“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

Thank you to all the clients who have trusted us to help them sell and buy rental properties, apartments, fourplexes and homes this year.

Each sale also creates a donation to the Idaho Food Bank, the 2020 selected charity from all of us at Swope Investment Properties.  We've collectively contributed to 31,000 meals being provided to our local community.  And you made this happen by promoting and sharing in our business and referrals.

Clients are the heart of our business, and that's something we never forget.  Your repeat business and referrals are what keeps us rolling and client statisfaction is the number one motivator of the Boise Investment Properties Team.

And thank you for telling your friends that we were the team they could trust to get the job done, and to work hard on their behalf.  It worked!  They heard you, and then they hired us.

You helped Boise Investment Properties Team acheive sales of:

     8 - Apartment buildings/complex - including 3 partnership deals

     8 - Fourplexes

     3 - Tri Plexes

     9 - Duplexes

     21 - Single Family Rentals - many of which are then rented out within days of closing

     12 - Single family Residences (homes for owner occupancy and not rentals)

You've created 2 top producing agents in the entire investment properties category in 2019 for all of the Intermountain MLS* (and we're on target for similar results and rankings in 2020)

Two agents in the top three spots in the esteemed Swope Investment Properties brokerage, which according to the MLS Sales Data, holds the longest-running record for top producing investment-focused brokerage.

If you haven't given us a GOOGLE review and would consider it, or haven't read our reviews, please do so.  Some individual reviews are also scattered around Zillow, GOOGLE and Facebook.

We are so grateful to be your number one choice as real estate agents, and to serve as your investment real estate resource in the Boise are.  Thank you

Your Boise Investment Propeties Team

Stacy A McBain, Associate Broker, Swope Investment Properties, stacy@inflowpr.com, 208-921-0630

Tony A Drost, Associate Broker, Swope Investment Properties, Tony@BoiseInvestmentProperties.net, 208-794-6424

There were only 5 four plexes sold within Ada County (Boise, Meridian, Eagle, Star, and Kuna) in October.  Two were in Meridian and the remaining three were in Boise.  The average sold price was $660,000, with a high of $807,500.  Cap rates continue to trend downward as values increase faster than rents.  Although Boise rents continue to rise, they are doing so at a much more moderate rate.   Due to the low inventory, we believe cap rates will continue to trend downward.

The average Gross Rent Multiplier (GRM) for Ada County four plexes continues to climb at a steady rate.  The average GRM in October was 167 with a low of 152 and a high of 174.

At what point will investors find the returns too slim and what effects will that have here in Boise?  Will there be a big push to increase rents to make the investments pencil, or will investors continue settle for less cash flow?

Please contact us to receive the full report and graplhs.

Tony A Drost, Associate Broker, Swope Investment Properties

208-794-6424, Tony@BoiseInvestmentProperties.net

Stacy A McBain, Associate, Swope Investment Properties

208-921-0630, Stacy@inflowpr.com

Recently one of our colleagues at Swope Investment Properties, forwarded an article from the Wall Street Journal titled, Tech Workers Take to the Mountains, Bringing Silicon Valley With Them.

Without a doubt, COVID has added to Boise’s explosive real estate.  People are realizing that they can work remotely from anywhere, and as this article suggests, they are choosing to live in areas like Boise.  This new segment of migration has fueled the already hot Boise market.  What effects will this have on Boise, in addition to the double digit real estate appreciation?

This certainly can explain the rise in home prices, but why are the multi-family investment properties also increasing at record levels?  Low supply is an obvious factor.  This year, the Boise Investment Properties Team has been selling residential homes to those relocating to Boise, however many of those home buyers are also investing into the area as well.  Bottom line, Boise real estate is in high demand, regardless if its a single family home or an investment property.

A copy of the full WSJ article is below.

The diaspora of tech talent is apparent in towns around the Rockies, where wealth and business activity are rising, along with property prices

Tech staffers from the Bay Area are relocating across the country, bringing to their new locales the woes and upsides that go with some of America’s highest-paying jobs.

Employers including Facebook Inc., FB 2.75% Twitter Inc. TWTR 6.04% and Stripe Inc. have liberated their staffers, allowing them to work from wherever they want. As a result, some are leaving the Bay Area to live in Western mountain communities that they had already been drawn to, like Boise, Idaho, and Park City, Utah. The transplants are adding more wealth and business to their new hometowns but also widening wage gaps and raising real-estate prices.

“You do see some California hostility here,” said Lauren Williams-Elstein, 32 years old, who works for the fintech firm Mosaic and moved from the East Bay to Boise last month.

In Bozeman, Mont., with a population around 50,000 as of 2019, the median home price has risen to $515,000 from around $432,500 in a year, with inventory shrinking sharply, according to the Bozeman-based Gallatin Association of Realtors.

