Real Estate Investments That Make Sense - Utah

While many parts of the country struggle with the ongoing housing recession, the Utah real estate market has faired fairly well.  Utah home values have declined, but only moderately for the majority of homes for sale.  Of course, there is a significant segment of distressed properties--homes subject to foreclosure or short sale--that are selling at a larger discount from previous prices.   But the Utah real estate market as a whole seems to be improving and growing stronger daily, as evidenced by increases in demand (more home buyers entering the market) and stable prices.

Now Is A Good Time To Buy, But . . .

So, is now a good time to buy a home?  Well, yes.  But don't expect to see big increases in your home value--appreciation--over the next few years.  You can expect modest price appreciation, but the days of 10% annual growth in home values are behind us.  In the Salt Lake City real estate market, I anticipate annual housing price increases in the 2-3% range over the next several years--a little better than the interest on your checking account, but significantly less than the return you might receive on other investments.  So, where do I invest in Utah real estate if I want a better return than 2-3% in the coming years?

Investment Opportunities in Utah Multi-Family Residential

One of the best opportunities in Salt Lake City real estate for 5% to 7% returns over the next several years is in small multi-family real estate:  duplexes, triplexes, and four-plexes.  The Utah housing rental market has remained strong throughout the housing downturn, with rents stable or increasing and renter demand high--in key markets.  Salt Lake's key multi-family markets include areas around the University of Utah (student housing), areas close to downtown (young-urban housing), and areas around unique niche neighborhoods (Sugarhouse and 9th and 9th).  Because these are desirable areas in any economic downturn, rentals will always be strong and vacancies minimal.

Interest Rates Make The Difference

The reason I recommend investing in duplex, triplex, and four-plex properties in these areas is because properties with four or less rental units qualify for conventional residential financing--the same financing you would get if you were purchasing an owner-occupied single family residence.  Properties with more than four units require commercial real estate financing.  And right now, conventional loan rates are at a significant discount compared to commercial rates:  4.5 - 5% for conventional vs. 7% for commercial. 

In our current market, most investment properties are priced to provide a 6-7% return.  With unusually low interest rates on conventional financing, an investment in a four-plex property that returns 7% can be a much better investment than an investment in a 6-unit property that also returns 7%--because you can finance the 4-plex with money that costs 2% less than the financing for the 6-plex.

Get Sound Real Estate Advice

For more information on investment opportunities with 1, 2, 3, and 4-unit rentals or small apartment buildings in the Salt Lake City real estate market, read my recent article on "Real Estate Investment Opportunities Today" on my Dwell Utah Real Estate blog.

Finding the right property, at the right price, with the right amount of risk is important to making a successful real estate investment.  With current low interest rates, the opportunity for higher returns on your investment is even greater.  If you are interested in investing in Utah real estate in today's market,  I would be happy to discuss the current opportunities with you.  Just give me a call or send me an email.  I look forward to speaking with you!

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