Houston, TX · Member since 2017 · 14 posts · 1 vote
Fellow BP members,
I am trying to get a sense of the future appreciation possibilities in Saint George, Utah for single family homes and also to get a sense of how solid the renter/tenant population is in this area. If you have any inputs or thoughts then please share them. Appreciate it.
Flipper/Rehabber · St. George, UT · Member since 2010 · 212 posts · 114 votes
9y
Hey @Andrew Mykletun ... as @Ryan Lee said we have seen lots of appreciation over the past several years as well as rent increase across the board.
Everything we read says that Southern Utah and St. George specifically is going to keep growing and growing. We have a strong retirement population that gets $$$ ever month. We are a tourism destination with state parks, national parks and lots of recreation and fantastic weather.
All that said we do not have a strong employment base that I see in many other markets (like northern Utah). Our employment base is SOOOOO real estate related and "service" industry related. High paying jobs seem to be hard and career employment is not good. I have temp employees and staff at $10 hr and they are happy with that because "the job market sucks". I can run an add at $15 and for any position and our phones blow up. This is very different than what I see in other fast appreciating markets with jobs.
The employment sector makes me nervous for our little growing town.
I do not see St. George rentals providing good returns (like .5% at best)... YES, the appreciation is awesome but that is speculative investing.
Investor · Salt Lake City, UT · Member since 2014 · 27 posts · 5 votes
9y
@Andrew Mykletun Do you live in St George or are you an outsider looking in?
I don't do a lot of investing there, but i have noticed significant growth there and I can attest to pretty consistent appreciation over the past several years as well as rent increase. There is a lot of data out there that you can study to get a idea of the area and job growth along with other factors. Here is a starting point http://www.usa.com/saint-george-ut.htm
Houston, TX · Member since 2017 · 14 posts · 1 vote
9y
@Ryan Lee Thank you for your response. I will have a look at the url you sent me. I am basically trying to figure out if the past growth will continue or slow down. If you come across any other information that could be of use then please send it over.
Flipper/Rehabber · St. George, UT · Member since 2010 · 212 posts · 114 votes
9y
Hey @Andrew Mykletun ... as @Ryan Lee said we have seen lots of appreciation over the past several years as well as rent increase across the board.
Everything we read says that Southern Utah and St. George specifically is going to keep growing and growing. We have a strong retirement population that gets $$$ ever month. We are a tourism destination with state parks, national parks and lots of recreation and fantastic weather.
All that said we do not have a strong employment base that I see in many other markets (like northern Utah). Our employment base is SOOOOO real estate related and "service" industry related. High paying jobs seem to be hard and career employment is not good. I have temp employees and staff at $10 hr and they are happy with that because "the job market sucks". I can run an add at $15 and for any position and our phones blow up. This is very different than what I see in other fast appreciating markets with jobs.
The employment sector makes me nervous for our little growing town.
I do not see St. George rentals providing good returns (like .5% at best)... YES, the appreciation is awesome but that is speculative investing.
Investor · Salt Lake City, UT · Member since 2014 · 27 posts · 5 votes
9y
Just as @Justin Morgan said planning for appreciation is speculative. If you going to look into a market to invest in the most "important" (IMO) thing to look for is how does it perform now and is that rental stable for the future. Especially when you are working in a market you don't know all that well. Obviously there a enormous amount of ways to analyze a potential deal, so you just really have to have a firm grasp of what it is that you want from your investments. Good luck and keep asking questions.
Houston, TX · Member since 2017 · 14 posts · 1 vote
9y
@Justin Morgan - Thank you for taking the time to provide your input Justin! This is good to know.
I have to admit that the not so strong employment market is a bit alarming. I am surprised regarding the appreciation in the past as there doesn't seem to be much business activity to support it, unless I am mistaken. This also makes me think with respect to the type tenant population that would rent single family houses.
Do you happen to have any of the reading material you were referring to that talks about that St. George will keep growing? Do you know if bigger businesses are moving to St. George given the growth potential and also which ones? Any other reasons apart from the ones you mentioned above that would point to the direction of continued appreciation such as supply and demand of inventory of houses?