Amy Alvarado, an agent with boutique real-estate company Engel & Völkers AG, said that around 95% of her clients since the pandemic hit are coming from the Bay Area. Many make all-cash offers.

Les Craig, a partner with the venture-capital firm Next Frontier Capital, sees both downsides and advantages of arriving tech workers.

A transplant himself from Baltimore in 2015, Mr. Craig said the arrival of tech-industry remote workers can complicate compensation in a place where there is already a gap of $20,000 to $30,000 between local workers in other industries and those who work in tech. “If you have out-of-state workers coming in that are making proportionally even more than that, it accelerates this problem even further,” he said.

But his firm, which focuses on early-stage investments in tech companies in several Western states, has invested more than $28 million in 19 Montana tech companies, which together have raised an additional $174 million. On the salary front, with the increased venture-capital spending, he said, “I think we’re going to start seeing some equalizing with out-of-state jobs.”

He also sees any talent influx as a positive. “I hope for us that it means we finally forge a tech culture in the local ecosystem,” he said—a time when there are enough people in tech to create a natural networking effect. Three of his own friends, all in tech, have relocated from the Bay Area and New York since March.

In the ski-resort town of Park City, Utah, Casey Metzger, owner of the Top Shelf mobile bartending and consulting service, said all the newcomers have been a boon for local restaurants with outdoor dining, bike stores, guiding companies and construction companies. However, they also drive up costs for properties, he said.

“If we don’t pay attention to low-income housing, we’re going to be in trouble,” said Mr. Metzger.

Tiffany Fox, vice president of marketing for Summit Sotheby’s International Realty, said that in the past three months, she has had a handful of people knock on her front door to ask if she’s open to selling her house. (She’s not.)

She said every weekend in town now feels like the Fourth of July—good for some but not as good for others. While the real-estate market pulled in $1.49 billion from July through September, residents are posting comments on the local Facebook group expressing concerns about the newcomers, she added. “People are mourning Park City,” said Ms. Fox.

Jon Jessup, who founded the e-commerce software startup Cloud Conversion in Park City 12 years ago, said every time he takes his children to the park he meets tech workers who recently landed from San Francisco and New York. He recently played golf with a fellow ex- Oracle Corp. employee.

“Normally I’d have to go to San Francisco to meet guys like me,” he said.

Mr. Jessup had already had a couple of recent transplants ask his advice on starting companies of their own in Park City. But Covid-19 and the work-from-anywhere era have caused him to rethink his own operation: He’s closing his Park City office and making his workforce fully remote. He also thinks anyone luring talent to Park City will have an uphill battle, as far as salary goes, because of the rising cost of housing. “They’d have to make $300,000 a year to be able to buy a house here.”

Back in Boise, the software company Clearwater Analytics has already seen a handful of its 1,200 workers leave for big tech firms that offered them more money but didn’t require them to relocate. “We’re expecting this to be a trend that could actually be a significant issue for us,” said Cindy Blendu, chief human-resources officer for Clearwater, which has 1,200 workers globally.

Having long been an office-centric company, Clearwater implemented its own flexible remote-work policy that it will continue past the pandemic to stay competitive.

“You now have all these people moving in from different markets bringing in all different types of compensation,” she said, adding that she’s continually evaluating whether her firm is keeping up with Boise’s going rate for tech labor.

“Last year I would have said, yeah, I feel really good we’re paying market,” she said.

Your Boise Real Estate Investment Team

Tony Drost, Associate Broker, Swope Investment Properties

Stacy A McBain, Associate Broker, Swope Investment Properties

This morning, we were forwarded an article, written by Catie Clark with the Idaho Business Review, titled Boise's fast-growing rents still a bargain.  Like many of you, the title got my attention.  I also really liked how she summarized the data, which I used in my own little brief summary below.

Having numbers, what do they tell us? Both studies compared their rents for September 2019 vs. September 2020. Apartment List calculated an annual increase of 5.5% while Advisor Smith calculated 8.6%. Basically, the numbers tell us that rents in Boise went up. This is not a surprise.

The Apartment List rent growth for the nation was only 1.4% for two-bedroom units, so prices are going up in Boise a lot faster than elsewhere.

Compared to median rent for the whole country of $1,106, Boise’s median two-bedroom rent of $1,021 is both good and bad. It’s good that the cost is living is lower here in Boise. It’s bad because all those people, whose states have riots, smoke instead of air, and no jobs want to move to Boise, which seems to be driving rents up even further. And I’d like to add, that it is increasing the cost of housing, not just rents.

Boise made the top-twenty list for fastest growing rents, in the no. 17 slot.  Using the traditional formula of allocating 30% of gross income to housing cost, and assuming total tax burden of 9.3% from Forbes, then a median two-bedroom Boise apartment would require an annual salary of $45,000.