Building wealth takes time, planning, investment, and a ton of work. One way to build wealth is to invest in real estate. Right about now, some people are groaning sarcastically, “Oh, yeah with all the thousands I have just lying around, right?”
It’s true that some types of real estate investments can be very costly (and many of those costs come up before you have made a dime). Investing in a Salt Lake City duplex is a great way to get started with less cash than you might think.
No, this isn’t an intro to some “Get Rich Quick” scheme, but I’ve got some information that might help you see this could be a great way for you to get started.
Utah’s economy is Roman Reigns strong, and the rental industry here is booming. Investment Banking Industry Scholars World (IBISWorld) recently published an article online singling out Utah for its growth, gross state product (GSP), and low unemployment based on 2022 numbers. According to IBISWorld, “In 2022, the state of Utah ha[d] a population of 3,399,940, having grown an annualized 1.8% over the five years to 2022, which ranks it 2nd out of all 50 US states by growth rate.”
The organization calculated Utah’s gross state product (GSP) at $185.2b. From 2017 to 2022, the GSP increased by 3.7%. Utah businesses employed 1,930,947 people with average annual employment growth of 2.5%. Wait for it, “The top three sectors by total employment are Manufacturing, Real Estate and Rental and Leasing, Professional, Scientific and Technical Services,” IBISWorld said.
With great diversity, multiple institutions of higher learning, and world-class medical centers that employ hundreds of medical professionals – this place is an investor’s dream.
Okay, why a duplex?
Let’s talk about why buying a duplex in Salt Lake can be a smart financial move (I’m glad you asked).
Cash Flow: Who doesn’t love cash flow? If you buy a duplex and live in one half, you can rent out the other unit to help pay your mortgage, as well as maintenance and repair expenses. If you buy right, you might be able to generate a positive cash flow (that means you’re making money on your investment every month). Remember, the same is true if you are in a position to rent out both units.
Lower Down Payment: Remember when you rolled your eyes at the beginning of this article because “Most people don’t just have that kind of money sittin’ around”? You might be surprised to learn a duplex is a multi-unit property. That means you could qualify for a lower down payment than would be required for a single-family home. If you are a first-time buyer hoping to get started in real estate investing, this is a great way to do it.
Appreciation: Real estate tends to appreciate in value. If you hold onto your duplex for several years, you might be able to sell it for a profit.
Tax Benefits: Tax benefits such as depreciation, can lower your overall tax bill. Discuss the amount you can deduct for maintenance and repairs, management, accounting, and more.
Diversification: Owning a duplex can be a way to diversify your investment portfolio. The stock market feels a little sketchy from time to time. The best practice is to diversify your investments. Real estate is certainly impacted by major fluctuations in the stock market, but it isn’t as closely tied to it as many other investments.
How to buy a Salt Lake City duplex
This is doable. Start planning today. Following are three very basic steps to get started.
Step 1: Determine your budget
Before you start shopping, determine your budget. This will help you narrow down your options and avoid falling in love with a property that’s out of your price range.
Take a close look at your finances. Consider your income, debts, and other expenses to determine how much you can realistically afford to spend on a duplex. Once you are intimately familiar with your own finances, visit with one to three lenders. A lender can tell you if you are likely to qualify for a loan, how much you can borrow, and roughly how much of a down payment will be required. Remember to ask about closing costs (separate from your down payment) too. Even if you are not yet a qualified buyer, a lender can guide you through the steps to get qualified including credit repair, debt reduction, etc. When you’re ready, the lender you choose will provide you with a letter of pre-approval.
Step 2: Find a real estate agent
Once you’ve determined your budget, find a real estate agent who specializes in duplexes in Salt Lake City. Look for an agent who has experience working with investors and who understands the local market. I can help you find properties that fit your budget and investment goals (as long as they exist).
Step 3: Shop until you drop
With your real estate agent by your side start shopping. A buyer’s agent can show you any property active on the Wasatch Front Regional Multiple Listing Service (WFR-MLS). Check out a variety of properties and neighborhoods to get a sense of what’s available and what might work best for you.
As you tour duplexes, be on the lookout for potential issues that could impact your investment. For example, if one side of the duplex needs significant repairs, that could impact your ability to rent it out and generate income. I can help you identify red flags and determine if a property is worth pursuing.
Step 4: Get financing
Once you’ve found a duplex that you want to buy, a team of professionals from the mortgage, real estate, inspection, and title industries will walk you through every step of the exciting process to buy a Salt Lake City Duplex.
Still have questions? Give me a call or send me a text at 801-673-3333 and we’ll talk. Or, send an email to me at [email protected].