My husband and I are looking to buy our first duplex or fourplex. We have been looking in utah county, Utah, but we also have seen some properties in Vernal Utah. Im wondering how the market it for rentals in the basin is? does anyone have any experience in that area? I know it use to be a really hot spot when oil was up. We are just thinking it could be a good time to buy when oil is down and hopefully it gets hot again, but I also don't want to have an empty fourplex.
Hi @Amanda Boshard . I traditionally work in the triplex/fourplex arena here in Utah County. For the most part, everything is going for about a 5 cap. There are some new construction opportunities here that do better than that though. I was in Vernal a few weeks ago on a fishing trip and couldn't help but look at the market. You can typically get land cheaper there but you're exactly right about demand. When demand is strong your property will be filled and life will be good. But in a one dimensional economy when it's bad, it'll be really bad. I saw this happen to a lot of investors who bought trailers etc up in North Dakota back during the shale boom. Completely different market though. It's okay to buy when oil is down...I've helped a lot of clients buy in Houston. But you can agree that Houston is just a LITTLE different than Vernal LOL. Much more diverse economy.
Thanks Steve! thats good advice
Hi Amanda, my name is Sam Levin and I am a real estate agent in Provo who specializes in new build premium fourplexes there. Though I have never looked into the Vernal real estate market I used to work in the oil field in the southwest region of the United States. Before I go into the reasons why I would avoid investing in oil field dependent areas like the plague (perhaps even more so as the suffering from the plague is at least guaranteed to end at some point) I want to disclose that I have every reason to be biased because it competes with what I currently sell. More about that in a minute.
Oil field dependent markets have the casino-like appeal of big returns overnight. If you are well versed in geopolitics and energy market trends and fluctuations (and have a crystal ball as a backup) you could conceivably make that element work to your advantage. I've known some very smart people who got in to rental property development in the Dakotas with as much lead time ahead of the heard as you could hope to have and the resulting glory was very short lived. It was followed by a financial disaster that will haunt them for the rest of their lives, and this is by no means a new story. The historical data of epic financial ruin following even very savvy people who invested in housing, food, tools, clothing, heavy equipment, technical services, a few unmentionables, etc for oil field boom events is truly legendary. When contemplating such a move one might want to evoke the immortal words of Clint Eastwood's question "do you feel lucky punk... well do ya?". Of course in the case of that cinematic dialogue the stakes whre again not nearly as big as the oil field question, as the worst thing that was going to happen to Dirty Harry's "punk" was a quick merciful death. I'd take that over having the rest of my life ruined by a bad decision that never stops punishing me financially.
Back to some good news; there is a specific line of investor-centric multi family investment buildings in Utah County that are as far on the opposite end of that spectrum as they could be. I would assert that when investing in rental property the traits to prioritize are STABLE, predictable, high quality, new construction, hands off, turn key and above a 6 cap rate. Those things coupled with a rental pool/vacancy rate that is almost too good to be true is exactly what is available to you right now in Utah County. I have several clients currently in process on the acquisition of said properties and they are going to benefit from this for the rest of their lives.
If you would like more information about this product line... well, that is exactly "what I am here for". Please let me know. I will shoot you a BP connection request in anticipation of your possible interest in these options. Thank you.
I grew up in Vernal and my folks still live there. I can confirm that there are a lot of ups and downs to the market there. But it is similar (in my opinion) to any investing. With proper research and as long as you aren't going in with a get rich attitude there is money to be made in owning real estate there. My dad has a half dozen properties that over many years he has patiently waited and purchased correctly. They have enough margin that if they sit vacant for a bit it isn't a disaster. If it helps he still thinks there is a ways to go before it is time to really look at buying.
Jumping in without enough research will lose you money whether it is North Dakota, Vernal, or Utah County.
I am working out in Vernal right now. The market out here is way slow. I had more options than I knew what to do with when I was searching for an apartment. There are a lot of empty places out here. I think that if you could find the right deal and don't mind having to sit till the market picks up then now would probably be a pretty good time to invest out in the basin, but if you are needing cash flow right away the basin probably isn't the place to invest in.
I have a 5 plex under contract in Roosevelt right now, which is about 30 minutes west of Vernal. I had been looking in Davis and Utah Counties and had not found anything that fit the numbers I wanted. When cap rates are what he can get other easier ways, my husband prefers I not invest in real estate. We carefully considered the market in Roosevelt before making the offer. I spoke to several property managers as well as researched current rents and occupancy rates. The property managers all indicated that there is a price that will keep an apartment rented and that number is much much lower right now than it was during the boom. Rents are down $100-150/month for a 2 bedroom since 2013-14. The property managers all said they are leasing steadily if the price is right and they have seen an increase in occupancy in the last several months. The key is buying the property at a good price to support those low rents. We offered very low and they accepted. At the price I am buying it at, I will make a good return at the current low market rents with a higher vacancy. If rents go back up to 2013 levels, I will make a VERY good rate of return. If it doesn't go back up for several years, this property will still return what I need it to. The other bonus to buying right now is that contractors are available and able to help with the rehab. It was apparently difficult to get contractors to talk to you a few years ago. If you do your research and you can make the numbers work under current weak market conditions, it will be a good investment under both weak and strong markets.
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