Young and inexperienced? Looking for an investment property?
Deals can still be found near Salt Lake City
While housing prices in Salt Lake City continue to escalate, the dream of buying a home seems further away than ever for many first-time home buyers. So many are resorting to renting or buying townhomes or apartments. This is quite sad, because I think there is nothing better than having a great backyard that you can call your own.
Twenty-five years ago a decent single-family home could be bought in Millcreek or Sugar House for around $120,000. At that time, I was lucky enough to have my father in the real estate business. He found a property in Millcreek that was a Tudor-style very well built home with three levels, built-in bookshelves, a built-in shrine and a great backyard. A steal at $120K.
He told me this property was “a winner.” I snatched it up, found three roommates who paid my mortgage and essentially lived there for free for the next nine years. I was nineteen. I wasn’t old enough to drink, but I was old enough to have roommates who were a lot older than me who could pay my mortgage. But is this still possible today?
Not in Salt Lake City or even it’s less expensive neighborhoods. Entry-level homes in Salt Lake City, the smallest of the small, the most basic of the basic are going for around $400,000. Even adjusting for inflation this is far more than it was in 1995 and far out of reach for most young adults in their late teens or early twenties. But real estate can still be found in Utah. If I were nineteen again, with my first decent job I would still be doing everything I could to buy.
What could you buy for an investment property near Salt Lake City?
I thought I would do some research.
Here is a property that looks like nothing more than a manufactured home and carport in West Valley going for $79,900. Certainly, West Valley is not quite the cool neighborhood like up-and-coming Poplar Grove, Rose Park or Glendale — but West Valley has some advantages. It is home to Utah’s second-largest city. There is a huge Salt Lake Community College campus on Redwood Road in West Valley, and there are actually some nice neighborhoods with well-kept yards and some nice amenities in West Valley.
Without driving by this property I can’t say how great the neighborhood is, but it’s just a short distance from the amazing Jordan River Trail and it’s just a block away from Kings Pointe Park. With three beds and two baths, if I were nineteen, I could still have two roommates footing the mortgage (each paying $400– which is a steal), and I could offer them a discount for helping to paint or retile the bathroom.
The biggest problem with the above home (from an investment standpoint) is that it doesn’t have a huge “upside potential” because it’s a manufactured home and it’s already been fixed up. But if you just want a cheap place to stay for a few years while you finish up your electives at the community college it is certainly going to raise in value by a few thousand and you could easily rent it after you leave.
Let’s examine another potential home
The above home is in West Valley for $250,000. But unlike the previous home it has a lot of upside potential. Of course the drawback is that it costs three times more than the previous home. A guy in his twenties would need to have a good job with roommates with decent jobs because he would need to charge around $600 per person in rent (for two roomates). But if this front entry were fixed, it could be a decent home and actually “cute.” Being in a neighborhood with other brick-and-mortar homes rather than manufactured homes would offer the benefit of a greater potential property value increase.
Also, this house has a rundown yard that could easily be fixed up and made into a backyard bbq bachelor pad.
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