“Buy right, sell right”; seems easy enough.  Arguably, anyone that owns property in Boise, seems to have bought right.  But, how do we know when it is time to sell?  “When everyone is buying,” investors and contrarians could answer.

For some, the time to sell is now.

Ada County four plex cap rates closed the 2020 year with average capitalization rate of 4%.  In the last two months, three Boise fourplexes sold with a sub 4 cap.  It’s hard to imagine that investors are buying for the mediocre cash-on-cash returns; they’re chasing the appreciation.  We believe three factors have fueled the increase in prices.

Low inventory and high demand.

As of the day we write this, there are zero active fourplexes on the market in Ada County. Last week, there was one active fourplex on the Boise Bench and it went pending after 4 days on market with a list price is $697,000 for a 1977 built 4 plex. Two 2004 fourplexes, also on the Boise Bench,  just closed for $800,000 cash each, had been listed for $725,000. The increase was a result of bidding wars.

Fear of losing out.

Interest rates are low and Boise is repeatedly making headlines across the nation as a great place to live and own real estate.  Anyone searching to buy in the Boise area for longer than a few weeks can see prices on the rise.  Buyer’s that are repeatedly beat out in competing offers, see that they are chasing an increasing market.  To finally land one, they go strong and over the top.  It seems that everyone that ‘paid too much’ just months prior is already sitting pretty with added equity due to the appreciation building trust in the Boise market.  Many perhaps think that they can't do any wrong, except perhaps not buy.

Migration to Boise. 

The pandemic has fueled what was already an aggressive migration to Idaho, which directly affects the Boise real estate market.  The lines at the DMV are hours long and it is now taking weeks for new license plates to be issued.

How much higher can investment properties increase in value without increased rents?  To many, rents are already too high and seem unsustainable, considering Idaho income levels.  It is our belief, that the growth in our Boise investment property values will probably slow.  And it may be the right time to sell.

Your Boise Investment Properties Team

Stacy A McBain, Associate Broker, Swope Investment Properties

Tony A Drost, Associate Broker, Swope Investment Properties