Do you want a wealthy retirement without worrying about money.
Do you want a wealthy retirement without worrying about money? Do welcome to the Retire In Texas Podcast, where you will discover how to enjoy your faith, your family, and your freedom in the state of Texas. And now here's your host, financial advisor, author, and all around good Texan, Darryl Lyons.
(00:24): Welcome to retire in Texas podcast. My name is Darryl Lyons. I'm the co-founder of PAX financial group and San Antonio, Texas PAX financial group is the sponsor of this program. So visit PAX financial group.com. And before I get started, I need to share the legal disclosure. This material contains general information only is not intended to provide specific investment tax or legal advice. Visit PAX financial group.com for more information, investment advisory services offer through PAX financial group. Okay, so we're going to talk about Elan skin. The reason is, is because he's making a lot of noise in Texas, and so that does affect the Texas economy. And so you need to know that if you're going to retire in Texas is Texas is hot on fire. I have four bullet points I want to cover with you and the, but the next, I don't know, 15, 20 minutes.
(01:13): First of all, I want to map out some of the LMS footprints port for you to know, map that out too. I want you to know about the impact of the housing situation. And three, I want to talk a little bit about the ripple effects of what's going on and then for what it means to you as a retiree. So let's start out at mapping out Elon Musk footprint, you know, Elan for those that don't know, he's Tesla's CEO, one of the richest people in the world he's worth more than Johnson and Johnson. He's yeah, he's rich. So he's already moved. His Gigafactory orders is working on moving his Gigafactory. That's being, I guess, erected. Now there's if you look online, you can see real-time pictures of where it's at and the progression of the factory. It's a Gigafactory in Austin. I'll talk more about that in a minute, but you also recently said he was going to move his headquarters from Palo Alto to California or Palo Alto, California to Austin, Texas.
(02:08): Here's. He warned about this a long time ago in, in 2020, when COVID was happening. He was so mad. He had a public falling out with California. When regulators came in and forced Tesla to suspend production, he was so mad. He threatened right then publicly to move Tesla's headquarters. And now he did it. He has been not happy and like many businesses, not happy with the regulatory environment in California and rightfully so in Los Angeles, it's illegal to wash your neighbor's car. If you've not gotten their permission in Walnut, if you fly a kite higher than 10 feet off the ground, you'll get fined in long beach. It's illegal to curse on a mini golf course in San Jose. It's against the law to have two cats or dogs in Berkeley. It's illegal to whistle or loss Canary before 7:00 AM. And finally, I don't know if you know this, but in California, it's illegal to set up a mouse trap without a hunting license.
(03:09): So obviously these are silly, but we all know that the regulatory environment for business owners is so burdensome that it's forcing all of them to reevaluate where they call home. And Elon Musk is now calling Texas home, not only to himself, but also to his company. You can see him wearing Western style, bandanas and shirts and enjoying the fact that he no longer has to pay a 13.3% California state income tax. Whereas Texas has no personal income tax. So let's map out Elon Musk, footprints. It's important that you know, that he launched a company called space X, where the intent is to take space exploration from the government's hands into the private sector. And so ultimately he wants to allow everyday people to enjoy and experience space from Texas we're at, in Texas Boca Chica. So this is in the Rio Grande valley all the way down south.
(04:16): You know where Brownsville is at it's right at the border, right at the very end of Texas. And if you go 23 miles east, I used to live in the Rio Grande valley. I've never been to Boca Chica 23 miles east of Brownsville is a community. I don't believe it is even considered a city or municipality. I believe it's a village. And so 23 miles east is where space X is at. And in September, 2019 space X offered to buy all the houses in Boca Chica for three times, the fair market value. And they even threw in VIP invites to all future launch events is when a non negotiable offer. And I don't know who all took them up, but they're very serious about making space. X's home in Boca, Chica, Texas. So now you travel up north from Boca Chica, I guess by car, it'll take you five, five and a half hours, and you'll get, you could go up through San Antonio and San Marcus, and then you take the toll road, one 30, like you're going out to Bastrop or even college station or going around Austin.
(05:21): And that is where you will find the Tesla factory, the giga factory. It's huge factory right now it's dirt. And you can go online and see the construction of it, but it's huge factory. And many people speculate that the Tesla's home office will be somewhere around there. I believe it will turn out pretty. I mean, Colorado river's there. It's really close. It's three miles to the airport. 15 minutes downtown, really not far away from bass drop, which is one of my favorite getaway communities. The lost Pines. There's a nice resort there. You got to check it out called Hyatt hill country resort, but that is going to be one of the central hubs of Tesla, obviously likely to be the home office and then a major Gigafactory, the largest of his gigafactories. I think there's four all across the world, but that's going to be humongous.
