All Forum Posts by: Jaiden Olsen

How long have you had the property? Any idea what your return on equity is? I'll bet that you've got over $100k in equity. My guess is that you are only clearing (after principal/interest,  taxes, insurance, repairs/maintenance, cap ex, utilities, and property management) about $4k per year. If you have $100k equity in the property, that is a return of 4%. I think it is a fantastic investment, there is no question about that, but one reason I don't like single family is that it is difficult to grow very quickly! As soon as the investment starts to perform well, there is so much equity in the property that it is hard to justify keeping your capital in that asset. Another thing to consider is this; if you have lived in the property for 2 out of the last 5 years, any capital gains you have seen (market or forced appreciation) are tax free. It is totally up to you, but I might get out ,while the getting is good, and move your capital into a higher yield investment.

Congrats on a fantastic investment!

Here is my two cents as a structural engineer. 

Salt Lake City is considered a high seismic region. Meaning that there are very often small earthquakes, and high probability of a large earthquake. It has been observed across the nation in the last 30-50 years that most injuries and deaths caused by earthquakes are caused by things falling on people (not structural collapse). One of the most deadly things that have fallen on people during earthquakes, are old, un-reinforced, brick chimneys. They are very hazardous and are known to fall through roofs of all kinds.  If the chimney is made of brick, I'd get rid of it in a heart beat. Especially if it extends above the roof more than 4'-0".

Also, @Scott Bowles is absolutely right. 

I just purchased insurance for a 6-unit building in Utah. It was built in 1949 and has two layers of un-reinforced brick/masonry. That is key, because it costs more to insure that kind of building. I received very similar quotes as you. I ended up using State Farm. They were middle of the pack, as far as quotes, and the premium was $2200/year. I decided to use State Farm because the agent is a friend, and I know that if something bad were to happen, we would definitely go to bat for me to make sure that I'm taken care of.

I use Reeder Assett Management and have absolutely no complaints with them! I would Highly recommend them to anyone with rental real estate between Salt Lake and Logan. https://www.reederproperties.com/

As a rental property owner myself, I value my privacy. With the information you posted, it was very easy for me to see which properties you own, where they are located, your personal address (where the tax bills are sent anyway), and other personal information. That all took less than 2 minutes. An LLC is a great way to protect your privacy and so much more. @Jeffrey S. Breglio is a great resource for setting up your Utah LLC. Check out his website to learn more about why you need an LLC and why a Lawyer should set it up for you!

http://bregliolaw.com/

@Ethan Ducharme, I haven't used them personally yet, but I have heard great things about Lewiston State Bank. I know they hold their loans in house, so they have lots more flexibility. I would use them rather than a traditional bank, mortgage broker, or similar.

Good Luck!

Utah is a tough market. 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. 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, cap ex, management etc). It is still a great way to get started in Utah, but you will definitely find it challenging along the Wasatch front if your only looking at listed properties.

My recommendation would be to get involved in the local real estate clubs and meet people that can bring you off-market deals. 

If I can help in anyway, let me know! And Good Luck!!

@Caleb Heimsoth & @Andrew Jackson, Here is some good information about doing a 1031 Exchange into a personal residence. It doesn't answer all the questions (like for a house hack), but it looks like it is definitely a possibility.

https://farr.com/1031-exchange-into-principal-residence/

@Dane Kania, Congrats on getting it under contract! That is awesome!

I wouldn't post publicly on the internet that you are planning to quit your job. That is a good way to get fired.

I ran your numbers through my calculator. My assumption is that when you say "Mortgage Payment," you are including PMI, Taxes, Insurance, Principal and Interest, correct? By my best estimation, this property will cost you $1000 per month on average not including Utilities.

That being said, I don't know that you could live for cheaper than $1000/month in the Salt Lake Valley. Rent would likely be that high for anything decent, buying anything would result in a PITI payment more than that, and the help of someone else paying down your mortgage for you is awesome too! Not to mention the tax benefits, potential market appreciation, and everything else that is awesome about real estate.

Honestly, from an investment standpoint, it isn't great. But from a lifestyle standpoint, it sounds like it will ultimately save you money! I say go for it!

My one concern with the deal is that you say that one side has been completely gutted. Make sure you have a plan to get it remodeled and how you are going to pay for it. 

Good luck man!

@Eric Mitchell, I agree with @Amy Kendall. Project managers are great and they are often willing to work with you. 

One thing that you may find difficult (as I have doing my own maintenance) is that I still have face time with my tenants. I have the facade of a maintenance guy, because I've never met my tenants face to face, and I have an entity set up that I own that does all the maintenance and I bill my holding LLC for all maintenance requests. It's a complicated set up, but it saves money and still gives me the separation I want between "Landlord" and "Tenant." If you are worried about being the bad guy, you might consider setting something up in a similar way, but that may require you to get a new tenant anyway.