Well . . . that depends. Are you looking to Buy, Sell, Lease Out or Vacation Rental a property? Each segment is very different. Which area are you interested in? (Lease Out- in this text is reference to a traditional rental investment or non-nightly rental with a rental or lease period of 12+ months)
At the time of writing this post (2/28/21) there are only 252 ACTIVE residential listings available – the lowest priced is a 1 Br. 1 Ba park model mobil home in a 55+ community and at the high end we have a 5.58 million dollar estate with very little “Investment” properties in between.
Take out the 55+, the manufactured and the homes outside the traditional ‘Investment’ window ($400k or lower) and we’re left with only 38 units that an investor may want to look at! Only 15% of our available inventory is in the “investment range”! Are these good investments with healthy cash flows or are they too over priced with lots of difered maintenance issues?
Use of our ROI sheet and analysis will be more critcle than ever.
Is it possible to find a good investment property in the St George market today? YES. But we recommend the following:
1.) Be prepared. Your offer is most likely to be accepted if it is a CASH offer. Be prepared to compete and pay 3-8% above asking price. IF not a cash offer, then a good down payment.
2.) Be patient. Keep looking for good buys and not buying from the fear of scarcity. I beleive the market will have to make a correction. When the correction occurs rents may take a hit and you may find yourself upside down.
3.) When the opportunity presents itself – act quickly. Get the property under contract and then ANALYZE the hell out of it. IF you want to analyze the opportunity before making an offer and getting it under contract you’re going to find that your 48th in line. Get it under contract so its just you and the seller – no one else. Let the noise settle. It is FREE TO WALK AWAY if its not a good deal.
The agents at Escape Properties are exceptionaly qualified to analyze investment properties for rental analysis and looking at trends and risks as well as looking at ways to improve a property to find its best use.
Team Recommendation: Hold. Conserve CASH and watch for deals. WHEN the deal comes – we will need to ACT fast. Ask to be added to our WATCH list.
I have never seen a stronger sellers market before. YES – now is a great time to sell . . . . if you need the cash for another opportunity. Otherwise its a really bad time to sell. Don’t sell just for the sake of selling unless you have a plan for your capital. If you sell high and buy high it makes no sense. I recommend analyzing your cash flow first. IF you are making good cash flow then the smart thing to to is to HOLD on to the asset and look at ways to improve cash flow. (There’s an entire discussion on that topic in itself).
Example to SELL. I had a condo in Brian Head, a ski resort about an hour north of St George. I sold in less than 24 hours for top dollar. I was producing about $600/mo positive cash flow on the unit. (I only paid $32k for the unit and sold for $71k) I wanted the cash to invest in a non-real estate opportunity that produces about $1000/month instead. We invested in a food truck that someone else operates it and I hold an equity position in the asset too.
Example to HOLD. I have the opportunity to sell another property I own in Hurricane – a vacation rental. Its cash flows are much stronger then our Brian Head units and I could sell the unit easily for $450,000 today. (We paid $200ish) But we looked at the cash flow – and the properties utility – and have decided not only to hold on to it but we’re activily building 4 more cash-flow producing units. Because we already own the land and we know the vacatin rental market based on the properties location and amenities we know the cash flow on the additional investment will be strong regardless of what the BUY/SELL real estate market does.
If you have a second home in the St George area and you’re not currently leasing it you may want to really look at how strong the demand is at this time. If you’re not visting as often or the cost of holding is taking its toll on you (negative cash flow each month) this is a supper great time to lease – top dollar rents, tenants who want to stay long-term and willing to improve your property at their expense – all realities right now as the inventory for quality rentals is tight.
If your property values between $1 and $450-500k you’re in the range that using it as a rental investment may be your best use of the asset. Let’s take a look together and analyze your cost vs income.
All the associated risks of renting remain (damages/wear and tear etc.) but the revenue stream has increased substaintially and therefore is worth looking at. It is FREE to analyze a property and there is no cost to do so. Set up a time by clicking here to chat.
Vacation Rental a Second Home |
Thank you Gov. Newsom of California and other business killing Govenors for shutting down everything in your state and Thank You UTAH for staying OPEN for tourism – despite the goofy mask thing and other adjustments. Few people are traveling to Disneyland and the beachs etc. due to COVIDrestrictions but have felt the need to get out and social distance in our community. What has this meant for having a second home where you’re able to rent out on a nightly basis? A BOOM in occupancy and a surge in nightly rates! Business is strong and healthy and will most likely remain so for the next 12 months and beyond before returning to a ‘new normal’.
All this despite a surge in hundreds of nightly rental units hitting our market. IF you have a property that is zoned for nightly rentals and you’re not doing so – you’re missing our on very good cash flows. We should have a serious talk.
If you’re not seeing 60% occupancy or stronger – we need to talk. IF you’re at 80% occupancy – you need to raise your rates. We should talk. Click here to set up a time
BUT WHAT WILL HAPPEN after COVID? We anticipate a slowing – sure. But we also see that St George is no longer a secret either and between our amazing outdoor lifestyle venues we’re going to see a second surge as sports tourism returns in full force. In other words – come along for a great ride!
You may ask “What can I do to set my unit appart from the unit next door?” If all you are doing is competing on price – then be sure to pay down your debt service. Price wars always hurt the one with the biggest debt service payment the most. IF this is you then you may want to SELL to free yourself from the debt OR if you have a reasonable debt load you may want to look at THEMING your unit to stand out such that your rate and occupancy stay strong. (There’s a whole nother post on this topic by itself!)
Right now is the BEST time to have a vacation home in my 14 years of operations. Let’s get together to discuss strengthening your property. IF Escape Properties doesn’t currently opperate your property for you let’s discuss our services, rates and long-term success strategies. Let’s Meet: LINK