Houston, TX · Member since 2017 · 14 posts · 1 vote
9y
@Ryan Lee - Thank you for your useful input Ryan. I agree with both you and @Justin Morgan that appreciation is speculative and that one should not plan on it. I do think though that it is an important factor to actually get a return on your ones investment and that there are market that have more potential appreciation than others, which is the bottom line I am trying to uncover along with how stable the tenant population in terms of turnover frequency is in St. George. Stable rent like you said is important.
Flipper/Rehabber · St. George, UT · Member since 2010 · 212 posts · 114 votes
9y
@Andrew Mykletun I don't save article very often. You can Google St. George (appreciation, growth, market,)... you will find that a bunch of articles are about "top 10 places to live" or " the top real estate markets to watch in 2017" or "best places to retire" etc. Hope that helps!
Just out of curiosity, why are you interested in St George? Seems to me that there is huge upside in Austin, DFW, and even Houston. I would love to buy some RE in Texas but I feel like I wouldn't get the benefit of no state income tax but I would have to pay the exorbitant property taxes. Kind of a double edged sword seems like...I've built 5 homes in the last 1.5 years and I kept 4 of them as rentals. I'm at a .6% GRM so not amazing, but pretty good for Utah especially since they are brand new. You can get a higher GRM in a lot of other states, but you may not get the appreciation that you get in Utah. The rental market is very strong right now and inventory is very low in both rentals and homes for sale. Really the best thing to do anywhere is to put money down. I put 25% down so I have some decent cashflow. This cashflow will also protect me in a downturn because I have a decent buffer if rents fall which is why I am not a big fan of "no money down" or "refinancing 100%." I would love to believe that there are still places where you can cash flow with no money down, but it's pretty tough unless you are absolutely ripping a property. If you want more cash flow/higher cap rate, you have to sacrifice age of property or area with the way the market is right now. Unless something changes, Utah has very low cap rates. It blows my mind how many people are willing to get such a low return on their money.
Thanks for sending your message Chris and I apologize for not replying to your email before, but I was out on vacation and just got back. I have looked at the Houston and Austin market and I was not happy with the numbers and the high property tax rate. There are some areas that could good for investment rentals, but I have decided not to pursue them at this time.
Congratulations on building five homes! Are these in Saint George or other parts of Utah? I am surprised your GRM is only 0.6% given my research. I would be interested in hearing more about your Saint George / Utah experience and I would be happy to share my Texas real estate research with you as well along with real estate investments I have made if of interest. Would you be available for a quick call? If yes, please proposed a time and we can set something up.
Rental Property Investor · Cedar Park, TX · Member since 2014 · 415 posts · 272 votes
7y
@Chris Potter You are right about the property taxes in Texas. Do you have any update to share on the rental market for buy-and-hold investors in St. George?
Rental Property Investor · Saint George, UT · Member since 2017 · 54 posts · 40 votes
7y
@bob h, the St George long-term rental market has become much more difficult even though rental rates have climbed, they haven't climbed as quickly as appreciation thus contracting cap rates. On top of that the builder that I built my rentals with stopped selling to investors and not other builder could come very close on price thus halting my long term holds for a bit. I have come across a couple that I thought could make sense for BRRR, but a couple were in HOAs with restricted rental abilities or higher cap rate than I would like after remodel. I do feel like there have been just a few more deals the last few weeks and I'm not sure if it's just coincidental or a sign of the times....
St George Utah · Member since 2018 · 4 posts · 1 vote
7y
@Chris Potter sorry to hear about your builder, If your looking for another contact me. My father-in-law, Christopher Wyler, has around 100 acres by sand hollow he is developing and is looking for more builds to do. He is the contractor on my house which I will be closing on in a week or two. I'd love to meet you and show you through my house if your ever interested and would like to come by and see his work.
Just wanted to add some info regarding the job market here. My understanding is that city officials are embracing growth and trying to bring better jobs to St. George. What was said previously about the St. George economy being primarily retirement, service, and tourism driven is spot on, but they're doing some interesting things to try to expand that.
There's been a fair amount of investment in tech-related stuff, trying to make the city another tech hub. I'm feeling cautiously optimistic about that but even if they succeed, I don't think it'll happen for at least another 5-10 years, probably more.