(06:18): So if you map out his footprints, they go all the way from Austin, all the way down, the Rio Grande valley, I would suggest to you and I was sitting with a business owner today, very successful man. And he said, I want to invest anywhere between Austin and the Rio Grande valley is that's where it's at. He said, everything north of Austin is getting expensive, but everything from Austin, south still great opportunity. And I'd suggest to you that he's right, but next, this is my second point. After we follow his footprints down from the valley up to Austin, back and forth. The second thing I want to cover is the housing situation. So you've got to know about that. So the reason Elon Musk moved from California, not only regulatory environment, but also this is actually the public announcement is the housing was out of control.
(07:06): Did this Gigafactory in Austin is going to, it's going to employ about 65% of the jobs are going to be, middle-skilled no college degree with salaries about 47,000. And so you can't have a salary of 47,000 and buy a home in California, or if you do, then you've got to commute two, three hours away. So that makes it for a healthy environment for somebody to move to Texas and where the, the houses are still affordable, but are they right? And so we see them going up and up and up, but we, you know, some of us are saying, well, I bought a house for $80, a square foot or $70 square foot, a hundred dollars a square foot. But now we're seeing them go to a hundred fifty, a hundred seventy five, two hundred certain pockets, $400 a square foot. You know, there's some I'm in new Braunfels. I saw some the other day, $400 square foot.
(07:57): So they are going up. But, but in California, specifically Silicon valley, they're $2,000 a square foot. And you can look that up on Zillow, $2,000 a square foot. So people are coming to Texas paying cash, offering twice the offering price, paying cash and still pocketing money. And so that's why the housing prices in the greater Austin area are skyrocketing a Redfin. It shows that the median home price in that area, which is the zip code in that area is 7 8 7 2 5 7 8 7 2 5. Over the last year, went up over 44% and all of Texas is going up. But specifically that area is absolutely hot. You may be able to find better houses as you move out into some of their more rural communities. As I mentioned, backdrop, I don't know all of the rural communities, but there's wonderful places to live out there with great school districts in great people.
(08:58): Even if you consider going a little south towards Buda or San Marcus, even which is a little further away, but in that specific area, it is absolutely hot. And if you plan on moving there, then you got to get in front of that. And the interesting thing is, is that many of the jobs that will be from the Gigafactory will actually, the majority of them will be hired from people within Travis county. There's a commitment to hire from within. So there will be, you know, I can imagine if they're going to move, you know, hundreds, if not thousands of people over from California that would drive up that whole community rapidly. But if they're going to hire people from that community, then we'll see some stabilization in the increase in home prices. So that's something to consider. Many of the people that will work, these factory jobs will be from Travis county, not a ton of people moving in from California.
(09:53): I don't know about the home office. I would imagine the home office executives or the leadership team from a home office would be California. But again, if you're building out a company, you've got to pay attention to how many people will be from Texas or how many people will be moving in from out of state. And that'll kind of drive the housing prices, especially when somebody is moving from a house that was $2,000 square foot. And they're static about paying $500 a square foot. That's the housing prices get in front of that. If you're moving here, let's talk about some of the, some of the, I guess the intangibles we'll call them the ripple effects of this move. I think you've got to look at school districts. And so some people that are retiring here in Texas, they want to be close to family and grandkids.
(10:38): And so you do want to have some awareness because you love your grandkids of the schools. And so if somebody is moving here, big companies moving here, what you need to know is that it's a roundabout way of paying property taxes. And let me explain that. So in 1991, Intel was going to build this massive chip fabrication plant near Fort worth, but Texas lost that deal to Arizona because Intel said the property taxes were too high. Two years later, the Texas law makers got together and they created something called chapter 3, 1, 3 or 33, 3 13, also known as the Texas economic development act. And so this act allows property tax breaks to big companies moving in. And Tesla was definitely one of those big companies. So Tesla will not pay the property taxes that some people might expect that would go to the school districts. In fact, in Tesla's incentive agreement, they will value the property that the gigafactories on is 80 million.
(11:46): That's the max property valuation when it's really worth 1.1 billion. So it's capped at 80 million, it's worth 1.1. And so that means for the first 10 years, Tesla's only going to be paying $776,000 a year in property taxes. If it was valued at what it should have been, they would be paying 5 million a year. Now the community saying, Hey, it's still great. You know, we had a gravel mining facility there, that's paying 6,400 a year. So we're going from 6,400 to 776,000. They're happy in Del valley, but a lot of people were saying, what's going on? And, and so what happens under this three 13 code is that Tesla then has to work an agreement, which is beyond the scope of my knowledge. People know I've done some business development before, but I don't get all this stuff. They actually have to pay directly to the school districts.
