Newbie from Logan, Utah

[Lee Israelsen]

My name is Lee Israelsen. I currently work at a pest control company.  I have met with some RE agents, looked at some multifamily properties and analyzed them.  Mostly I have been learning about real estate investing from listening to BP podcasts and also reading the forms. I listened to a years worth of podcasts last month.  After listening to so many different podcasts I realized there are endless ways to do RE investing and I just need to pick one and get started.  My first goal is to find a multifamily property in my area live in one of the units and get some practice land-lording.  My biggest hurdle right now is finding good deals.  From what I have seen the MLS is not working.  I have asked the county and city if they have lists of current evictions they didn't...I also got a list of properties from the county that have been sent a notice of default. But I think what I really need is a list of landlords and to figure out the best way to approach them about buying properties off the market. I asked a title company if they had access to any such list, currently waiting to hear back from them. If anyone has recommendations on where to get lists of landlords and how to market to them please let me know.  

Thanks for your time and help!

[Ryan E.]

@Lee Israelsen after being on BP for over a year, listening to all the podcast, reading voraciously etc I've come to realize that a lot of the advice and many of the principles don't apply to all markets. By and large BP is all about cash flow, cash flow, cash flow. From what I've seen the market is a bit different in UT where many properties won't see the 1% rule until a few years down the road when rents have increased. 

You mention that the MLS isn't working. I agree and disagree somewhat. Let's say you buy either a duplex for 375k or a fourplex for 575k and the total rent to value ratio is .6% on the duplex and .8% on the fourplex (two real examples off the MLS in UT county that hit my inbox this morning). Neither of them meet the 1% rule but let's assume they are in A areas and in decent condition. Let's say you purchase one of these properties and put enough down so that your rent will cover your PITI and you have enough rent left over each month to put in the bank to cover any repairs/vacancy that may come up during the year. Many investors on BP would say this is a bad investment. I would argue that most of those people don't have the full picture that is UT. In a way we do have a crystal ball for the future of UT. Here's what we know:

UT had the highest population growth in the nation by percentage in 2016, insignificant when you compare it to somewhere like CA but very significant for UT and our local economy and housing market. UT is consistently ranked by Forbes as the best state for business. UT has very low unemployment. The population is expected to possibly double in the next 50 years...we have the highest birth rate, lowest death rate, and the youngest population of any state. The vast majority of that growth will be happening between Ogden and Provo. Salt Lake County is down to an estimated 30,000 remaining acres of buildable land supply while UT county has an estimated 230,000 acres of vacant land available for development. 

When you combine population growth with a lot of business coming in you get demand for housing. So back to the example of the properties above. I think we can say with a decently high level of confidence that those properties will continue to go up in value and that their rents will also continue to increase over the long term (not saying we won't see recessions and dips here and there). I think it's perfectly possible that those same properties will be cash flowing extremely well within 5-10 years. Knowing what we know about UT's economy and population growth if you were to buy one of those two properties today they might be absolutely stellar, home run deals 5 years from now when the rents have increased to exceed the 1% rule and the values have gone up considerably. 

I think the key is doing your homework and making sure you are finding a property in a great area where you will get great tenants and where the area will stay awesome for many years i.e. Sugar House, the Avenues, Cottonwood Heights, Daybreak, the Point of the Mountain, etc. Also, I'm not trying to discourage you from finding a great off market opportunity that you can fix up and create a bunch of equity. I'm just pointing out that we will all probably be kicking ourselves in 10 years for not buying everything on the market today. I mean who really cares if you overpay for a property by $20k today if the property has increased in value by $200k in the next 5 years? 

But listen, don't take my advice without doing a ton of research....I'm just some dude on the internet and there are certainly much more qualified people than me who can give you much better advice. I am not purchasing properties without some immediate significant upside but I am very bullish on UT real estate. I think as long as you take some solid action you will end up ahead.