Hello BP! My husband and I are new to real estate investing and without knowing what we were doing, just finished our first live and flip in Sandy, UT. Now we are looking to move into a home with a mother-in-law situation or a multi-plex this summer. Every deal we are looking at on the MLS doesn't even come close to meeting the 1% rule and prices continue to increase because of the influx of jobs and overall growth of the valley. So I have a couple of questions:
1. What is the most successful way that you have found below market deals in the Salt Lake valley? Driving for dollars? Wholesaling? Direct mail marketing?
2. Opinions on renting out properties? We’re finding it very hard to have cash flow since rents don’t seem to match the continual increase in property values.
3. What are your general thoughts about the Salt Lake Market? Best methods for property investments?
This market here is truly insane and is getting more insane every day!
To answer your first question I would say that being well connected with others in the industry to find deals and/or connecting face to face with NOD's have been the best source for me to generate new opportunities.
My cashflow on all of my rentals is very thin. Most of the time here I am speculating on the market appreciation, not the safest route, but it honestly feels like the only route when your properties rise in value 15% in 1 year. Then when that happens you may think, okay this works for now. (The last words of real estate investors in 2008) Also, with this approach assuming the market doesn't tank, you can usually refinance off PMI in 1 year, if you are house hacking and then get decent cash flow.
In general, the Salt Lake market is not slowing down anytime soon. The top of the market cycle is probably still a couple of years away and we have new jobs coming into our area daily due to Utah's extremely friendly business environment. I would say keep investing for now.
@Greg Lemmon I agree with you, SLC and surrounding counties are getting pretty insane. @Sarah Caldwell Probates, NODs, buying from wholesalers is the best strategy I've experienced in the area. I've also had friends make great deals driving for dollars but I've never done it because it's so time-consuming.
You're pretty much going to have to rehab property to see the 1% rule in Utah. NOTHING is listed at that 1% for a long term rental that doesn't need some serious help. But... it is possible. We have a 1.5% duplex in the area, however, we rehabbed it.
I mainly work on development projects (less competition in the area) as well as we have a lot of short term rentals which often far surpass that 1% and have allowed really high cash flow in Utah. I'm happy to answer questions anytime on how to find great deals in SLC.
Most anything you find on the MLS will be listed at top dollar. Almost everything that I've seen in the last year, as far as small multi-family along the Wasatch front, has been listed below a 4 CAP.
If you are looking to house hack, I think that your analysis has to change. House hacking is great, but most places that you find in Utah won't cover your mortgage payment, let alone make a profit on (at least initially). You'd probably be lucky to break even. When I have helped people identify good house hack properties (on the MLS), we have looked at what their PITI would be if they were to go buy a SFR. If that number is $1600/month, then our target for a house hack would be to make their portion of the PITI of the house hack less than $1600/month (accounting for vacancy, repairs, maintenance, etc). It is still a great way to invest in the current market, but you will definitely find it challenging along the Wasatch front if your only looking at listed properties. I think in the long run, it will be a great investment for anyone in the Salt Lake area, if you are willing to hold it long enough.
.5% here right now is a deal!
Salt lake county just passed an ADU clause that has some restrictions, but it sounds like with what you want to do might be right up your alley!!
Don't forget about your opportunity zones, which has several good aarea that I've personally flipped in.
easy math is, anything east of 700east from the aves to cottonwood heights and at least 2-3 bed 1.5 bath will rent for $1+ sq/ft up to about 1800sq ft.
So if you can buy a house and rent out a 1200sq ft basement it should go for $1200
I'm hoping that we will see this market turn into a buyer's market soon. Sales in all counties are down from last year, some areas are seeing double digit sales volume decreases. But the California migration this spring and summer will probably continue to prop the market up. I don't see it going any higher though!
What is the 1% rule?
Great replies so far!
I bought a couple duplexes in Ogden a couple years ago that easily met the 1% rule, since then I haven't found anything very close though.
I'm in luck though because I switched my strategy to renting by the room! Currently, I like to buy houses with close to equal # of bed/bath and 3-5 in driveway parking spots (if there's room I'll just add a large rv pad for extra parking. Then I generally live in them for a year or two while finishing up a basement and living in it too (all this helps if you're single)! I've noticed the guys/gals renting from me are happy to have nicer than average living conditions, beefed up wifi, and all bills included into what they're renting. By doing this, I generally cash flow only a $100-200/mo, but that jumps to around $700 the day I find the next property and move out.
Pros to this: Free living w/ a little cashflow monthly; sweat equity = $ down the road; able to acquire nicer housing w/ less repairs needed to be done; loans are cheaper to acquire also!
Cons: I haven't found a property manager (other than myself), that would touch a house like this with a 10' pole. So it's just better to manage yourself. You have to find the right functuay of people that are comfortable and open with each other to make a living situation like this work well, this is where it's extremely important to be a great judge of character/vette your tenants well.
Hope this helps in some way! Best of luck, if you need help from an investor/realtor/military guy drop me a PM!
Hello. New to BP here. Can anyone share how to begin connecting with wholesalers in Utah? Interested in 4 plexes along Silicone slopes. Thanks.
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@Sarah Caldwell Like the others have said, good cash flowing rentals are hard to find in the valley at this point in the cycle. I would shy away from looking for a 1% deal, because you aren't going to find much.
I prefer looking for a net amount that I can cashflow each month. At this point, I'd be hoping for something that could cashflow at least a couple hundred a month. Which is still tough, unless you are going to pay a sizeable chunk as a downpayment.
We did pick up a new townhome recently that should cashflow $150/mo, but had to put down $40k+ to achieve that. It was a 1031 exchange, otherwise we probably wouldn't have done it.
Properties on the west side of slc with a value-add play might still be able to achieve ok cash flow. Whether that's because you are going to do a rehab, or buy where the seller has been operating at below market rents.
If you need a good wholeseller option, @Rebecca Jensen is great.
Thank you Taylor Chiu!
I do get multi-family rentals on a regular basis to wholesale. Send me a message so we can chat! I am happy to add you to my email distribution list.
@Rebecca Jensen , connecting with you regarding MF rentals in UT.
@Christian Tiessen , the 1% rule is finding an apartment that has a monthly rent of 1% of the purchase price. If a home is purchased for $100,000, then monthly rent should be $1000 to satisfy the 1% rule.
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