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Ryan Lloyd
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  • Syracuse, UT
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New Investor: Is it possible to cashflow in Utah right now?

Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
Posted Jun 14 2022, 09:44

I'm a new investor looking to get into the Utah market - most likely Davis/Weber county areas.  Wondering if current investors are just buying in order to get appreciation currently in Utah.  Numbers I am running on properties I evaluate show it's really difficult for rents to match up to the higher costs of property Utah has been experiencing.  What's the mindset of investors right now as to how they make it work in Utah?  Just a new guy trying to understand what I should be looking for in a potential investment currently and where to put my effort.  Thank in advance!

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Logan McKay Zylstra
  • Realtor
  • Salt Lake City, UT
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Logan McKay Zylstra
  • Realtor
  • Salt Lake City, UT
Replied Jun 14 2022, 15:35

@Ryan Lloyd

Cash flow in Utah is pretty much nonexistent right now, unless you do major rehab or get a great deal.

The investors I’m working with are willing to float properties for the appreciation and wait for the rents in Utah to catch up in the next year or two.

Inflation seems to be everyone’s main concern right now. The logic is that it is better to own an appreciating asset than have you money losing value literally everyday in your bank account.


I believe strongly in our market, but if you are looking for cash flow specifically I would explore other markets.

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Leo Ray#3 General Real Estate Investing Contributor
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Leo Ray#3 General Real Estate Investing Contributor
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Replied Jun 15 2022, 11:36

@Ryan Lloyd What Logan said is completely correct; the only way to find cashflow in most areas of Utah right now is to either find an incredible off market deal, do some sort of rehab where you turn a non-cashflowing property into a cashflower (for instance, splitting a large single family house into multi fam), or get cashflow via STR (which is much more labor intensive than a long term tenant, and is illegal in many neighborhoods around Salt Lake City)....I wouldn't say it's completely impossible to find cashflow these days, but it is very, very, very hard to find it (and often requires significant work); turn-key cashflow doesn't exist around Salt Lake right now....

Personally, I would not suggest buying a property if appreciation is a do-or-die requirement for your plans. Although there are valid arguments that the salt lake area will continue to appreciate, there are also valid arguments that we will not appreciate and that prices could even go down...ultimately, nobody knows for sure what will happen, and if a person's entire plan depends on future appreciation, they're speculating (not advisable for anyone, particularly a new investor).

Good luck out there!

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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
Replied Jun 15 2022, 14:09
Quote from @Logan McKay Zylstra:

@Ryan Lloyd

Cash flow in Utah is pretty much nonexistent right now, unless you do major rehab or get a great deal.

The investors I’m working with are willing to float properties for the appreciation and wait for the rents in Utah to catch up in the next year or two.

Inflation seems to be everyone’s main concern right now. The logic is that it is better to own an appreciating asset than have you money losing value literally everyday in your bank account.


I believe strongly in our market, but if you are looking for cash flow specifically I would explore other markets.

 @Logan McKay Zylstra Thank you so much for taking the time to give your thoughts.  This is what I was expecting as to the mindset of most people buying right now for investment.  Buy with the hope that rents (and inflation and appreciation) catch up in the future.

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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
Replied Jun 15 2022, 14:13
Quote from  Ray:

@Ryan Lloyd What Logan said is completely correct; the only way to find cashflow in most areas of Utah right now is to either find an incredible off market deal, do some sort of rehab where you turn a non-cashflowing property into a cashflower (for instance, splitting a large single family house into multi fam), or get cashflow via STR (which is much more labor intensive than a long term tenant, and is illegal in many neighborhoods around Salt Lake City)....I wouldn't say it's completely impossible to find cashflow these days, but it is very, very, very hard to find it (and often requires significant work); turn-key cashflow doesn't exist around Salt Lake right now....

Personally, I would not suggest buying a property if appreciation is a do-or-die requirement for your plans. Although there are valid arguments that the salt lake area will continue to appreciate, there are also valid arguments that we will not appreciate and that prices could even go down...ultimately, nobody knows for sure what will happen, and if a person's entire plan depends on future appreciation, they're speculating (not advisable for anyone, particularly a new investor).

