate property taxes, you receive a rate, which is influenced by local, county, and state laws. E.g., a house in Hawaii, worth USD$1 mil., will cost USD$3,000 in property taxes a year. Yet this does not take into account the rate which a specific county in Hawaii may add to this.

• U.S. States Property Taxes

Transfer Taxes – What is it? Who Pays transfer Taxes?

Transfer taxes are argued to be taxes which pay for the work and materials invested when documenting the purchase of a new home. This is why they are sometimes also called documentation taxes. They are one time fees upon the transfer in ownership of a home, i.e. when buying or selling a house. These are sometimes paid by the seller, and sometimes by the buyer, with some states stipulating who, and sometimes the real estate agent mediates between seller and buyer.

• Sometimes paid by seller, sometimes by buyer

Avg. US Transfer Tax: 0.6%

These are often felt to be one of the more complicated taxes because the rate does not only differ by state, but also between counties and between cities. E.g. in New York you have the New York State (0.4%), New York City (1,4%), Mansion (1%, only when buying a house > USD$1 mil.) transfer taxes. Meaning when you buy a house for USD$1 mil., there is a total of USD$28,250.

• U.S. Real Estate Transfer Taxes

Mortgage – What is a Mortgage Registration Tax?

This tax is based on the amount of debt being secured by the procurement of real estate. It is a state-based tax, and is paid towards the locations where the mortgage is documented and recorded. If the buyer wants a mortgage, the buyer pays the registration fees for the mortgage. In Minnesota, there may be an additional tax such as an “environmental response fund tax”. The 7 states which require a mortgage tax are Alabama, Florida, Kansas, Minnesota, New Yoek, Oklahoma, and Tennessee.

Avg. US Mortgage Registration Tax: 0.2%-.4%

The amount required is again based around the amount included in the mortgage. E.g. in Minnesota county, there is a 0.23% mortgage registration tax, when a mortgage worth USD$1 mil., you will pay USD$2300 in mortgage registration tax.

• U.S. Mortgage Taxes

Closing Costs Real Estate – Hidden Additional Costs

These taxes are just some of the many additional costs which accompany the purchase of real estate. Buying a house means paying attorneys, brokers, and many other individuals or organisations. And these additional costs can equal as much as 5-6% of the total purchase price of the property. We’ve broken down all the costs you have to know about in our article

• Buying Real Estate – All Additional Costs