Is Ogden a cash flow positive market?

Question

Hi all, I am looking at Ogden and wondering whether any local investors can shed some perspective on overall property values to rents in this market. Are you generally seeing cash flow positive deals from day 1? In general, I'd be interested to know cash flow investors think of Ogden. Thanks in advance!

William Hochstedler · Answer

This post is my official pivot on Ogden.  I've been a long-time Ogden bull with posts like these:

https://www.biggerpockets.com/forums/12/topics/882817-local-...

https://www.biggerpockets.com/forums/586/topics/785294-who-h...

But, like a January 2022 study determined, Ogden is overvalued.  The study from some Florida Atlantic University took historical price change data from Zillow and compared it to current trends.  It showed the upward trajectory in Ogden to be among the most deviated in the country from historic market data.

At the time, I thought this to be an interesting and coincidental statistic because Ogden's upward prices were a function of the entire Utah trend and the laws of conformity.  It had little to do with Ogden itself.  In my view, if there was a reason that it was overpriced, it was that the ancient inventory was not being fully upgraded when flipped to owner occupants.  If the rising values had reflected property improvements and upgrades (rather than massive profit taking) the rapid rise in prices would have been justified.  The methodology of the study would not have been able to capture that nuance.

Unfortunately, for the last few years, there has been a missed opportunity for Ogden to take advantage of the comparatively lower price points and really cater to smaller pocket books with energy to rehabilitate the old houses.  Now, big multifamily projects are going up everywhere (possibly entitled years ago).  But there is little evidence of small, conscientious operators.  So neighborhoods haven't improved noticeably since they were half the current price.  Ogden has done nothing to provide for mom-and-pop landlords who might have brought stability to neighborhoods where owner-occupants aren't quick to adopt.

Right now, the ROI isn't terrific (I have a handful of properties which I could sell for $250K-350K that I struggle to rent for $1400/mo).  And the market conditions are unwelcoming (physically distressed inventory, difficulties with Ogden City, and poor tenant pool).  As a result, many investors (including myself) are either spending a very small premium for way fewer headaches in other markets or moving farther afield to more promising opportunities.

In other words, Ogden failed to ride the gentrification wave that buoyed the REI landscape everywhere around it.  Now it's just expensive for what it is. (I guess that's what overpriced means).

Because of all this, I'm still holding my Ogden properties.  But don't see enough near-term or mid-term upside to keep them if something better comes along elsewhere that I can transfer into.  Right now I'm doing better with my return on equity elsewhere.

Hope this helps and I'm very interested to hear what others are saying these days.