Good luck out there!

@Leo Ray Thanks so much.  I'd love for you to expand a bit when you say "I would not suggest buying a property if appreciation is a do-or-die requirement" - I'm assuming you mean if you're going to tank on the property solely based off of the appreciation (you can't afford to hold the property with negative or zero cashflow in the case the property depreciates).   Because really the only reasons to invest in a property are for cash flow (very difficult in Utah) and appreciation or loan paydown.  Right? 

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Leo Ray#3 General Real Estate Investing Contributor
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Leo Ray#3 General Real Estate Investing Contributor
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Replied Jun 15 2022, 18:09
Quote from @Ryan Lloyd:
Quote from  Ray:

@Ryan Lloyd What Logan said is completely correct; the only way to find cashflow in most areas of Utah right now is to either find an incredible off market deal, do some sort of rehab where you turn a non-cashflowing property into a cashflower (for instance, splitting a large single family house into multi fam), or get cashflow via STR (which is much more labor intensive than a long term tenant, and is illegal in many neighborhoods around Salt Lake City)....I wouldn't say it's completely impossible to find cashflow these days, but it is very, very, very hard to find it (and often requires significant work); turn-key cashflow doesn't exist around Salt Lake right now....

Personally, I would not suggest buying a property if appreciation is a do-or-die requirement for your plans. Although there are valid arguments that the salt lake area will continue to appreciate, there are also valid arguments that we will not appreciate and that prices could even go down...ultimately, nobody knows for sure what will happen, and if a person's entire plan depends on future appreciation, they're speculating (not advisable for anyone, particularly a new investor).

Good luck out there!

@Leo Ray Thanks so much.  I'd love for you to expand a bit when you say "I would not suggest buying a property if appreciation is a do-or-die requirement" - I'm assuming you mean if you're going to tank on the property solely based off of the appreciation (you can't afford to hold the property with negative or zero cashflow in the case the property depreciates).   Because really the only reasons to invest in a property are for cash flow (very difficult in Utah) and appreciation or loan paydown.  Right? 


Correct.  If one's financial success or failure hinges on a property appreciating in the future, then they probably shouldn't buy the property.  Appreciation is not guaranteed, and it is possible for a property to lose some or all of its value (look at Detroit). There's a fine line between buying a property with the expectation of appreciation and speculation.  


Some people are in a position where they can afford to make some speculative purchases (e.g.; if someone with a net worth of 20 million buys a 100k property and the property tanks in value, that's probably not going to ruin them).  But, if someone with a net worth of 50k buys a 100k property, and their success hinges on that property appreciating, they're walking on thin ice IMO.

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Ryan Lloyd
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  • Syracuse, UT
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Ryan Lloyd
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  • Syracuse, UT
Replied Jun 16 2022, 07:07

@Leo Ray Perfect, totally agree.  Thanks for the insights.

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Conner Olsen
  • Real Estate Agent
  • Austin, TX
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Conner Olsen
  • Real Estate Agent
  • Austin, TX
Replied Jun 16 2022, 09:45

@Ryan Lloyd People say the same thing about Austin, TX. I changed my rental strategy to MTR. I doubled my gross rent and am going to make a 15% CoC on my property that didn't cash flow as a LTR. What I bought as a base hit and thought I overpaid ended up being a home run.

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Brendon Hatfield
  • Real Estate Agent
  • West Jordan
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Brendon Hatfield
  • Real Estate Agent
  • West Jordan
Replied Jun 16 2022, 14:23

It is definitely very difficult it also depends what type of property your looking for snd the type of financing you plan on / end up with. I know that  some member of my brokerage have had success with off market deals and seller financing. I personally haven’t been a part of these deals but I’ve seen them happen I am looking actively tho!!

