Where to Invest? New Utah investor

Question

I live in Park City, UT and am interested in starting my investing business to complement my main source of income. I have ~$275K in cash and am more interested in building equity than cash flow. I'm looking for ideas - which area and asset class I should invest in. All recommendations are appreciated!

Craig Sloan · Answer

@Don Johnson I would try to get into Multi-Family as soon as possible. I don't know your market but I have been investing in MF for 16 years. I always liked the fact that I had more than one person paying my mortgage. I could have some vacancy and still have money coming in. If a SF is vacant you are on the hook for the mortgage and all the expenses.

Don Johnson · Answer

Thanks to everyone for your insight. I’m not opposed to multi-fam, just not sure if the potential for appreciation is as great as houses in certain areas. After reading countless RE books, my main takeaway is that I need to jump in and get my feet wet. I’m not in a hurry to buy asap, and want to make sure I find a great tax advisor to help my identify which asset class can best complement my current main source of income.

Leo R. · Answer

@Don Johnson In general, the East side of SLC usually has the best appreciation for single family homes (neighborhoods like Sugarhouse, the Aves, East Millcreek, and anything along the East bench usually has good appreciation...but they also tend to be expensive properties to buy...). ...everyone wants to live in those areas, but there's a finite number of houses to go around, and very few new single family homes are being built in those areas, so it's a fairly straightforward issue of low supply and high demand.However, I think I saw a stat recently that showed that some West side areas like Taylorsville had the highest appreciation in SLC last year (even higher than the East side neighborhoods)--my theory is that the East side has become so expensive, that most "normal" buyers (that is, people with fairly typical incomes) cannot afford the East side anymore, and are therefore being pushed toward West side areas like Taylorsville, driving up prices in those areas.... that's just my hunch (I don't have any data to back it up). If the market tanks, I would expect that West side neighborhoods like Taylorsville and WVC will get hit the hardest, and the more expensive East side neighborhoods will retain their value better (again, just a hunch).Hopefully that helps. Good luck!

Logan McKay Zylstra · Answer

I agree with Leo. East side historically is more desirable and has appreciated because of that. However the discrepancy in pricing between the east side vs west side has continued to widen, leading to people opting for west side.In addition I like Vineyard, Draper, and Eagle Mountain/Saratoga Springs. I would love to connect and share my thoughts on these areas as well.

Chris Forbush · Answer

I am a new investor myself and will say that I grew up in Taylorsville. In the last 20 years, I've seen radical improvement / development here. My cousin has an air bnb there and it's doing really well. I'm no expert myself but this is definitely an area that's getting more attention. Recently noticed a home that was once in the 300s going for over 700 in Murray. Definitely blowing up.

Leo R. · Answer

Also, the title of Don's post says he's a new investor--if he has little or no experience, then a single family house would presumably be a much easier learning curve than multifam, commercial, industrial, etc....

Leo R. · Answer

@Don Johnson mentioned that he's more focused on building equity than cashflow.Generally speaking, around SLC, I think that single family properties have appreciated more than the small multifam properties... If I'm correct about that, then single fam may be a better route than small multi fam for Don... of course, who knows what will happen in terms of appreciation (or depreciation) in the coming years...there's a fine line between investing for appreciation and speculation, as they say...Having said that, I have no clue about the appreciation of large multi fam, commercial properties, or self storage around SLC...would be interested to learn about those if anyone has info, though...

Josh Green · Answer

@Don JohnsonI would look for multifamily properties in areas that are less competitive, but still have good job and population growth. My two main markets are Ogden and Cedar City. I like multifamily because I think it is one of the safest assets to own and is generally not hit as hard in a recession. Having more units helps mitigate vacancy losses and are generally more efficient to operate. There are a lot of small things you can do to increase value. We bought two value- add apartment projects in Ogden earlier this year (10 units and 8 units) and have already added a lot of value (and cash flow) by doing relatively easy things (replacing laundry machines, better management, charging back utilities, etc.)I'd generally stay away from areas that are heavily dependent on one industry (Vernal, Price, etc) as rents and occupancy are more volatile.With $275,000, you could probably find a good 4-plex.Other than multifamily, industrial is also something I'd look at. Can be more impacted by a recession, but still pretty safe.