Concho raises good points about the hazards of investing in TX that also apply to AZ and, I suppose NV.
The biggest mistake CA investors can make is extrapolating their own CA real estate lessons and applying them in a different state.
CA, and especially San Diego investors, have often made their money because of our expensive and limited land. But RE development in other states can quickly expand in all directions, making the land component of your investment tiny. It is easy to be seduced by fine-looking buildings that seem incredibly cheap, a tendency the local RE hawkers easily capitalize on when successful CA 1031 exchangers come visiting.
Because land is so cheap and easily developed because of lower entitlement costs and government hassles, value appreciation cannot be counted upon. Instead, cash flow is primary. You must control costs, attract and keep tenants, and just work the property hands-on style the old fashioned way. (That’s why most of my properties are in Yuma, a pleasant 2 3/4 hour drive away).
