February 10, 2024 at 10:33pm | Alexandra McEwen
Investing in Utah real estate presents a compelling opportunity for those seeking a stable and profitable adventure. With a robust economy, population growth, diverse property options, stable values, and a stunning natural environment, Utah has positioned itself as a prime destination for real estate investors.





What to Expect: 
People who invest in Utah Real Estate are typically doing it for the appreciation potential and the fact that it's a relatively landlord-friendly state.

There are other states where you can buy properties that have cash flow better than Utah, but Utah kills it with long term appreciation. Because mortgage rates are so high right now, if you can find a property where you can cash flow at all at current rates, is a huge win. Keep in mind that cash flow is actually the smallest way you are making money by owning real estate. Here are the other ways you make money: 


  • Value Appreciation: The state's consistently low unemployment rate and a business-friendly environment attract a steady influx of residents, contributing to a strong demand for housing. Additionally, Utah's stunning natural landscapes and recreational amenities make it an attractive destination for both residents and tourists, further enhancing the appeal of real estate investments. As the population continues to grow, the limited supply of available land ensures that real estate values are likely to appreciate over time.

  • Tax Benefits:  Rental properties offer a plethora of opportunities for tax advantages. A good accountant can utilize your rental properties to create a HUGE tax shield for you through things like accelerated depreciation and deducting interest, property management costs, and overhead. By leveraging this method, investors can write off the cost of their property at an accelerated rate, providing significant tax benefits in the early years of ownership.  

  • Tenant Paying Down your Principal Each Month: One of the compelling aspects of real estate investment is the way in which tenants contribute to building equity by paying down the principal balance of the loan each month. Every rental payment from the tenant serves as a dual-purpose financial move for  the property owner. Not only does it cover the cost of mortgage interest, property taxes, and maintenance, but a significant portion also goes towards reducing the outstanding loan amount. Over time, this consistent repayment by tenants results in an incremental increase in the property owner's equity. Essentially, each monthly payment serves as a form of forced savings, steadily growing the investor's ownership stake in the property. This unique feature of real estate investment not only builds wealth but also positions property owners for potential future financial opportunities as their equity continues to accumulate.




Strategies that are working for our clients:

Single Family Homes



Benefits:
  • Securing long-term tenants with stable incomes not only brings immediate financial benefits but creates a long-term range of advantages for property owners. The presence of tenants with good income often translates into a heightened commitment to property maintenance and care, resulting in lower overhead costs for repairs and renovations. 
  • The continuity of occupancy reduces turnover rates, minimizing the time and expenses associated with finding new tenants. This stability contributes to a low vacancy rate, ensuring a consistent stream of rental income.
  • Additionally, attracting long-term tenants often enables property owners to command higher rental rates due to the reliability and quality of their tenant base. As tenants stay for extended periods, the property is likely to experience long-term value appreciation, aligning with market trends and creating a solid foundation for sustained real estate investment success.

Downsides: 
  • Managing higher-cost properties often comes with increased expenses per door, from property taxes to insurance and other associated fees. 
  • Additionally, exterior maintenance costs can be elevated, as maintaining a property's curb appeal and structural integrity may require more substantial investments. 
  • Another consideration is the responsibility for lawn care, which falls on either the property owner or the tenant. If not managed effectively, this can lead to potential disputes or additional costs. 


Condo/Townhomes:
Benefits: 
  • Lower cost per door compared to standalone houses makes condo/townhome investments more accessible for many investors. 
  • One significant benefit is that the Homeowners Association (HOA) typically assumes responsibility for exterior maintenance. This not only reduces the financial burden on individual owners but also simplifies property management by outsourcing tasks such as landscaping, building repairs, and common area upkeep. 
  • The shared costs within the HOA contribute to economies of scale, allowing property owners to enjoy well-maintained exteriors and amenities without the hassle of coordinating maintenance efforts. 

Overall, condo and townhome investments offer a streamlined and potentially more cost-effective approach for real estate investors looking to minimize the time and expenses associated with property upkeep.

