Hi everyone -
I'm starting out in the buy & hold field, and have 1 property under my belt. I'm trying to come up with a plan for buying properties in the next year. Is it possible to hit the 2% rule in Utah? I'd assume it'd be with lower priced properties, but I haven't seen much of anything that comes in at $50,000 or lower (outside of mobile homes).
Hundreds of properties. Never seen 2% in Logan. Only 3 or 4 hit 1.5%.
Interesting conversation on the 2% rule:
@William Hochstedler What types of properties are coming in under $50,000? Foreclosures and short sales, or are there any normal SFR's coming in that low?
Thanks for the link to the forum thread, I'm looking over it now.
$50K is a pretty low benchmark for buy-and-hold's up here. I just bought one last month, but they are rare. Lots of physical distress from an estate. At this price point, we see a bunch of mobiles and rural properties. Both types are problematic (for different reasons) for holding. I'm still not sure of my risk tolerance for rural properties even though I've been pretty lucky with them. (Maybe a new topic)
The short answer is, for under $60-70K we see older, physically distressed, 2-3 br SFR's usually under 1500 sq ft. These make great rentals in when in good condition and location. After repair values (ARV) tend to be around $110-135K and rent for $700-900. No 2% rule there even with 30% equity positions. Consider this: with these kinds of rent to value ratios you need to be getting into properties with 65% equity positions. Our best deals have been at around a 50-60% discount after rehab. It might happen in Cleveland or Detroit, but not here.
These properties come from all sources: Estates/probate, REO's, Trustee Sales, and the occasional odd situation, but rarely short sales these days.
Hope this helps.
There seem to be some relatively cheap multi-families on the MLS in Ogden, (1-1.5%) especially when compared to other areas along the Wasatch front... but I'm sure there is a catch.
I've never done anything in Ogden, but the word on the street is that you really have to know what you're doing there. Class A's on one block, class D's on the next--all throughout the city except in very specific neighborhoods.
There's definitely opportunity there, but high risk.
Ah, I always wondered about Ogden...that makes sense.
From the other thread you posted, I'm sensing that Utah is not a market where the 2% rule is really feasible. Makes sense, my property definitely doesn't hit that mark.
Do you own any mobile properties in Utah?
in ogden i would say 1.5%, i have some experience with the market.
Probably because the cash flow tends to be thin in my area, I focus on equity first.
For that reason, I stay away from mobiles, particularly those without land.
Look at pad fees, depreciation rates, financing options, and potential tenant pool before you go too nuts on mobiles.
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