If you live in (or are planning to move to) Utah and want to buy a rental property, you’re in luck. The Beehive State is home to some of the hottest real estate markets in the United States.
Utah has a burgeoning tech industry, which creates new jobs and attracts more renters. The state’s tourism is doing well too, increasing the need for transient accommodation arrangements. As the state economy grows, so will land values. Since inventory remains low, the demand for housing is still strong enough to justify relative high rent prices.
If you seek FHA multifamily financing services, you can buy a property with several rental units provided that you’ll also live in it. While the timing seems perfect, understand that failure is still a possibility. Being a landlord is no joke, and real estate is only a lucrative venture to investors who regularly do their homework.
To minimize the risks of owning a rental property in Utah, use these expert pieces of advice as your guide.
Think About All Costs
Only two words decide the fate of any business: cash flow. Regardless of how much rent you collect every month, you can’t turn a profit without controlling your costs. Pay attention to fixed expenses, such as mortgage, tax, insurance and maintenance, since you can’t avoid or skimp on them no matter what.
Moreover, make sure to set aside enough funds to cover unexpected costs, like emergency roof leakage or unscheduled furnace replacement. Calculate your projected costs to the last penny to determine how much income you may generate.
How do you know if your rental property is a viable investment? Follow the 1% rule, which states that a property must bring in monthly income equivalent to 1% of its price. You can only break this rule when you’re positive that the property is likely to appreciate fast and the rent isn’t going to drop soon.
Pick the Prime Spot
Be picky when choosing a neighborhood. Uncover anything you can about your prospective area to forecast its growth and anticipate the headaches it may bring you. Sometimes, you need an analytical mind to connect the dots and discover the negatives of a location no one likes to mention. For example, a rather high insurance premium may suggest that the area is prone to flooding and other natural disasters.
Choose a Property Objectively
Don’t buy the first property you fall in love with. Curb appeal is a major renter magnet, but don’t forget about structural integrity. Have your prospective multifamily piece of real estate professionally inspected to reveal its deep, dark secrets. This way, you’ll know whether the seller’s asking price is reasonable and what improvements still need to be done.
Learn About Property Management
Being a renter in the past doesn’t make you a qualified landlord. Be prepared to handle demanding responsibilities and make hard decisions for the better of your business and other tenants. One of the primary skills you need to master is identifying a high-quality renter. You would be surprised how much hassle one bad tenant could cause to everyone in the building.
Invest in yourself before investing in a rental property in Utah. Although no one is born ready to be a landlord, you can succeed in this endeavor if you dedicate yourself enough to it.