Why you should be investing in rental property in Utah
There are a lot of property investors out there. More than 28 million, to be exact. So why do most people still consider it something you only jump into when you have a lot of extra cash to throw around?
Property investment is actually one of the most stable financial decisions you can make — especially if you’re buying in an area with sustained economic growth and a steady real estate market.
After Zillow named Utah one of the hottest housing markets in 2016, the Beehive State has been on the radar of property investors worldwide. Last year, Utah ranked among the top five cities for investment properties. Here’s why:
1. There’s a booming tech industry
Dubbed “Silicon Slopes” for it’s growing startup scene and large mountain ranges, companies like Adobe, Twitter, Microsoft, and more have all put down roots in Utah. The growth prospects and aggressive state tax breaks have consistently put Utah on the map of best states to do business in. Plus, Utah is home to plenty of other billion-dollar software companies like Qualtrics, Domo and Pluralsight. And where there are jobs, there are people that need housing.
2. The population is growing — fast
Partially due to its reputation as a new tech hub, Utah is experiencing above-average growth at a steady rate. In the past five years, Utah has seen a 9 percent growth ratein population and a proportionate increase in people who rent.
Moody’s expects Utah’s job growth to be third best in the nation over the next five years, while EMSI forecasts the Beehive State to be top in the nation for employment. Thanks to this projected growth, investing in a property to rent or flip has become a pretty safe bet for positive cash flow.
3. Tourism dollars are plentiful
Southern Utah is famous for sprawling canyonlands and grandiose national parks, while Northern Utah is home to some of the best ski resorts in the U.S. Thanks to Utah’s vibrant outdoor scene, renting out property short-term is also a viable option for property investors.
According to Forbes, Provo, Utah is among the best cities for Airbnb investment this year thanks to fairly low house prices coupled with high rent prices. The average property price in Provo is $249,900 and the median monthly income from Airbnb hovers around $1,700; making the cash-on-cash return almost 5 percent.
4. There are a large number of renters
USA Today reported that nearly 80 percent of renters in Salt Lake City spend at least 30 percent of their income on rent. While that may seem low compared to cities like New York and San Francisco, that’s actually slightly higher than normal for a mid-sized city.
The increase in renters is driving rent prices up and Salt Lake City is quickly becoming a place where it’s more affordable to rent than to own. If you’re a property investor, that means now is the perfect time to invest in rental properties.
5. Lower inventory = homes sell for more
Nationwide, housing inventory is down as much as 11 percent in the country’s top 100 metro markets. This demand for housing can be felt especially hard in Utah, where many homes are being sold over the list price after multiple offers.
While this might scare off some potential investors looking for a great deal, it also signifies that the properties will continue to appreciate and that flipping a house or becoming a landlord can be a lucrative venture right now in Utah’s most populated cities.