All Forum Posts by: Randy Scott

Thanks for putting it together Chad.  I'm back in town and will be able to make it.  I will also offer the attendees the template I use in Google docs to keep track of my properties and net worth. (current NW, and projections with changeable appreciation projections.)  I obviously changed the true info to make it internet safe, but I'm wondering if anyone has seen a "Net Worth Clock."   It would constantly be moving like the National Debt Clock, however, it would ideally go higher.

Looks.  Like there are a couple of people interested in doing a real life tour of a 13 year buy and hold rental.  (2000 sq. Ft duplex.  Two 2/1 units.  Bought for 168k in 2005.) Come by at 7pm tonight.  1482 S 200 E Orem if interested.  

I'll offer this up if anyone is interested in buy and hold.  I have a vacant clean unit (2 bed/1bath) in a duplex in South Orem that I have owned since 2005.  (New tenants are moving in Aug. 1st.)  I would be willing to spend 15-20 minutes to give a tour of the duplex and outline renovations/expenses/tenants over the years.  I just had a rental open house for this property on Thursday, and had over 50 prospective renters show up (received over 20 applications).  I would be able to do this around 7pm on Monday.  Afterwards, the group can walk to Chili's or In N Out and talk about important topics like the Dodgers and the Steelers.  If there are enough people, we can iron out the details.

If you are truly a buy and hold investor, I would think long term population growth would be your priority.  Yes, Utah County has had a run up, but is still affordable nationally.  I had to buy an overpriced duplex in Provo in 2007 (at the peak)  Value and rents are up over 25% since that time on that property.  Its simple.  In the long run, everything doubles every 20 years or so.  With leverage and the ability to add value (buying right), this is more than enough to make you rich and let you travel the world.

My personal opinion for Utah Co. would be to start with a small SFR, $150k-$200k that has a quality lot and location. You could probably qualify for this in the next 6 months. (yes I still think its a good time to buy here. RE Prices have gone up 10-15% in the last 12-18mos, but rents have gone up 15-20%) You are not going to make or lose a lot of money, but your RE knowledge will go from a D to a B-.

The best time to buy in Utah Co. is during the Fall and Winter. There is actually a greater demand to rent these small houses, than purchase them. (Look on Zillow for page views on For Sales vs Rentals) My guess is that you should look at about 200 houses online, and maybe inspect 15-20 before you find something decent. I am not saying don't buy a MF, I am saying your odds of finding a good deal on one are very slim for the foreseeable future. The last SFR house I bought 1 year ago with 20% down has a pmt of $706 and rents for $1150.

@Sam Newell, are you having the meeting tonight? I have a SFR on a double lot on 600 W, and a SFR on an acre lot on 500N, East of 15 I'm looking for options on .

Alright, I'll give you a real case study to answer the original question.  

I bought a duplex on the Provo River in 2005.  It was pretty beat up, but if I was I pioneer/Charlie Ingalls I could have literally done my laundry in the backyard.  (and yes I have caught a couple small trout as well) As I'm from LA, the price was crazy cheap.  I fixed it up a little and got it rented with no problem.  

Two months later, the duplex next door (also on the Provo River) was listed for 190k.  I got outbid by 2k.  Some investors bought it and rented it out to some tenants who kindly filled the back yard with 70's car parts and 80's music.  As Winter 2005, 2006, and 2007 passed the 2nd duplex began to look more and more like the set of Sanford and Son. (El Camino's on blocks. etc)  In the summer of 2007, the investors decided to sell if for a their huge profit.  

They listed it for 220k.

I told the realtor that I'm over paying 10k, but offer them 219k.  The bottom line was that it would cash flow about $180 a month, and I needed to buy it because it was right next door to my property, and still on the river.

Now the question.  I bought it in the summer of 2007, (for 219k, long term hold) at the absolute peak of the Utah County/World bubble, before the great recession.  

Now you have to think the timing could not have been worse.  The question is.....Did I overpay?

(I assume the Utah County people know the answer to this, but maybe not other non-Utah'ns)

Is July 2016 a worse time to buy in Utah County than July 2007?

Rents have gone up around 10% in Provo over the last year or so, but I believe that is just one of the factors you should use in pricing your properties.  If you like your tenants, (They pay on time, take care of property, get along with fellow duplex tenants, able to fix small repairs, take care of yard, etc.)  then you should consider this in pricing your rent.  Ultimately, you are running a small business where you want to give your customers a good value for their money.  Calculate the 2 weeks vacancy, small repairs to be made, and time it will take you to list/show property and see if it worth the extra $50-$100 a month.

