New buy & hold investor in Salt Lake City, Utah

[Gene P.]

Hi everyone, I'm new.  :)

Been thinking about investing in buy & hold for years now and only stumbled across BP a couple weeks ago.  I've been reading everything I can and have listened to maybe a dozen relevant podcasts so far.

I'm in my mid thirties and have a full time job, and my goal is to invest in 10-15 buy & holds over the next 15 years, which would allow me to step away from my full-time job by then.  At this point not interested in flipping/wholesaling.

My budget is such that I have around $50k-$60k "left over" annually from my full time job, either to use as a downpayment on a new investment, or towards paying off an existing one.

My concern is that the market has gone up so much in Utah (Wasatch Front specifically) the last several years, that I worry I've missed the window to jump in.  Have I?

Currently my target is either single family homes or townhomes/condos.  I'm looking for cashflow of $200-$300 per month (assuming 20% down), and an 10-12% cap rate.  Any thoughts from Utah folks if something like this is feasible in the current market?

[Becca Summers]

@Gene P. An old Chinese proverb is the best time to plan a tree was 20 years ago. The second best time is today. Did you miss the window? Yes the best time to buy in the last ten years was 2010 great little buyers market we had there but that window is over. If you where an all cash buyer then right now might not be the best time to buy where you don't want to do flips. The reason it's still worth buying and why there are so many buyers and house prices are being pushed up is interest rates are amazing!!  Once interest rates go up that should cap the housing market and cause it to shift back to lower house prices but affordability stays the same. Based off what we are seeing in the market I've heard many agents say in the next two years.

If your investing for the long run I don't really think it matters when you get in just as long as you do. Even if you bought at the height of the market back in 2007 your home is worth more today than it was then (unless you bought in very rural area) most areas in Utah have come back. Plus your mortgage pay down for the past 9 years would give you more equity. 

Unless your willing to buy a home than needs work that you can get below market value you won't be able to get a 10-12% cap rate at retail. 

What area are you looking to invest? What type of renter do you want? Answering those will tell you what areas and types of properties you want to invest in.  You'll find you get better cash flow per month of lower end properties but the management on them is more time consuming. It all depends on your personality of what you can handle.

For me, I grew up with parents who had lower income rentals and they did a lot of maintenance and dealt with a lot of late rent and evictions but they had renters that stayed forever and had very little turn over. I didn't want that type of rental so I have "A" rentals where they may move more because they are buying a house or getting a better job but the houses look great I can show them while I still have tenants and I haven't had a vacancy in the last 4 years.