Dan Rowe ABR CRS GRI
Dan Rowe Realty
911 Balsam Drive Boise ID 83706
Boise Idaho Real Estate Investing
March 2017- Here comes spring and the rush! The most significant trend in Boise area real estate is our growing population. The exodus from California continues, but people are moving here from many places for our more affordable homes. low crime rate and low cost of living. Some say low wages too, but it's all relative.
As a result of the population growth, Boise area home sales are the strongest ever and supply remains extremely tight for housing. The hard winter really slowed down the new listings. Investors are facing small margins and tough competition from home buyers for starter homes, which are also ideal rental property.
So why invest in Boise area homes now?
#1 Home prices are rising in the Boise area. Housing supply is low (extremely) and demand strong. Brisk home price appreciation is a sure bet in 2017. A good reason to beat the rush and call me now.
#2 These low interest rates are such a rare opportunity to lock in long-term positive-cash-flowing, positive-leveraged investments in Boise Idaho homes and real estate. I can show you how to buy with 75-80% OPM (other people's money) and your renters will pay them off, while you get dependable returns from cash flow, tax shelter and equity build-up, before any appreciation (the big money). Ask me to show you the numbers on money-making properties.
How should you invest in Boise Idaho real estate?
First, think long term. The latest recession is a good reminder that you may have to outlast a downturn lasting several years, so don;t buy unless cash flow is break-even or better.
Rentals. I like best the single-family home held for income, equity build-up, tax shelter and long-term gains through appreciation. This is the safest way to invest in real estate and requires the smallest investment. Investors need 20% minimum down payment, although 25% down may get you the best interest rate. Single-family homes command the highest rent, lowest vacancy, and easiest resale to the largest pool of buyers for liquidity.
Multi-family Income Property Sounds attractive, but every time I look at the numbers on available properties, I wonder why the prices are so high for the income. Even with these near record low interest rates, the cash returns are under 5% at best. Low cap rates. Higher vacancy, higher maintenance and utility costs, much harder to sell than single-fam... it better cash flow!
Fixer-uppers. Contractors or investors with skills, cash, credit & time can create great wealth by repairing/improving Boise area homes, but the margins are slim for flipping. Many foreclosures are needing repairs & updates and are sold as-is. Buy them low, fix them up, rent them out and hold for appreciation and pay less taxes on long term gains. You also don't pay self-employment tax on capital gains from your labor.
Flipping homes. I've helped clients do it, but the necessary discount is extremely hard to achieve without building in your own sweat equity. There are other drawbacks- requires larger investment, higher taxes on short-term gains, financing limitations on flipped homes reduce pool of potential buyers, much higher risk than long-term investing. I'm not big on get-rich-quick methods. Or taking advantage of distressed owners to make your margin.
Use your IRA. The self-directed IRA allows you to utilize retirement funds to invest in real estate and get the same tax-deferred growth as your other investments. If your IRA can't pay cash for a property, there are non-recourse loans available, but they require much larger down payments at much higher than normal interest rates.
Why Short Sales Are Usually A Waste Of Time- typically priced for liquidation to avoid foreclosure, these are distressed homes. With our improving home prices over the last few years, there aren't many short sales left. Many look available, but already have accepted offers waiting for approval and you could only be a back-up anyway. I usually filter short sales out of searches for my investors because A) it takes too long for lienholder approval and you can't inspect, lock in a rate or plan a closing date until then. B) the price is not real until approved- lienholders often counter higher, C) property often not maintained and seller has no money for repairs, D) ties you up from making offers on another home unless you can buy both.
Foreclosed Homes- Now only 20 REO homes are for sale in Ada/Canyon counties (peaked at 750 in Dec 2010), including existing homes, homes with acreage, condos, townhouses- all owned by HUD, VA, Fannie Mae, Freddie Mac and private banks and lenders. Also the occasional bank-owned multi-family income properties for sale; duplex, triplex, fourplex, apartments.
Dan Rowe always knows where the best buys are in Boise ID real estate! Call today (208) 866-3481 to start making more money.