Boise Idaho Real Estate Investing

August 2022- Boise area home prices are up 15.3% year over year, but sales have weakened recently and it will soon start showing in sold prices. With higher prices, higher interest rates and inflation eating away at consumer confidence, our local market has turned quickly in buyers' favor.

The most significant trend in Boise area real estate is growing population causing a housing shortage and driving prices up. The exodus from California continues, but more people can now work remotely and are moving here for more affordable homes, low crime rate and low cost of living. Some say low wages too, but it is all relative- and our wage growth has been strongest in the nation recently.

As a result of the population growth, Boise housing supply was extremely tight- down to a 1-week supply at one point. This year, demand started to fall in May with spiking rates and inventory has jumped to a 7-week supply. It is unlikely prices will fall until we get near 6 months of inventory- triple the current levels. Despite the relatively cheap mortgage money and rising rents, cash flow is tight and investors have been forced to bet on appreciation, which paid off big over the last few years!

So why invest in Boise area homes now?

Reason #1 - Home prices are and should continue rising in the Boise area as the economy is strong, driving demand. Housing supply is still low and this will not change quickly.

Reason #2 - There is no bubble to burst in Boise home prices. Most major metros are experiencing low supply and jumping home prices.
This table compares Boise Median Home Prices to all major metro areas in this part of the country. For the first quarter of 2022, Boise's median home price is still well below the west and still lower than our closest neighbors- Salt Lake City and Reno.


Reason #3- These still low interest rates are 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 mostly 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 last recession was a good reminder that you may have to outlast a downturn lasting several years, so look for cash flow that is break-even or better (positive leverage) with a reasonable 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- compared to investors, there are 5 times as many home buyers with many low-down financing options.

Multi-family Income Property Where's the income? Every time I crunch the numbers on available multi-fam properties in and around Boise, I can't justify these prices, even with low mortgage rates. CAP rates under 5 percent? Might as well buy homes. After allowances for vacancy, maintenance and management, you'll need more than the minimum 20% down to achieve positive cash flow. This forces you to bet on rising rents or appreciation for a good return. (Fine for now. However, when rates go up, your resale value goes down on income properties.) These multi-fam properties can also be much harder to sell in a downturn because the already small pool of investors shrinks.

Fixer-uppers. Contractors or investors with skills, cash, credit & time can create great wealth by repairing/improving Boise area homes. Many older homes are needing repairs & updates. Buy them low, fix them to rent out and hold for appreciation and pay less taxes on long term gains. When you're ready to sell, then fix it really nice for resale.

Flipping homes. I've helped clients do it, but the necessary discount to cover resale costs and profit is extremely hard to achieve in this market without building in your own sweat equity. There are other challenges- requires larger investment, higher taxes on short-term gains, much higher risk than long-term investing.

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. One catch: you can't use the property personally. If your IRA can't pay cash for a property, there are non-recourse loans available, but they require much larger down payments and much higher interest rates, negating much of the tax-deferred benefits.

Why Short Sales Are Usually A Waste Of Time-  Priced for liquidation to avoid foreclosure, these are true distressed homes. Since home prices have been rising for years, there are no short sales today. I dislike short sales for my investors because A) it takes months 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 few, if any, 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.


Dan Rowe has been licensed in Idaho since 1991 serving buyers, investors and sellers in Boise, Meridian, Eagle, Star, Kuna, Nampa, Caldwell, Middleton, Ada County, Canyon County, Treasure Valley and SW Idaho. Dan has earned the following designations: Accredited Buyer's Representative, Certified Residential Specialist and Graduate of Realtor Institute. Repoman also specializes in foreclosure properties including short sales, pre-foreclosures, foreclosed and repossessed homes and real estate; HUD, VA and Bank-owned REO and auctions.
Dan Rowe ABR CRS GRI
Dan Rowe ABR CRS GRI
Broker
911 Balsam Boise ID 83706