Idaho Investment Property

[Michael Ash]

I am a new investor and have been analyzing deals in CA for the last few months. My goal is to achieve a 6% cash on cash, after-tax, return. The best I can get here in the central valley of CA is about 4.5%. On a whim, I went to realtor.com and looked at a few condos in Pocatello, ID. I know that this market will not appreciate substantially but the cash flow seems to work out much better--I'm calculating a 6.5% cash on cash after tax. I'm looking to be conservative with my money and I know that Pocatello/Chubbuck is only 70,000 people with, not the most dynamic economy/job market.  Is it worth taking my funds to Idaho to achieve this return or should I stay close to where I live here in CA and reap minimal returns? My intention is to buy and hold forever.  Let me know if you have any thoughts about Pocatello, moving from a higher priced market to lower, etc...

Thanks to all.

[Jeff Rappaport]

@Michael Ash I am an investor in Salt Lake City, UT.  Income properties in Utah are very high and do not make a lot of sense in terms of return on investment or Cap rate.  I started investing in Pocatello, Idaho Falls and Mountain Home Idaho strictly for the better deals on income properties. 

Yes, you are right!  You will not get the same kind of appreciation in these markets as you would in California or any larger market.  However, the cash flow is so much better in these areas.  The rental market is strong in Pocatello with rents on the rise.  There is a shortage of 3-4  bedroom units in this areas as well so if you can get your hands on a larger rental you will be able to get a premium rent for it.  

I don't typically buy any condos so I cannot speak to that part of the market but in terms of houses and multifamily properties you will get 10-20% cash return on investment with a Cap rate of at least 9%. I don't touch anything that I can't get at least 15% ROI.

I have branched out into the Boise, Meridian and Nampa areas.  There are still deals for rental properties there but the market is much more competitve than some of the smaller cities.  

The bottom line is you must feel comfortable in whatever you do.  Investing in another state scares many investors because they want to be close to the property so they can check up on it.  As far as I am concerned that is what a property manager is for so I don't have to go to the property.  

If you have any other questions PM me and we can discuss further.