Dan Rowe ABR CRS GRI
Dan Rowe Realty
911 Balsam Drive Boise ID 83706
Boise Idaho Real Estate Investing
Nov/Dec 2017- This time of year, listings outnumber sales as buyer activity slows in the winter months in Boise. I call this bargain season for buyers. Nasty weather and holiday distractions reduce your competition and increase your bargaining power.
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. 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 and the economy is one of the strongest in the country, according to recent study by Forbes. Housing supply is low (extremely) and demand strong and this won't change quickly. Brisk home price appreciation is a sure bet for the near future.
#2 There's no bubble to burst in Boise home prices.
This table compares Boise Median Home Prices to all major metro areas in this pat of the country. Boise is 4th from the bottom in home prices. Boise's annual increase was 5th highest. Boise's median home price is still 14.2% below the national median and 38% below the west.
#3 These low interest rates are such an 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 with a cushion for vacancy & maintenance.
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. 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! And when rates go up, your resale value goes down.
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 older homes are needing repairs & updates. Buy them low, fix them up, rent them out and hold for appreciation and pay less taxes on long term gains. You also would not 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 less than 10 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.