A lot has happened to the fourplex market in the last several months in Boise Idaho. Prices have definitely gone up, investment mortgage rates have also gone up and rents are as strong as they've been in a long time.
So why have prices going up?
1031 exchanges and cash buyers are the main drivers of the increase in demand for fourplex investments in Boise Idaho. Cash investors are pulling money out of the stock market and bank accounts. In addition sellers are reluctant to sell because of increasing prices thus leading to smaller inventory numbers. Therefore the increasing demand and the shrinkage in the inventory have led to increasing prices. The logic might be, “Should I leave my money in a bank account and make nothing or negative or should I put my money into a real estate investment that will get me a 5 to 6% cap rate?”
Interest rates are up
Interest rates have gone up as we all knew that they would. Click here for a link to an article that explains it better than I can. The mortgage rates for investment properties have gone up over 5% to approximately 5.125%; that’s a 1% jump from rates in Feb of this year. That will put a downward pressure on cash flow before taxes for potential investors. Investors will likely have to live with lower cap rates which at this time are still much better than leaving your money in a bank account or putting your money in to the stock market casino royale.
Rents are up!
According to the Southwest Idaho chapter of NARPM rents have increased significantly year over year over the last 24 months. So why are rents increasing in Southwest Idaho? There seems to be a steady and strong influx of people moving in from California, Oregon, Washington and other cities and states around the northwest as well as from the east. In general people are finding that the quality of life in Boise Idaho is very desirable. Rental vacancy rates in Ada County are as low as 3%. Therefore rents are increasing steadily which is serving to counteract the downward pressure from increasing mortgage rates on cash flow before taxes.
So what's the moral of the story? The moral is that overall rates, which are still ridiculously low rates, are increasing; inventory is short so therefore if you are looking to buy AND a good rental property comes on the market in Boise, be ready to jump. It remains a very good time to buy as well as potentially sell. So if you're interested in doing either that is buying or selling your fourplex or other investment properties in Boise Idaho please give us a call at 208-939-9033 or send us an email.
The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
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Regards, Michael Hon, REALTOR®CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422