(12:42): So to make it fair for the school districts to cover their needs as the community grows. So Tesla does have some fully disclosed backdoor agreements between the school districts. That's not reflected in their property taxes for those that are not in the know. And apparently the school districts have no issues with this fact. They I'm sure they love it. If you look at the school board voting, it was voted seven to one and only one trustee Susanna Woody said, well, I don't know if she said she liked it or not, but the only thing she said is she thought the deal was rushed. So she voted against it. But overall, Hey, they're going to go from 6,400 from a gravel mining to 776,000. And then they're probably going to get a few checks from Tesla directly. I'm sure this works out because at the end of the day, since Texas has, has set up this economic development plan, they've gotten a lot of, a lot of big business here.
(13:33): So it's worked out. So that's a little bit of the, how that's going to work. And it's important for you to know that. So you make sure that your grandkids are going to good schools and, you know, Texas has a lot of good schools, but no schools are perfect and you want to make sure they have the funding, namely for the beautiful football stadiums. That's a joke, not funny for some, but that's how it works in Texas. So the idea behind this section three 13 is that it'll continue to grow taxes. We've seen Dell stay here. We've seen apple move here, Google move here, Oracle Samsung. You know, it's just going to keep going. I've mentioned tech, but there's an oil refineries and petrochemicals and all kinds of companies that are coming. Not only for the regulatory environment, not only for the weather, they're not only for housing, but also the tax incentives.
(14:26): And so these are, it's kind of one of those perfect storms. You know, taxes is also, this is important for you to know is a right to work state. So businesses that come here, their employees are not forced to join a union. Whereas if you're not a right to work state, you have to join a union in a right to work state. You get a choice to join a union. And so obviously a favorable environment for business, that's actually different. Don't confuse that with an employment at will. So that's different in which Texas is an employment at will. That means that the employment relationship can be terminated for any reason at all, except discrimination. So I'm going to let you go. I don't really have a reason. I'm not discriminating that's employment at will, but both of those two features of Texas and continue to enhance businesses and incentivize businesses.
(15:18): So not only the regulatory environment, not only for this section three 13, not only for housing, not only for the good people in good weather, but also these other features right to work employment at will. So those are all factors that will continue to be the tailwind for businesses to come into taxes. And so when you're retiring in Texas, you want to start thinking about that because what may be a rural community one day may not be tomorrow. And so those are some factors you want to consider. So now let's wrap it up with the final point here I want to make. And that's why it all matters to you. You know, I think that the environment for Texas is going to continue to be healthy and continue to embrace the freedoms and liberties that are important to you. There's no doubt. Austin is a different animal and everyone that knows that.
(16:10): My in fact, I have some friends who are in the construction business. They won't build in inner city, Austin because ordinances are just out of control, retaining ponds. The fact that there's weird laws in Austin, too. I don't know if you know this, but in Austin, it's illegal to carry wire cutters in your pocket. Spitting on the sidewalk is also illegal. And then finally, I want to let you know that criminals must notify their victims within 24 hours. If they plan to commit a crime against them. And they must also disclose the nature of the crime. So don't get me wrong. Austin has a little feeling of California. If those that don't know that keep Austin weird is true, but Austin is growing and everything. South is growing. We know I could talk about what's north, for sure, the Waco's and the temples, and going up to Fort worth in Dallas.
(17:00): That's a different conversation, but just so you know, Austin, San Antonio, all the way down south Texas has one of the richest people in the history of the world is a target for that person. And he's evaluating everything between Austin and the Rio Grande valley and little Boca Chica village. And I assure you, others will follow in his footsteps. So as you consider a place to retire, consider what it might look like in the next 10 years. And as you come around your family, your kids and your grandkids, I think there's consideration for what those school districts look like. And the communities look like and starting to look ahead at what that potential growth might look like because where you live today may look totally different than what it might be tomorrow. But overall, Texas is hot and Texas is not only, not only physically hot during July and August, but it is figuratively hot. And I'm proud to be a part of that. So thank you very much. I hope this was information that you can put in your pocket to make better decisions as you retire in Texas. So thank you again for joining us today and as always be sure to grab our ebook retire in Texas. It's a PAX financial group.com. And remember you think different and think long term,
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