Searching for advise in Utah

[Jake Jensen]

Hi my name is Jake Jensen, I am completely new to real estate understanding basic techniques some investors are using, and being lost and confused when trying to apply them to my special current situation that changes per person, and despite the constant back lash from friends family and that keep telling me not to buy in my ever changing fast growing utah housing market. “Buy low, sell high” “save you’re money, don’t invest” “it’s hard, it’s scary, you’ll loose money cause you’re buying too high”. Now with the median home prices in utah being $300,000 and not having any savings right now,  I’m trying to buy my first house. So I’m getting nervous as I look at potential properties and try to figure out how to make money in this market. Knowing I want to invest in a rental property between Layton and Ogden, does any one have any advise on the best strategy for a high market like utah? Are we in a bubble? Is it about to pop? Should I buy a long term rental property when Utah’s housing market is so high? How do I predict the market crash?😅

[Ryan Gross]

Jake! Welcome to BP and welcome to investing. I'm in Ogden and have a small portfolio of rentals and have done a few flips. I'm by no means a big time investor, but perhaps I can give you some insight. 

1. No matter what you do, people will tell you that you are wrong. 

When I started investing about 3 years ago (in a Utah market that was much more friendly than now) People around me casually said things like, "I wouldn't want to be a slumlord," or "I wouldn't ever do that because I heard of some person's cousin who had tenants from hell." In the end, I feel like people just try to justify to themselves why they won't take any action to better their position. That being said, millions of people around the US are doing what you want to do and having success, even people in this Utah market and you can too! 

2. This market is crazy right now. 

There's no getting around it, prices are insanely high. Cashflow doesn't exist without substantial down payments. We live in a part of the country that is growing extremely fast and construction has not kept up. Deals are super hard to come by, and everyone is looking. I've been trying to pivot my investing and instead of saying "I can't afford it," I'm trying to change my mindset to, "how can I afford it." I really believe that flexibility and creativity are the most important skills you need to invest in this market. At the end of the day does it matter if the market is high if you can create a deal that cashflows? You can ride out dips/crashes if you keep enough in reserves and have properties that cashflow.  

3. Househacking 

I really believe that house hacking is the best way to get started. You can buy a huge array of properties with low down payments and get the best terms on your loan. You can lower your cost basis by renting out other parts of your house/building. And perhaps one of the best parts, is that if you live there for two years, you can sell without paying any capital gains tax. 

4. How do I predict the market? 

I believe that no one can predict any market. People may disagree with me here, but there is no way to know what will happen in the future. Look at how fast covid changed everything in a rather short period of time. People just like to look back in time and find ways to say "I knew that would happen." For example, its easy to look back at 2008 and say that "oh I knew that would happen" yet in the moment millions of people had no clue a crash was coming and not just ordinary people but huge financial industries as well. This is why you have to mitigate risk and plan on the worst but hope for the best. Have enough in reserves, invest in cash flowing deals, and also understand that all investing involves risk. 

Sorry that was a lot, but to sum up. You can invest successfully in real estate. Search out like minded people. Tune out the outside noise. Most importantly, take constant action. I'm looking for people to partner locally. Reach out to me if you would like me to look at any deals you are considering and I'll give you my honest opinion.