And it’s no secret that affordable rental properties are hard to come by in Bozeman these days. The vacancy rate for rental housing in Bozeman is effectively zero. High demand is allowing landlords to charge a premium for rentals, and the average rent amount is around $600-$800 per bedroom. At the time this article was written, there were only 12 rental listings in the classified section of the newspaper. Compare that to 2005 when there was an average of 300-500 classified ads for rental properties in Bozeman on any given day.
While Bozeman’s growing population and subsequent increasing housing costs mean bad news for renters, it certainly is good news for property owners. The average sold price of a single-family home in Bozeman has been steadily increasing since 2012 and has increased more than 50% in the last five years. Property values are at an all-time high and with the increasing population growth, university growth and visitor growth, there are certainly no signs of a slowdown.
PROS & CONS
ADVANTAGES OF OWNING AN INVESTMENT PROPERTY:
* The value of your property will likely appreciate over the long run.
* A mortgage payment is generally significantly less of what the equivalent rent would be.
* You might be able to deduct your interest payment, property taxes and depreciation on your income taxes.
* Rental tenants will generally cover your cost of ownership while building wealth for yourself.
* You can build additional sweat equity by making some of your own improvements to your property.
POSSIBLE DISADVANTAGES WITH OWNING RENTAL PROPERTY:
* Your rental income could be taxable.
* You might have to pay capital gains tax on the gain of your rental property when you sell it.
* Out of state owners may need a property management company to look after their rental property. This could be around 10% of the gross rental income.
* You do have the added expense of property taxes, insurance, and repairs during your ownership.
* You may have to deal with bad tenants and vacancies.
* You must abide by Montana's Landlord/Tenant laws.
Every person's financial position is different. That's why potential investors need the advice of an accountant, tax attorney, and a local real estate agent to locate the best property for their financial position. Investing in a home in can be a great way to avoid the difficult rental market in Bozeman, or cash in on the demand for rental properties. With Bozeman’s substantial growth reflecting in real estate values, it undoubtedly is a great time to invest in a home. Click here for a market report update of home values in Bozeman.
For a great investment opportunity near Montana State University, check out the South Row condominiums. These tastefully designed, Bozeman condominiums feature open and efficient floorplans, a contemporary design, high-end finishes, energy efficient components and euro-style windows that highlight the mountain views and draw in abundant natural light. With a variety of 2, 3 and 4-bedroom floorplans, and a fantastic location, these condominiums make the ideal investment property.