Downsides: 
  • One significant drawback is the adherence to Homeowners Association (HOA) rules and regulations, which can limit the flexibility and autonomy of property owners. 
  • HOA restrictions may impact everything from exterior appearance to rental policies, potentially influencing the investor's ability to make decisions aligned with their preferences. 
  • You should also know that condos, in particular, may experience higher turnover rates compared to townhomes. The nature of condominium living, with shared walls and common areas, can lead to a more transient resident population. This turnover could result in more frequent vacancies and the associated challenges of finding new tenants regularly.

Multi-Unit:



Benefits:

  • Investing in multi-unit properties offers compelling advantages, particularly in terms of cost efficiency and cash flow potential. Multi-unit properties, such as apartment buildings or multifamily dwellings, often provide the lowest cost per door compared to individual units. This cost-effectiveness becomes more pronounced as the number of units increases. 
  • Because it’s harder to get financing on bigger (4+) units, the pool of buyers (demand) is smaller. Since you won’t be competing with as many owner occupants or newer investors on these, you can get a better deal on them. If you can come up with the large down payment needed and qualify for financing, you will enjoy a higher ROI on big, multi-unit properties.  
  • Additionally, the ability to diversify rental income across multiple units helps mitigate risks associated with vacancies, offering a more stable and resilient investment strategy in the real estate market.

Downsides:
  • Managing multiple units entails higher overhead, as property owners must coordinate maintenance, repairs, and other operational aspects for each unit. This elevated level of management complexity can lead to increased expenses and demands on the owner's time and resources. 
  • Turnover in multi-unit properties may be more frequent compared to single-unit investments, as the turnover of one tenant in a multi-unit setting can impact multiple rental incomes simultaneously. Vacancies and the associated turnover costs, such as marketing, screening, and potential property upgrades, can pose challenges in maintaining a steady and consistent cash flow. 
Careful property management strategies and proactive measures are crucial to mitigate these downsides and maximize the benefits of investing in multi-unit properties.

If you’re just getting started with investing, multi unit properties might be out of reach and that’s ok! Eventually, you’ll have enough equity to move it into something like this. The most important thing is to get your foot in the door and own some Utah real estate!

Student Housing: 



Benefits:
  • Investing in student housing presents unique benefits, particularly when focusing on renting by the room. This approach can yield a substantial return on investment (ROI) as each room in a student property can be individually leased, maximizing rental income. 
  • Real estate located near major universities like BYU, UVU, and the University of Utah are likely to hold its value over time. The consistent demand for student housing near educational institutions ensures a reliable tenant pool, providing a steady stream of rental income. 
  • The stability of this market is often bolstered by a continual influx of students, faculty, and staff associated with the university, creating a resilient investment opportunity. 

Downsides: 
  •  One significant drawback is the potential for the highest overhead costs among various real estate investment types. Managing multiple rooms or units, catering to the needs and demands of a transient student population, can lead to increased operational expenses. 
  • Student housing is often associated with higher turnover rates. As students complete their studies or move between semesters, property owners may face more frequent vacancies, requiring consistent efforts and resources for finding new tenants. 
  • Another challenge is that student tenants may be less likely to address maintenance issues themselves due to financial constraints. This could result in increased responsibilities for property owners to handle repairs and upkeep, further contributing to higher operational costs. 

Utah locations to watch due to recent or planned investments in infrastructure/business: 

  • Daybreak
  • Vineyard
  • North Salt Lake
  • Bountiful
  • Draper
  • Anywhere with highly rated schools
Utah and Salt Lake County in general have the highest job growth projections so you probably can't go wrong buying anywhere in these counties- a rising tide lifts all ships.

Locations to watch due to high population growth projections: 
  • Washington County (HUGE GROWTH PROJECTED HERE)
  • Wasatch County
  • Toole County
  • Juab County
  • Morgan County

Ways to Get Properties that Work: 
  • Buy Fixer Uppers
  • Find off market/pre-market properties (our team always has a list)
  • Write low ball offers
  • House Hack
  • Seller Financing

Create a syndicate group -we can help with this as we have a list of people interested in doing this

New Construction: Builders are offering some crazy incentives right now to get rid of inventory, but this may end soon as the market picks back up in the spring.

Call or Text our team at 801.389.8975 or start your property search here. 

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