Investing in SLC/Provo - Building a team

15 Replies

I have researched several areas and I have narrowed my focus to 3 potential markets. One of those markets I would like to explore more is the Salt Lake City to Provo, Ut corridor. I'm interested because:

I am a buy and hold investor that is looking to learn more about the area and build a team. I am interested in buying B or C properties in A or B areas (value-add opportunities) - SFR and Multi's.

What should an out-of-state investor know before jumping into investments in the region? 

Should I focus more in the Provo or SLC area? If SLC, what are the areas to avoid?

Any suggestions for investor focused agents? good property managers?

Thank you in advance for any information and contacts you choose to share!

@Nate Waters great questions I can tell you've really done your research.

What should an out-of-state investor know before jumping into investing in Utah: We are cheap but lack of supply has pushed rent rates up so the rental market pricing is not inflated. There are a lot of luxury style apartments being built in the area to help with the demand and I think once they are all done there rent prices will drop which will affect the B class rental prices. Something that a California person wouldn't find "getto" a local wouldn't live in. When I work with buyers I always ask where a buyer if from when they are giving me their wants and need because my local born and raised buyers think the "getto" is really just areas that a home owners can't afford to upkeep their homes, they are still considered safe but scare the local buyers away. Where buyers from out of state know what a real getto is. With that said I would say there are only a few areas in Salt lake that are heavy in crime which I would avoid. 

Provo has it's benefits as the pricing is lower that SLC but the rent rates are also lower than Salt lake. Lehi  and American Fork are great areas as they are close to Salt Lake but cheaper than Salt Lake. If you can afford anything on the East side of I-15 in Salt Lake that area has more demand but a lot of renters are having to go to the west side to get the right rental vs purchase price rates.  

I hope that helps.

Nate,

Congratulations! You have discovered a great market. You are correct on your bullet points.  Add to that the SLC airport expansion, and non stop flights to Europe.  To me, that is a big vote of confidence in the area. From companies that spend alot of money on demographics.

Becca is also correct in the market conditions having tightend up. However there are still great deals to be had, that rent well.

Best of luck!

Nate:  Welcome to the Utah market.  You're on the right track.  Provo is home to 2 Universities and Salt Lake City is rated as one of the nations top business friendly cities.  

A lot of the growth in the state is happening in what's considered the Silicon Slopes.  Companies such as Adobe, Snapchat, Amazon and Vivant just to name a few have established offices here.

Just to give you an idea on price and returns in Provo we just sold a 4-plex that closed on 11/30/17 for $597,000 with a 6.3% cap rate.  Also another 4-plex we just put under contract yesterday for $550,000 with a 6.3% cap.

Benefit of Provo is not a lot of vacancies but also lower rental rates then Salt Lake City.  Provo is a much more concentrated where Salt Lake is more spread out.

I see a huge market in the Silicon Slopes area of Lehi and Draper but there are not a lot of existing Multi-family. 

Hope that helps.  Let me know if I can help I'm a licensed Real Estate agent/Investor so I'm familiar with what you're after.

Thanks,

--Adam Harward

@Becca Summers The insight on the luxury style apartments is exactly the type of information that I hoped to get - thank you. Do you believe there is more opportunity in multifamily or SFR? Lehi is interesting. It seems to have it's own diverse economy and it is within commuting distance to SLC.

@Martin Carstens Great point on the airport expansion. Thank for the insight. Are you investing in SFRs or Multi's? Do you manage your properties remotely or do you use a property management company? 

@Adam Harward Thanks for the pricing information. What condition are the properties you mention? - just trying to get a feel for what a $550K-$600K 6.3% cap buys. Where do you find your deals? MLS? Off market?

Are your tenants typically students or professionals in Provo?

@natewaters both properties were completely remodeled. Both properties were sold to clients several years ago they remodeled them, brought the rents up and then sold them.
I would say they were just sold at the top of the market. One of the Universities in Provo requires housing for students to be university approved housing. This type of rental property is in high demand because you’re practically guaranteed tenants. More secure but less return based on higher demand. In addition these types of rental properties drop prices for students who stay through the summer.
I’ve found that things are easy to lease here because of the other university and growth.

Nate, I am in SFRs, and  have been able to get up to eleven homes. I am very happy with the entire big picture. Like yourself I enjoy visiting SLC and the area.  The overall quality of life is what I think is the biggest draw.  My day job is 8 to 10 months a year as a sea going captain, so a property manager is a must. Regardless, it works for me.  At the moment, I believe, like others that "Silicon Slope" is getting traction and a lot of good attention. It is a very positive picture! 

@Martin Carstens being is busy as you are, how have you been able to find the 11 homes? Do you have any recommendations for agents or property managers? Thanks for sharing, Martin, I appreciate your time and insight. 

Nate, I am at sea at the moment. However you can look up V7 Realty Services, Rachel Vaenuku.  She is a wealth of information and my property manager.

For an agent, start with Scott Rabin, with Windermere.  He has a deep understanding of the investor mindset.  http://utahrabin.com/

@Nate Waters , I focus on property management in Salt Lake County in SFR and small MFR properties (under 50 units). Our company started from the investment side which gives us a unique focus on investor focused management. In the market today, MFR is tremendously competitive and nearly anything that is a worthwhile investment trades off market. The SFR space still offers value as many investors are focused on flipping and there is certainly an availability through a variety of channels to pick up value add SFR's.

I can refer you to some great agents that understand investment and we can discuss alternative pipelines for SFR properties as well. Would you like to hop on a call to discuss?

Nate, I personally invest in SFR because I like the rent rates, value add, multiple exit stratigies and renter pool. My rentals are B and C class and I prefer the B but the C makes good cash flow. I manage my own properties so I have no reference on property managers. I think the multifamily 2 and 3 units are over priced because so many Utah "investors" buy them and live in them to help off set the mortgage and don't buy them to cash flow so they pay more than a traditional investor. There aren't many small multi family in Lehi at the moment. There are a few corporate run townhouse style complexes right by adobe that have been built to fill that void and they get great rent rates for what they have to offer.

@Nate Waters My wife’s grandma lives on Bastanchurry Rd there in Yorba Linda, great area. We have sold over $200M in multi unit investment properties in the Salt Lake-Provo areas in the last 5 years. Would love to tell you about a few of the best deals we known of at the moment. I have a few pocket listings you might be interested in

Originally posted by @Nate Waters :

I have researched several areas and I have narrowed my focus to 3 potential markets. One of those markets I would like to explore more is the Salt Lake City to Provo, Ut corridor. I'm interested because:

I am a buy and hold investor that is looking to learn more about the area and build a team. I am interested in buying B or C properties in A or B areas (value-add opportunities) - SFR and Multi's.

What should an out-of-state investor know before jumping into investments in the region? 

Should I focus more in the Provo or SLC area? If SLC, what are the areas to avoid?

Any suggestions for investor focused agents? good property managers?

Thank you in advance for any information and contacts you choose to share!

Hi Nate!  Great job doing your research!  There are a lot of exciting things happening in the state of Utah right now.  I have property in Provo and I agree with the above statements that the vacancy rate is lower, but the rents are also lower (compared to SLC).  My duplex is rented to college students and I have yet to have any major issues with them.  I would definitely recommend Jon Neviaser from Rize PM - he commented on this thread as well.  I am a licensed agent as well as an investor so I definitely have the investor mind-set.  Feel free to reach out and we can set up a call sometime.  

Coco 

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