Out of state investing in Montana

3 Replies

Hey BP community,

My name is Jon McElyea, I am an investor and Realtor in Bozeman Montana.  I am looking to learn from and make connections with out of state investors.  Specifically I am interested in hearing the success stories as well as the deals that fell short while investing in Montana from out of state.  I would love to hear any investing stories from any state, however I thought it would be nice to get a conversations started about my home state, MT. I hope this post finds the few Montanans active on the site, however my aim is to connect with people outside of MT.  I am also happy to field any questions about the southwest Montana market should they arise.  

Hello Jon,

I’m from Bozeman but I currently live in Boston. I recently bought a duplex in Belgrade (I can’t find anything in Bozeman that cash flows!). I was able to purchase the property, do some minor repairs and get it rented within 18 days. I’m currently self managing it.  I hope to find another investment property to buy this year.   Please keep me in mind for any off market properties that cash flow!

Best 

Hey Jon!

I am back in town and would love to meet up with you. Sorry for the delay!

We started investing in Bozeman almost 12 years ago, and with a lot of work and sweat equity, we got our college LTR to cash flow a bit, but it was hard. Renting to college kids gets old. Even if parents co-sign, they just don't understand. Kids are kids, and kids destroy things (I am a father so I know this to be true). So I didn't even feel bad about switching to STR when the time was right.

We started 2.5 years ago in the STR business and never looked back. So we followed a tried and true method of REI (buy a multi with an FHA) and our success was elevated by the high tourism traffic and high real estate appreciation rates in our area. Sweat equity is like gold. We 'cashed out' our 12 years of 'sweat equity' in the form of a loan against one of our properties, to buy a commercial lot down by Yellowstone (Bozeman's regulations don't make it worth it anymore, and the city has shot themselves in the foot there...). We just broke ground finally on our first of 8 cabins going in down there.

Since we started, we have doubled our business every year, and will probably take a 2 year stabilization period after our second property is built up, to pay down some loans and debt, and then once the time is right, and our credit is back up, we plan on gobbling up some more prime properties once our market prices are back to sane levels. Right now, you need to be very careful about what you are buying in this area. For a single family, just looking for a house, there are MANY options in fantastic locations all over town, but for an investor... not so much anymore.

Overall, I still think Montana and Bozeman areas are great investments. As an agent, I see our market still appreciating, even with a correction. I think the word is out. Basically, as real estate becomes over valued across the country, people turn to the 'Last Best Place' because our market is still a deal compared to those other markets. Our standard of living is incredible, our schools, our low crime rate, and the scenery... Why wouldn't someone move here? I am thankful the prices are as high as they are, because otherwise we would be over run at this point. I think it is a travesty that a hard working Montanan can't afford a home in this town... But that could be said about many locations in this country. Our little town has it much better than others, even though it seems a little crazy right now for the blue collar folks looking for homes in Bozeman.

If you figure that, an investor in California, bought their house for $500k about 15 years ago, has watched their property's value double, or even quadruple, since that time, and so then they can sell and buy a beautiful house in Bozeman with cash, then it starts to become clear. People are escaping the crowded coasts, running from the over priced developments. I think we all remember 2008-2010 very well, and no one wants to be stuck in that position again. 

So those are just some of my thoughts on our market and where I think it's going. Investing here is tough, but doable, and still remains attractive when compared to other areas in our country. I can't speak to whether or not this type of hyper-development is a good idea in such a place as Bozeman. (Like the rate we are drawing down our aquifer is definitely not sustainable for example) But the thing I am certain about, is that I am definitely taking advantage of the appreciation while I still can. 

Good luck, and let's chat soon!