Have you ever thought about investing directly in real estate? Not indirectly, via one of those REITs (real estate investment trusts), but actually buying your own property and renting it out? Many of you may have thought about it, but never got started because you weren’t sure A) what market to buy in, B) which real estate agent to work with, or C) how you would go about finding tenants, renting it out, and managing the property.
I’m here to tell you that A) Salt Lake City is a great market to consider, B) you should work with me as your agent, and C) I can help you with all of that!
I grew up in Salt Lake City, but moved to the Bay Area in 2010 to get my master’s at Stanford (in case you’re interested, I completed two bachelor’s degrees in math and econ and then got my master’s in International Comparative Education). After getting a job, paying off my loans and saving up some money, I invested in a duplex in SLC in 2016. I knew the market, properties were half the price as the Bay Area, and some simple data analysis showed that rents could cover all costs.
After methodically analyzing hundreds of potential properties, I narrowed them down to the three that seemed to be the best deals based on price per square foot, rent amounts, and location. I flew back to SLC to check them out, made an offer on two of them, and got under contract with one. I ended up purchasing my duplex for $440K at 5.5% interest, which had a monthly mortgage, insurance, and property tax of about $2200. This duplex already had tenants in it who were paying around $2800/month, so immediately I had a monthly cash flow of about $600. Today, this duplex is worth over $800K and the market rent rate is around $5600 for both units.
In 2020, I renovated one of the units after some tenants trashed it (you live and learn). (Fortunately, the interior was already extremely outdated, so I would have wanted to upgrade it anyway.) Following the renovation, I was able to rent it out to some great tenants who are still there today. Around the same time, I invested in a condo. Then in 2021, I purchased another duplex. Besides being very outdated inside, the basement unit was contaminated with meth. So I renovated the entire thing and rented it out, again to some really great tenants.
See some before/after pics here.
I never hired a property manager, though I did end up flying to SLC a couple times during each renovation. I just felt like a property manager wouldn’t do as good a job staying on top of things as I would myself, despite me being remote. And why pay a 10% monthly fee if I could do a better job? It has all worked out well for me—2% of the time, there were periods of intensity during the renovations and filling them with new tenants, but the other 98% of the time has been pretty chill.
I still think SLC is a great place to invest. Utah is ranked #1 in “Best states overall” by US News and #1 in Employment, #3 in Economy, and #6 in Job Growth. I see evidence of this all around—there are so many new apartment complexes springing up to meet the increased demand for housing. Utah is also focusing a lot on building the startup scene (see startup.utah.gov), dubbing the Lehi area “Silicon Slopes.” It’s definitely not anywhere close to the OG Silicon Valley, but it seems like their efforts are paying off with more and more people moving here for tech jobs.
If you get the chance to visit SLC, you’ll see for yourself that it’s just a lovely place to live. The crime rate is low, the mountains form a gorgeous backdrop with excellent hiking just a 15-minute drive away, and everything you need is easily accessible (for example, my 1-year-old’s day care is just a 1-minute drive away, health care is within a 5-minute drive, and even all our friends live within a 10-minute drive). There are indie coffee shops, local breweries, and cute brunch spots. Every summer, residents look forward to the many festivals: the celebrity-studded Sundance Film Festival, Pride, Living Traditions, Nihon Matsuri, Shakespeare Festival, and Jazz Festival, to name a few.
But one of the biggest reasons people visit or move to Utah is to ski or snowboard. Snowbird, Alta, Brighton, Solitude, Park City, and Deer Valley resorts are all just a 30-min drive away. Having snowboarded for years in both Utah and Tahoe, I can attest that Utah snow is superb. And the world agrees—the 2002 Winter Olympics were held in Utah, and Utah will host them again in 2034.
I moved back to SLC in September 2023 to be closer to family, and have loved every moment of being back here. I promptly got my real estate license, both for my own investment ambitions and to be a resource for anyone else who wants to add real estate to their portfolios.
With interest rates where they are today, it’s harder to find a property that will have positive cash flow. But, it’s still possible, especially if you find a property that needs some work. I often see properties where if you put in around $50k, you will add over $100k of value and likely be able to increase rent by 30-50%. My instagram @kormanikrealestate has some examples of this.
Additional upsides to investing in property here include:
- Utah is very landlord friendly. There is no rent control, so you can increase rent according to market rate. Last year, rent rates for two-bedroom units rose by 15%* and I anticipate they’ll continue increasing at a high rate while your mortgage will remain constant.
- (And economically, no rent control is a good incentive for builders to continue creating more housing. Every day I drive by brand new and under-construction apartment complexes. One implication of this is that single-family homes, and even multi-family homes with yards and garages, will become increasingly in-demand as they become relatively more scarce.)
- Appreciation is a solid bet given Utah’s increasing popularity.
- You can plan to refinance as soon as interest rates drop. If you buy a fixer-upper and renovate it, you can do a cash-out refi and recoup what you put in. That’s what I did in 2021 with my first duplex, and then I used those funds to purchase my second duplex.
If you’re now itching to get pre-approved and start making offers on properties, or just learn more about the SLC real estate market, hit me up. For those of you who need to think a bit more about whether or not this is a good idea, as a statistician, I say let the data be your guide. Here’s a spreadsheet I put together for a client as various properties came on the market. My analysis indicated that cash flow upwards of $1000/month was definitely possible with plenty of properties.**
If you want to start seeing and analyzing what’s on the market now, I would be thrilled to start this analysis for you and check out any properties you want to see in greater detail.
So now, what if you do decide to purchase a property in SLC—then what? How will you get tenants and manage it, especially if you don’t live nearby? I’m happy to help you do this yourself each step of the way, or, if you really feel like you need it, help you find a great property manager.
I created this online course to tell you exactly how I found, renovated, rented out, and managed my SLC properties remotely. Clients get it for free. You become a client when you contact me, we have a conversation about what investment you’re looking for, and I start the property hunt for you by creating a search on the MLS so you can start receiving listings as they hit the market. Of course, there will never be any obligation to purchase anything. My goal is to build a trusting relationship with you so that I can help you reach your financial goals, with real estate as one avenue for doing so.
The best investment on earth is earth.***
* As of May 7, 2024
** This analysis gave a birds-eye view to help estimate potential cash flow per property, after which we could zone in on specific properties to make sure it would be a good investment (look at the exact location, do a walkthrough, etc.). I focused on properties < 2000 sqft since they have a higher rent/sqft than larger properties. Estimated rent for each property was based on the average rent/sqft of rental units < 2000 sqft in that specific city (e.g., Salt Lake City proper, Millcreek, Lehi) as of April 9, 2024 (see “4/9/24 Rent Analysis” tab). Average rent/sqft in each city was based on all marketed rentals on that date (see “4/9/24 For Rent” tab), which I extracted from Zillow using AI tools. You’ll see I also performed a more comprehensive analysis on March 17, 2024, extracting all properties for sale and for rent and conducting an analysis by city to determine which were most likely to generate the highest cash flow.
*** Quote by Louis Glickman, real estate investor and philanthropist
Kormanik Real Estate 