Beginning Investor in SLC

[Matt C.]

Hello Everyone! My first post here!

I live in SLC - where homes have been increasing in value extremely quickly. I have already gotten into my first home in which we are renovating the basement into its own unit. We will continue to live upstairs for some time. 

Ideally, I want to get into another home ASAP to repeat the process (waiting for the 1 year mark at residence #1). I've been trying to keep track of home values out here and I've been trying to do some quick calculations to determine potential ROI. Am I missing something if I am seeing that most of the homes out here are not hitting the 2% or 50% rules? Are these rules still relevant today and in this market? Or is this just the way the market is right now? (I know this has been asked a million times in this forum, apologies for that lol).

The bottom line here for me is this: What is the strategy to get into this market and maintain a positive cashflow?

If anyone out here is interested in meeting up for coffee or a beer, I'd love to chat and pick your brain. Suffice to say that the beverage will be on me!

[Ronnie Galindo]

Hey @Matt C. and welcome to the forums! With that said, those "rules" are really not rules, they are guidelines that will help you quickly see if you need to look further into a property. The theory is that if a property meets the rule, then they should "theoretically" cashflow/make money. With that said, when you are new, you have to just analyze a lot and see what the actual numbers get you. Once you get the hang of it, you will start seeing things or finding homes that meet what you are looking for without spending too much time on them. 

To get into any market, you have to be very familiar with a few things. What a typical rehab is going to cost (at each level: cosmetic, heavy, full), what closing costs/cash needed to close (roughly), and the ARV. Once you have those, you will be able to start seeing which neighborhoods to avoid or which ones to go full bore in when a house comes on market. Positive cashflow in markets like SLC, some parts of CA, Austin, etc. can be hard to come by in this crazy market we have right now but don't give up!

Also, don't try to go too fast. Make sure you have the cash reserves and everything in line to keep you going. This is a marathon, not a sprint! I hope this helps! Good luck!