Advice on real estate market

13 Replies

Hello Idahoans!,

I'm a newbie investor to the great state of Idaho. Need your advice on the Real Estate market in the Treasure Valley. Most of the properties on Zillow, Trulia and Realtor.com seem to be a poor deal and gone quickly e.g 2 properties I analyzed using BP rental calculator had cash flow of $200 to $300 as a pure rental. I'm looking to buy and hold rental properties but I would prefer house hacking. 

Would you say its time to look elsewhere for good deals? (e.g. Idaho Falls, Pocatello, Caldwell?)

Anyone know if Pocatello is a good place for buy n hold rentals? What about Caldwell?

I analyzed one 4plex in Pocatello which gave me a cash flow of $500, but I stay about 4 hours away, so I will have to hire property management. I'm just not feeling confident right now investing in the Treasure Valley seeing prices that seem excessive, but still gone in a week.

Hoping to hear from people who have much more experience than me. I'd be grateful for any feedback

@Ajay A. I invest in a number of areas in Idaho.  More specifically Pocatello, Idaho Falls, Caldwell, Nampa, Meridian, Boise, Mountain Home and Eagle.  I live in Utah but started investing in Idaho because income property is going for about half of what I would pay here.  I have wholesaled 18 or so multi-family properties in Pocatello alone over the last 14 months.  

Here's what I can tell you:  The rental market is strong in basically all of the areas I mentioned above.  You can get a cap rate of 9% or better in the smaller cities like Mountain Home and Pocatello.  I am not a big fan of Idaho Falls right now.  Too many vacancies and a lot of crap properties.  If you invest in Pocatello or Mountain Home you will find great cash flow properties.  They will be typically older, need some updating and will be in the lower income areas (no war zones just blue collar neighborhoods).  I personally like them for buy and hold since the markets there are very stable.  They don't go up or down dramatically.  Rents are on the rise and the vacancy factor is small.  

If you want to invest in the bigger cities or Treasure Valley area you will pay more for the property and the cash flow will be less (in most cases).  However, the rents are on the rise and you will probably see more appreciation in these areas.  You may also see more drop in values if the market corrects.  

It comes down to what you are trying to accomplish and what is your comfort level.  Most of the properties I have sold in Pocatello are to investors that live in Utah.  They cash flow enough so you can hire a property management company to deal with the day to day issues.  I personally think investors are making mistakes buying income property that don't cash flow enough to afford property management.  I also don't understand the idea of being able to go to the property.  I have not been to Idaho in 25 years.  

Investors in Idaho don't know what they have in regards to income property.  I have a triplex in Mountain Home for sale that brings in $1650 per month that I am selling for $125K.  I have a 4 plex in Pocatello that brings in $1580 per month for $110K.  Those properties in most areas of Utah would sell for $285K+!  

If you have some questions pm me so we can chat.  I may be able to answer your questions more specifically.  Good luck in your search!

@Ajay A.

Go to IREM.org search for ARM certified property managers. Call 5 ask them what they see expenses running per category per unit. What do they see them selling for per unit, what is the market occupancy rate. What are the market rents? Ask them if they know anything coming up for sale. Great way to pick up some good info and possibly a deal.

You can also search NARPM.org for the RMP (Residential Management Professional) and MPM (Master Property Manager) certified.

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info. Here you will meet wholesalers who provide deals and rehabbers (cash buyers). Find them through Google and meetup.com

Paul

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Hi Ajay - You are doing great in your research.   You can definitely find some cash flow deals in Caldwell and Nampa...just make sure you factor in property taxes (especially in Canyon County).  Multi-family inventory in the Treasure Valley is low overall right now.  Patience and analyzing each you come across as you go will help you know a deal that works when you see it.  

@Ajay A. all good advise you're getting here. The only other thing I would add is to be careful of the information you use from Zillow, Trulia, Realtor.com, etc. in the state of Idaho. Idaho is a nondisclosure state, meaning folks in Idaho don't have to disclose how much they paid for there property. As a result, the algorithms Zillow, Trulia, Realtor.com, etc. use often get pricing and other information incorrect. For purposes of accuracy and figuring cap rates and the like, I would recommend finding a source to get you information directly from the MLS if you can. Just my (bias) two cents. Good luck and keep up the good work.

