| In the Utah real estate market, the worst seems to be | | | | financing that you would obtain if you were buying a |
| over: housing prices are stabilizing, buyer demand is | | | | home for yourself. Anything above 4 units requires |
| increasing, and sellers are accepting the reality of the | | | | Commercial real estate financing. |
| newly adjusted marketplace. Unlike many areas of the | | | | Currently, Conventional loan rates are about 2% lower |
| country where a stable housing market is still years | | | | than Commercial loan rates. What does this mean for |
| away, Utah's real estate recovery seems to be | | | | you as an investor? Opportunity. Many duplexes, |
| closely following the general economic recovery. With | | | | triplexes, and four-plexes in Salt Lake City are priced |
| Utah housing prices now recovering from their | | | | to provide a return closer to the Commercial financing |
| recession lows, now is a good time to explore | | | | rate of 7%, while Conventional loan rates are currently |
| investment opportunities in Utah real estate. | | | | at 5%. So, if an investor can borrower at 5% and |
| Opportunities in Multi-Unit Housing | | | | purchase a property that returns 7%, the investor |
| In our current housing market, I really like the idea of | | | | receives a built-in profit premium of 2%. In addition, |
| investing in multi-unit residential real estate: duplexes, | | | | Conventional loans are often amortized over 30 years, |
| triplexes, four-plexes, and small apartment buildings. In | | | | which reduces your monthly payment and increases |
| order to reduce risk, I prefer smaller | | | | your cash flow versus the typical 15-20 year |
| investments--$500,000 or less--and investments in | | | | amortizaion used for Commercial loans. |
| diverse markets, targeting either different locations or | | | | Because of the interest rate and amortization |
| different tenant types. For example, I might | | | | differentials, significant investment opportunities can be |
| recommend buying a triplex in the Avenues near the | | | | found in 2, 3, and 4-unit residential properties, where the |
| University of Utah, targeting the student population; a | | | | sales price has not yet been adjusted for the lower |
| small apartment building near downtown Salt Lake City | | | | cost of Conventional financing. |
| focusing on convenience-minded working | | | | Vision And Multi-Unit Residential Real Estate |
| professionals; and a home in Salt Lake's unique Sugar | | | | Of course, there is always opportunity for investors |
| House area that has been converted into a duplex. | | | | who have the "vision" to see beyond the obvious |
| Multi-unit housing has an advantage over single-family | | | | value of a property and find additional value in the |
| housing in that the total property rent is divided among | | | | property's potential. This can include the vision to see |
| several tenants instead of a single tenant. In addition, in | | | | that with better management, the property can provide |
| multi-unit housing, the rents can be significantly lower | | | | better returns. Or, the vision to see that due to a |
| than in single-family housing. Both of these factors | | | | potential shift in the demographics of a neighborhood, |
| serve to further diversify the investor's risk by reducing | | | | property values can be expected to increase. Or, the |
| the impact of vacancy and by increasing the pool of | | | | vision to see that with small changes to the condition |
| potential tenants. | | | | or features of a property or to the way the property |
| Finally, demand for residential rentals in the Salt Lake | | | | is marketed, untapped value can be obtained through |
| Utah real estate market has remained strong despite | | | | higher rents. |
| the housing recession and rents have remained | | | | Of course, "vision" investments can be risky and the |
| steady--both of which contribute to strong cash flow, | | | | potential for loss is great. But if you have the ability to |
| which is the main reason for purchasing residential | | | | see a property's untapped potential and then can |
| investment real estate. | | | | capitalize on that vision, there are a lot of residential |
| But, if the Utah residential rental market has not been | | | | real estate investment opportunities uniquely available |
| seriously affected by the housing downturn, and if | | | | to you. |
| prices accurately reflect the value of the properties, | | | | The Importance Of Sound Real Estate Advice |
| where is the "opportunity" in residential investment real | | | | No one should rush into a real estate investment |
| estate? The opportunity can be found in two areas: | | | | without a sound understanding of the both the risks |
| interest rates and vision. | | | | and the opportunities of that investment, as well as a |
| Interest Rates And Multi-Unit Residential Investments | | | | detailed financial analysis of the current and projected |
| Interest rates are at all-time low levels making it more | | | | operations of the property. If you're thinking about |
| profitable than ever to invest in real estate. There are | | | | investing in Salt Lake City real estate, please give me |
| two categories of interest rates for investment | | | | a call. I will be happy to help you identify potential |
| properties: rates for properties with 4 or fewer units | | | | investment properties and assist in evaluating both the |
| and rates for properties with more than 4 units. If your | | | | risks and the opportunities of properties, before you |
| investment property has 4 or fewer units, it qualifies | | | | invest. There's no better time than now! |
| for Conventional residential financing--the same | | | | |