For several years I have tried repeatedly to purchase a condo, house or apartment near BYU in Provo, Utah for my children so they don’t continue to live in unreinforced masonry structures that may collapse during the next major earthquake.
Each time I lose out to a cash buyer.
This week I made a full-price offer for a BYU-approved townhouse on 700 East. The seller’s Realtor said there were four offers and gave us until Monday evening so I increased my offer by $5k. Later I was told the owner accepted a cash offer.
Who are these cash buyers who can afford $230k to $270k without applying for a mortgage?
I thought perhaps these buyers are smart, wealthy LDS Church members who are looking for safe investments but at today’s real estate prices near BYU and the likelihood that the current real estate bubble will collapse, is a 5% cap rate really attractive for the wealthy?
Before making an offer, I consider the annual rental incomes, HOA fees, property taxes, mortgage insurance, announced HOA assessments, and maintenance (which is usually 20% of married and 25% of single housing income). To save money, I would not pay a property management company.
Unless a significant down payment is made, these properties produce a negative monthly return.
This morning I read how the Mormon Church invests. See the text I highlighted:
“The church invests the money, Bishop Caussé said, following the lesson taught by Jesus Christ in the parable of the talents, by investing in stocks and bonds, agriculture, majority interests in taxable businesses — including Deseret Management Corporation, which owns the Deseret News — and in commercial, industrial and residential property. Those investments are managed by a professional group of church employees and outside advisors.” — see Mormon leader shares details on LDS Church finances.
Is the Mormon Church buying real estate near BYU with cash? Whether they are or not, I cannot compete with cash buyers.
by Robert John Stevens, March 3, 2018