Timing Saratoga Springs, Utah/Utah county purchases

[Nik Krohn]

Hey all. I want to see if I can get a pulse on what you guys think about the market right now in Utah. Everyone says 'we are at a peak in the market' & 'there are few deals to be had'.

I am able to purchase 2-3 homes. Ideally I would like to buy in Saratoga Springs where I live. The intention of the investment properties is to hold for appreciation over the next 10 years as well as some cashflow.

I don't like the idea of waiting for the market to dip but I don't want to pay a premium. Here are some of my questions:

• Should I hesitate to purchase now? 
• What things should I look for in a deal in this current market? 
• Saratoga is going to boom over the next decade. Should I get in now?
  

I am not a first time investor. But the last few years I have purchased out of state and now I am planning on coming back to Utah for investing. 

[Yuki Inui]

@Nik Krohn Hi Nik! Simple answer to your question "whether you should get in now" is yes. 

A friend of mine who is also an investor just built a house there and has a great cash flow and cap rate. The home prices are going up everyday, as well as rents. Whether to hold it for capital gain or income, I wouldn't hesitate to buy in Utah county right now. There is so many factors that make the Utah's rental market bullet-proof even if the market crashed. I would strongly recommend avoiding existing buying new construction for a few reasons, especially if you're intention is to buy and hold. 

1. Tax benefit - 50% bonus depreciation deduction on new builds purchased in 2017 (the % decreases to 40% for 2018 & 30% for 2019) 

2. Renters demographic - The majority of the renters here are young couples with small kids, tech savvy millennials (tech employees & university students). They tend to prefer a modern style home with newer systems. Hence higher rents, better quality tenants.  

3. No hidden surprises - No need for initial work or repairs.. I myself as an investor hate to own old homes as an investment. I value my time too much to be willing to stress over unexpected repair cost or something that could literately ruin my plan.

4. Easier to manage & cheaper to maintain. Insurance cost is lower. Utility bill is smaller. It takes less time and money to re-rent. Things don't break as often as older homes.

5.  New communities have amenities that established communities don't, such as new park, playground, pool, splash pad, etc, which the trend says millennials look for in a rental.

6. Investment Oriented - For example, you can increase the rent and increase the value of your property significantly by adding an extra bedroom for almost nothing. It works great for Utah because of the uniqueness of the renters demographic.

I would definitely recommend talking to @Sam Levin who is my investment partner and pick his brain. He knows the market extremely well, has strong connection with quality builders, lenders and is very honest and genuinely cares about fellow investors.