If you like the current tenants, use this opportunity to give them another good deal. (i.e. a lease for another year for a quality property at a good price)  First, tell them that you really like them as tenants, however, rents (and taxes) have gone up substantially.  Lets say current rent is at $800. Simply explain to them that if you were to rent their unit out today, you would rent if for $895, but because you like them, you will give it to them for $855.

In Provo, Craigslist is pretty much dead.  KSL/Rentler and Zillow will give you a much better idea. (you can get page view feedback at the end of every day.  The more pictures the better)

The one thing I have learned over the years is that not all tenants are created equal.

Let us know the outcome.

Here is the summary from the Utah County Tax sale May 19, 2016

.153 acres with house sold for 8% fractional interest. ($5,387))  I would value prop at 160-175k

.138 acres with house sold for 10% fractional interest. ($5,435) I would value house about the same.

.17 acres land locked in DT Provo sold for 16k 

40 acres in Nebo sold for $18,000

36 acres in Nebo sold for $42,000

Most small land locked parcels either sold to adjacent neighbor or didn't sell at all.

By far the most interesting sale was the last item listed as a "Mining Claim"

Opening bid bid was $5,355.  Going once, going twice, then another bid.  The two guys then proceeded to bid it up to $420,000.  This money is due in about 2 hours.  Just shows you the funds available in Utah County.

I've heard there's some serious issues with SLC and surrounding areas in terms of air quality, pollution, etc. Obviously I live in the Bay Area so it's a very environmentally conscious community, but can you provide any insight?

Definitely a valid point.  

Salt Lake seems to make headlines whenever there is a winter inversion and the air quality gets really bad.  (Provo, 40 miles south doesn't seem to get quite as bad because there is a smaller population/industry)  Overall, I would say Utah in general is about 10-15 years behind CA as far as being environmentally conscious. 

The difference between CA smog and the winter inversions in UT and CO is that CA smog seems to be more prevalent during a longer summer/fall season.  The mountain states inversion problem usually only hits in the dead of winter.  Inversions usually only last a couple of days, but I've seen them last a week or so in extreme cases.  I would say it would be comparable to wildfire season in CA as far as duration and air quality.

Bottom line is that Salt Lake is not even listed on the top 25 cities with annual particulate levels. (LA is #5, Bay Area #7).  

However, for short term particulate readings, (inversion) Salt Lake ranks #7, Bay area #6, and LA #5.

Hope that helps.

http://www.stateoftheair.org/2015/city-rankings/most-polluted-cities.html?referrer=https://www.google.com/

Since Provo came up earlier on this post.  Here is my take:

1. 430 Million $ Hospital Expansion (2018)

http://www.deseretnews.com/article/865630925/430M-Provo-hospital-upgrade-kicks-off-to-healthy-start.html?pg=all

2. New Federal Court house about to break ground. (70 million est)

http://www.utahbids.net/government-agencies/salt-lake/utah-division-of-facilities-constuction--management-dfcm-1104/6560342-new-provo-fourth-district-courthouse.html

3. New Provo Temple just opened DT Provo

http://fox13now.com/2016/01/04/reservations-for-provo-city-center-temple-open-house-available-now/

4. 65k-70k college students within 3 miles of DT Provo (BYU, UVU)

http://www.ksl.com/?sid=36847972&nid=148&title=uvu-now-the-largest-public-university-in-state-new-enrollment-numbers-show

5. Provo airport slowly increasing flights

http://www.sltrib.com/home/2987562-155/provo-now-utahs-no-2-airport

6. Two separate 150 unit class A apartments under const. DT Provo

http://www.provo.org/home/showdocument?id=3919
http://provomayor.com/2016/01/19/16159/

7. 108 Million bond passed Nov 2014 to improve Provo schools

http://www.heraldextra.com/news/local/voters-approve-bond-to-rebuild-provo-schools/article_98645dd2-fbca-5b8c-9889-30ffaa8d9336.html

8. 51k sq ft new Provo Power building under Const.

http://www.provo.org/home/showdocument?id=5435

9. 2.5% unemployment rate for Utah County (Dec 15)

https://research.stlouisfed.org/fred2/series/UTUTAH9URN

10. Utah County has a median resident age of 24 who love that Provo has Google Fiber.

http://www.city-data.com/county/Utah_County-UT.html

There's a lot more, but that's my top ten.

They also built one of the nicest, most financially successful Rec Centers in the country.

This should give you a general idea.