I am often asked about the rental market in Utah county, specifically the Provo-Orem area, because many of my clients are real estate investors. To gain additional insight on rent rates and factors to consider when purchasing an investment property, my team reached out to RESE property management (http://resepm.com/) to get their input on the current state of the rental market in Utah county and especially Provo-Orem.
According to Glen Harris, General Manager of Rese Property Management, rent rates have been on a gradual increase for the last 5 years in Utah county; however, where there is a prevalence of newly constructed multi-unit properties, as in Orem, rents of pre-existing units stabilize or even suffer as the market is saturated with the new builds. If given the option, renters will always lean towards a newer construction.
Those markets that encircle colleges and universities, like Orem’s own UVU and Provo’s BYU, are usually hotbeds for rental demand, but you do want to consider the effort and extra cost that can be involved in managing those units. For example, to appeal to the widest range of clientele, you would want your property close to BYU to be “BYU contracted/approved,” meaning you need to take a few extra steps to become a contracted housing provider, such as getting a business license. In addition, not surprisingly, property managers like RESE will need to charge a higher property management fee than the standard 8% as those properties are usually leased out by room and therefore require 3x the work.
You may wonder as I did how rentals fair in a fluctuating market since downturns are inevitable. Rese has noticed when the economy takes a dive as it did in 2008, rental rates may decrease, but not nearly as drastically as how actual home prices are affected. Typically in a “crash” or economy downturn, rents remain quite stable. During a recovery period, many home owners have lost their homes and prospective buyers are often afraid to buy, so subsequently, demand for rentals is very strong then as well.
If you’re an aspiring investor, here are a few things to keep in mind as you begin your investment property search:
- Location is everything! Focus on finding a property that is in a good neighborhood, meaning the area has a low crime rate and good schools with high test scores.
You can check an area’s crime activity/history here: https://www.crimereports.com/
And local schools with respective test scores here: https://k12.niche.com/
- Stick to properties within the 2-3 bedroom range; those are in highest demand in our county. Rese PM has found that for homes with any more than 5 bedrooms, the demand starts to sharply decrease.
- If considering a duplex, focus on side-by-side (2 units next to each other) properties as opposed to up-down (top floor and basement). Tenants in an up-down property tend to have greater conflict, and it is generally more difficult to rent a basement unit.
- Be prepared to hire a property management company. Speaking from personal experience, having a property manager can eliminate almost all of the headache of owning a rental property. From the notorious eviction to the late night phone call announcing a leaking toilet, a property manager provides the buffer between you and your tenant, thereby granting you the peace of mind to find another rental property!
If you’d like more information on managing your rental property, you can contact Rese Property Management at (801) 655-2449 or http://resepm.com/
If you’re considering acquiring a rental property, I’d be happy to help you begin your search! Call or text at (801) 830-1717, firstname.lastname@example.org