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Ryan Lloyd
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  • Syracuse, UT
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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
Replied Jun 17 2022, 06:27
Quote from @Conner Olsen:

@Ryan Lloyd People say the same thing about Austin, TX. I changed my rental strategy to MTR. I doubled my gross rent and am going to make a 15% CoC on my property that didn't cash flow as a LTR. What I bought as a base hit and thought I overpaid ended up being a home run.

 @Conner Olsen Newbie question.  What is MTR and LTR? (long term rental)?????

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Ryan Lloyd
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  • Syracuse, UT
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Ryan Lloyd
  • New to Real Estate
  • Syracuse, UT
Replied Jun 17 2022, 06:28
Quote from @Brendon Hatfield:

It is definitely very difficult it also depends what type of property your looking for snd the type of financing you plan on / end up with. I know that  some member of my brokerage have had success with off market deals and seller financing. I personally haven’t been a part of these deals but I’ve seen them happen I am looking actively tho!!

 @Brendon Hatfield Thanks for the reply.  Yes, hoping to find something off market as well.  Seem really difficult to find right now but I'll keep trying as well.

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Conner Olsen
  • Real Estate Agent
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Conner Olsen
  • Real Estate Agent
  • Austin, TX
Replied Jun 17 2022, 07:30

@Ryan Lloyd MTR stands for Medium-term rental LTR stands for LTR.

LTR - 1 year lease or more, unfurnished property

MTR - 30 days to 1 year lease, furnished property (traveling nurses are common tenants)

STR - 1 day to 30 days, furnished property

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Leo Ray#3 General Real Estate Investing Contributor
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Leo Ray#3 General Real Estate Investing Contributor
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Replied Jun 17 2022, 09:26

@Conner Olsen I've always been interested in MTRs--can you elaborate on that a bit?  

For instance, who are the tenants (other than traveling nurses)?  How much vacancy do you have between tenants?  What type of property makes for a good MTR, and what type of property would be a bad MTR?  How are you advertising for MTR tenants?  ...and any other important lessons learned about MTRs would be greatly appreciated.

Thanks!

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Conner Olsen
  • Real Estate Agent
  • Austin, TX
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Conner Olsen
  • Real Estate Agent
  • Austin, TX
Replied Jun 17 2022, 09:41

@Leo Ray

3 types of tenants:
1. People moving to a new place and need temporary housing while finding an apartment or house
2. People WFH and traveling around the country
3. People coming for work, traveling nurses, interns, business people etc

I had about 7% vacancy last year. It's a 2/1 side of a duplex. I think any 'entry level' home within 20-30 min of a major downtown is great. I do not know how well 'luxury' properties do for MTR. For example, I would target a 400k 3/2 in Austin and get $3700-$4300/month. I would not target a $700k 'luxury' 4/3 and try to get $7000/month. I'm sure there's a market for those properties but I haven't met anyone who is willing to pay that much for a short-term stay. I'd prefer to have the larger rental pool.

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Ryan Lloyd
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  • Syracuse, UT
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Ryan Lloyd
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Replied Jun 17 2022, 10:13

@Conner Olsen Very interesting thanks for sharing it here and @Leo Ray great question.  Thanks ya'll.

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Leo Ray#3 General Real Estate Investing Contributor
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Leo Ray#3 General Real Estate Investing Contributor
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Replied Jun 18 2022, 10:30

@Conner Olsen  thank you; that's very useful info! (and frankly, it makes me motivated to explore shifting my portfolio to include some MTRs)

Few quick follow-up questions:

First, how do you advertise your MTRs/how do you find your MTR tenants?

Second, the numbers you described are excellent returns...I'm not super familiar with Austin's market, but I was surprised to hear that you can get a 3/2 for 400k that works as a MTR. Here in Salt Lake, 400k would not get you a particularly nice 3/2 anymore (and I've always assumed that if anything, Austin is a pricier market than Salt Lake)...so, my first question about that is: what grade of property and neighborhood does 400k get you in Austin for a 3/2?  Also, presumably most MTR tenants are single people or maybe couples who probably don't need 3 bedrooms--with that in mind, is there a reason you would target a 3/2 for your MTR rather than a 2/2 or even a 1/1?

