All Forum Posts by: Matt Todd

Thanks for the input Cason, I definitely feel that. There's plenty of existing small multi out there and I could definitely target depressed buildings and get my construction kick out of an extensive renovation. Worth keeping that option open for sure.

Josh, super cool to hear that you've had lots of success doing this around here. I've knocked a very small handful of doors, and have been considering some type of direct mail, but I'll need a more intentional/targeted/organized approach. I also really appreciate your offer to share more, I'll definitely need to take you up on that. Do you have a preferred method of communication I could use to reach out with follow-up questions?

Yep. Kinda makes sense, kinda doesn't. The cities don't want students filling up regular family neighborhoods so they make it unprofitable to try.

Hello friends! I've never posted before but I'm a current BYU student and am trying to move into the long-term rental game here in Utah County. I currently have just one property (Provo duplex) but am actively looking to acquire #2.

I would love for it to be a new build. 2-4 units is obviously easiest, but anything up to 8 is probably doable. I want to do class A, nice stuff, 2/1 to 3/2. Anywhere from South Jordan to Provo, but especially interested in the Lehi area. I work as a project manager and superintendent for a homebuilder so I have the resources and experience to pull it off. It would be stretching, but in a fun way and I'd love a chance to make it happen.

All this to say, how the heck does a guy find land (zoned for multifamily) that could make sense in a smaller 4-plex like development?  

I've got an agent or two looking, have been talking with city planners, and working on this for a bit and am getting a sense that this is a tough thing to find. Cities want bigger complexes so newly zoned land goes to the big guys, and small stuff that's grandfathered in already has buildings on it. I'm prepared to knock down a small, old house on a big lot that happens to have the right zoning, I'd just need to find one that would work. 

Has anyone done this before? anyone successfully gotten land re-zoned? anyone know good land brokers with access to this kind of stuff? anyone in the business of wholesaling ideal knockdown houses? anyone know of cities that are good targets for small-multi new development? anyone want to partner?

I'm happy to chat or meetup and would love any general thoughts or advice as well.

People will buy small multi-family at break even all day in Utah/Saltlake County so it's really competitive and if you aren't financially prepared for initial expenses and no/low cashflow it might break the bank. Values went up 20-30 percent in the last 12 months so people are shooting to make money on appreciation rather than cashflow. It can still work out super well, but it's a bet, and if you're spending your last dollar, you're in a less stable position than your competition.

If you want cashflow in Utah (as in more than $200/month), vacation/short-term rentals, treating an ADU like a duplex, or renting by the room have better margins.

They all have limitations. 

Vacation rental laws are dicey in some areas, you'd need to furnish it, and management could (at least initially) be way more hands-on. 

The ADU/duplex idea is tantalizing (they could be 100k cheaper and yield higher rent than a legal technical duplex), but it's always illegal (when not owner occupied and properly licensed) and cities have a really big stick they can shake at you if your neighbors complain. If you get caught in year 10, then maybe you've already made money, but if it happens in year 1 (at the same time you just spent 50k on rehabs and your furnace goes out), then you're in the hole and have no way to get out. Also, if something really bad happens (house burns down, tenant gets electrocuted and dies) things will be much worse for you when it comes out that the setup was sketchy and didn't have any official stamp on it. If you want to try it just know the risks.

Renting by the room could be super lucrative (especially in cities with housing shortages and young, single people), but also flirts with illegality. Provo, Orem, and Salt Lake have a "3 unrelated persons" max tenant limit per unit. It's totally insane. That means a 7 bedroom house is allowed, you guessed it, 3 tenants. Everywhere else is 4. Elsewhere (like Seattle, Meridian Idaho, or Bend Oregon) you can have 8, 10, or unlimited tenants, but nowhere in Utah. Point is, your best bet would be something with a really low price point (like a condo) so that you can still cashflow with 4 tenants.

Potentially other niches exist where you can win big, but there are a lot of people watching this market. If you have an unfair advantage, use it. If you want to try to solve a hard problem, do it. Otherwise, you can still build tons of wealth through debt paydown, tax breaks, and appreciation on small multifamily, even if it "only" breaks even on cashflow. Just pick a good property that will last, in a city where things are moving up (and be prepared to pay over asking and waive contingencies). 

PS. Lots of cities are adding their first big apartment complexes, so if you can get invited to that party (even as a limited partner), that's something municipal governments really want to make happen right now with us running out of land and having big housing shortages.