Wow, Thank you everyone,

@Jeff Rappaport, thanks for your informative reply. I'm feeling a little less scared investing outside my neighborhood. @Paul Timmins, completely agree, I need to network more, so I'm looking up REI clubs online, and I'll look into the property management sites as well. @Diala Taneeb, @Matthew Foster, thanks for the advice on RE websites. Property taxes are not that easy for counties other than Ada, I struggled for a good 30 mins with Bannock county assessors website, but I couldnt manage to extract the property value or annual taxes, anyway, I'll try again tonight. Clayton, Jonna, thanks again

@Jeff Rappaport Hi Jeff, I was wondering if you could elaborate a bit more on your analysis of Idaho Falls and what specifics lead you to that conclusion? Particularly since you haven't been to Idaho in 25 years. What are you using for your information sources? I'm curious as I'm here in Idaho Falls looking to begin my real estate investing career, but it's a little disheartening to hear things like this.

@David Marwil , first of all, it is truly only my opinion!  I have not looked at any statistics that would make me think one way or the other.  However, as a real estate investor I am looking for a couple of different things.  First, if I am looking to wholesale properties or rehab properties I want to know there will be buyers for me to sell to.  I have not done any single family homes in Idaho Falls but have been told by a couple of investors and realtors that the single family home market is a bit slow.  I have worked in Pocatello quite a bit and found that to be a similar situation.  

Second, if I am looking for buy and hold or to wholesale income properties I want to know about the rental market.  Where is the vacancy rate?  Are the rents rising, dropping or staying stable?  Are there new businesses moving into the area creating jobs thus creating a need for housing?  Again, I have not looked into these factors but I would if I was doing a lot of business in your area.  I wholesaled a couple of multi-family properties in Idaho Falls last year and earlier this year.  What I noticed is there was quite a bit of vacancy around these properties.  I also noticed that many of the properties were distressed in that no one was taking care of them.  

I had no problem moving the properties I had but my potential buyers raised a number of concerns regarding the market.  Most of the buyers I have wholesaled income properties to in Idaho do not live there.  The reason I was interested and they were is that the cap rates, return on investment and cash flow were significantly higher in Idaho than in the areas they were from.  

So, my suggestion would be that if you are looking to wholesale or rehab in Idaho Falls that you find your buyers first so you know that you have someone to sell these properties to once you put them under contract or rehab them.  As far as buy and hold I would just want to make sure that the vacancy rates were low and the rents are either stable or on the rise.  If there is a lot to choose from in terms of rentals why will tenants choose your place?  

Lastly, I would tell you that a savy investor can make money in any market.  That does not mean every strategy is a good one!  You need to know your market and what is working to make sure you are safe!  I certainly did not mean any offense by the prior remarks I made.  I can tell you I did about 20 or so properties in Pocatello over a 8 month period of time but I am not currently looking for properties there now.  The market is always changing.  You must adapt to the market or change markets to what works for you!

By the way, I have never been to Pocatello or Idaho Falls!

@Jeff Rappaport Hey Jeff, first off, thanks for the long and thoughtful reply! I didn't take any offense, was just curious what led you to those conclusions, wondering if I should perhaps be looking in a different area to invest. Or wanted to look into the information you'd drawn those conclusions from. As I'm new to the world of real estate, I'm trying to absorb as much as I can before making that first leap into an investment. And getting specifics on this area will have to be my next step - as I feel I have a better grasp on the generalities of RE investing. As I'm going for a buy and hold long term investment strategy I'll definitely be looking at vacancy rates in the area, and trying to analyze the rent prices themselves. As for why renters would choose me, I think if there's a lot of rentals in disrepair, a single family in good repair will already have a leg up on the competition. But it's always good to be thinking about differentiation, niche marketing, and all of those things. So again, thanks for the reply!

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