Thanks again for your insight!

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Conner Olsen
  • Real Estate Agent
  • Austin, TX
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Conner Olsen
  • Real Estate Agent
  • Austin, TX
Replied Jun 18 2022, 19:07
Quote from @Leo Ray:

@Conner Olsen  thank you; that's very useful info! (and frankly, it makes me motivated to explore shifting my portfolio to include some MTRs)

Few quick follow-up questions:

First, how do you advertise your MTRs/how do you find your MTR tenants?

Second, the numbers you described are excellent returns...I'm not super familiar with Austin's market, but I was surprised to hear that you can get a 3/2 for 400k that works as a MTR. Here in Salt Lake, 400k would not get you a particularly nice 3/2 anymore (and I've always assumed that if anything, Austin is a pricier market than Salt Lake)...so, my first question about that is: what grade of property and neighborhood does 400k get you in Austin for a 3/2?  Also, presumably most MTR tenants are single people or maybe couples who probably don't need 3 bedrooms--with that in mind, is there a reason you would target a 3/2 for your MTR rather than a 2/2 or even a 1/1?

Thanks again for your insight!


I have listed my property on FB sublet groups, furnished finder, Airbnb, and VRBO. I’ve only had bookings from FB and Airbnb.

 at 400k you’re getting a C+ or B- property. Work force housing that is mostly renters, probably many cars on the street but none of the properties are dumpy and maybe 10% have been flipped recently.

I’d go for a 2 bed over a 1 bed and maybe make one of the rooms a dedicated work space. Most of my tenants have been a couple without kids.

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Brendon Hatfield
  • Real Estate Agent
  • West Jordan
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Brendon Hatfield
  • Real Estate Agent
  • West Jordan
Replied Jun 23 2022, 13:58
Quote from @Ryan Lloyd:
Quote from @Brendon Hatfield:

It is definitely very difficult it also depends what type of property your looking for snd the type of financing you plan on / end up with. I know that  some member of my brokerage have had success with off market deals and seller financing. I personally haven’t been a part of these deals but I’ve seen them happen I am looking actively tho!!

 @Brendon Hatfield Thanks for the reply.  Yes, hoping to find something off market as well.  Seem really difficult to find right now but I'll keep trying as well.


 I am looking to find my first deal in that market as well and i am a realtor so i can go through the on market deals as well id love to talk more about the Utah  market and how to find deals in its current state !!

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Doug Quist
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Doug Quist
  • Investor
  • Salt Lake City, UT
Replied Aug 2 2022, 00:25

I have 6 fourplexes, a duplex and a single family home spread across in Salt Lake and Utah Counties all purchased in the last 30 months. All cash flow, but they also all have under 3% 30 year fixed rate loans at, initially, 75% LTV.

I expect to buy a couple more new builds over the next 12 to 18 months and even at 5.5% to 6% rate loans they should have a minimum 1% CoC. Not amazing, but OK for me, as a start. My current worst performer is my single family rental. I'm a big fan of multifamily, though.

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Carl Davis
  • Real Estate Agent
  • Utah
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Carl Davis
  • Real Estate Agent
  • Utah
Replied Aug 2 2022, 03:10

It is difficult to cash flow currently but not impossible.

The property we just fully rented cash flows pretty well but it was a house hack that we lived in for a year.

Like the others said, unless you find a pretty good deal somewhere, you'll be waiting for about a year or so at least to start to realize your gains in your investment in the area.

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Tyler Vargha
  • Midvale, UT
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Tyler Vargha
  • Midvale, UT
Replied Oct 19 2022, 06:10

So what would you say is a good CoC and cash flow amount for a duplex or SFH right now in Salt Lake County?

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Logan McKay Zylstra
  • Realtor
  • Salt Lake City, UT
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Logan McKay Zylstra
  • Realtor
  • Salt Lake City, UT
Replied Oct 19 2022, 07:29

@Tyler Vargha.  You are unlikely to find a duplex that cash flows. If you can house hack a 4plex, cash flow numbers will be better.