Yellowstone Real Estate residential or multi

5 Replies

Hi all:

I was thinking about investing in a rental property in Gardiner , Montana or maybe Livingston or Bozeman.  Property values are continuing to rise, so I am apprehensive about future potential of appreciation.  What say ya all?  Thanks! Gayle

My part of Montana is near Glacier National Park and we have seen record number of visitors to our Park this year.  I think it would be a great investment.  We visited Yellowstone this year and it was wonderful. Yellowstone also had a record breaking year.  I think we might not always break records, but the visitor count should be up enough to keep appreciation steady.  

In the bigger cities, the CAP rates are "capping" out near 5%. Everyone wants a piece of Big Sky Country. I would predict at least a plateau in the next few years, possibly a slight price drop. Landowners and property owners, especially of rentals property are making out like bandits. Great rates on HELOC, and plenty of equity floating around town. Makes it attractive for the financial industry as well.

Montana's economy is a few years behind the rest of the country, but that seems to be changing, at least here in Bozeman. We seem to be more tied into the US economy here based on our main economic drivers. This is a unique location in that we can directly benefit from two major industries: real estate and tourism. Investors pay a premium for that as you have found on your own.

Get a game plan for the next 5 years to purchase. If something readjusts, the bottom will probably be about 5 years from now. Or you can go the syndication route, which is what happens when real estate becomes unaffordable, and developers look to bigger deals with much bigger CAPs than smaller multi-families. I can help you with that if you like. You would get better ROI with one of those deals than with all the hassle and low CAP rate of a traditional type investment right now.

But basically, if you are looking at multi-family housing anywhere, two key metrics to look at include average household income, and rental prices.

If we figure that once a wage becomes unlivable, then rental prices have to drop. When rents drop, prices drop. Bozeman is at that stage. A family of two working adults can just barely make ends meet in town. With that said, there seems to be some magical money floating around town. No one seems to have a job, but can afford plenty of lattes. Lots of flashy cars, and clothes. And of course, LOTS of new faces. I'm guessing it is parentally subsidized, if you know what I mean.

Outside of town, and further afield it is slightly better. So there has to be something to justify the rental prices in Bozeman, and currently that is lack of rentals. But I drive around the valley a lot, and I'm telling you that the next wave of lower to moderately priced residential real estate to hit the market will be a tsunami.

Livingston would be your best shot right now. It's another town with no vacancies, but also with low wages. There are deals, but your agent needs to be keyed into the local market. Deals disappear here in a few days. Cash is king of course, as it will help you close the deal ASAP. 

Gardiner is a totally seasonal economy, and just run some number on those rentals... You will see that it might not be what you are quite looking for.

I'm always willing to help investors in the area as an agent or as a group sponsor on some investment deals.

Thank you. I will definitely consider what you related!  I love Montana, so ideally, id like to find a duplex/triplex that can make ends meet - with me living in it... :)

@Gayle Eisner Bozeman market has had the best appreciation between the cities that you have mentioned. CAP rates are lowest here as well. I have been doing to some "investing" in Livingston as well as a few of my clients due to the cheaper buy in, super low vacancy and also great appreciation (although a little lower than Bozeman). And better CAP rates. It all depends on what your investment strategy is. Let me know if you need a hand I'd be happy to help with a purchase.

Los Gatos is a great spot I lived in Santa Cruz for a hot minute... 

Good luck with the search!

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