Central/Southern Iowa Real Estate Investing
Flipper/Rehabber · Saint Charles · Member since 2020 · 11 posts · 2 votes
Hello
I am new to investing and currently have 1 SFH that I rent out in Creston, Iowa. I am just looking to network and have discussions with other investors in what I call the "small" towns in Iowa. Basically anything south of Highway 92. I like the idea of building my portfolio outside of the Des Moines Metro as I feel they have more restrictions and that the commuter communities are easier to deal with and a growing trend for people to move to. Again just looking to connect with others in my area to build relationships with and discuss investing strategies. Thanks!!
@Ross Bauer
Ross I invest in Centerville Iowa. I think you will find amazing cash flow in small towns but not much on appreciate. If you need anything let me know.
Agreed with @Carl Cisler, I have property in Fairfield and it cashflows well but little appreciation. Also, I’d recommend targeting one town so you can build a list of contractors to help you out, instead of 10 small towns and needing to find 10 contractors for each type of job.
Also, being a good non-slumlord in these small towns is rare and if done right you’ll gain a lot of respect in the community.
Thanks for the responses. I appreciate the advice. I in no way will be a slumlord and I see plenty that are. I will only buy units that are nice or I can make nice. I have been involved with home construction for the past 20 years but I got out of it as a career 10 years ago to pursue my "dream" job!! I have known for years real estate was a good source of income and just haven't had the means to jump into it until recently. I have friends/connections in every trade so finding contractors won't be a problem. I also plan on doing the majority of the work myself until I get a good amount of cash saved up to hire it out. Right now I know sweat equity is where I can make the most profit. I live in St Charles which is a 15-20 minute drive to West Des Moines/downtown. Most of what I do for real estate investing will be with in 30 minutes of the Des Moines metro. I have set my perimeter for investing at 1 hour from my house but may close that distance. The houses in my area right now do not have a problem with appreciation as the housing market as of now is crazy. I am wanting to flip the next investment as my wife isn't huge on rentals just yet but she knows the long term benefits. I think a flip would get her involved in the business as she loves designing and is not afraid to work. With my job right now I get 4 days off every 5 days so I have some extra time to get involved in a project. The problem is finding a house in my area that I can afford to buy and rehab. The housing prices do not match up well for a rehab. There are deals out there that I have known will make money and I hesitate for some reason and I watch as others flip them into a profit. Anyhow a long response but kind of a background on me.
Hi Ross I think I've gotten some of your mailers!
I've heard DSM referred to as the 'black hole' and that's where we primarily operate. The main issue I have with 'mid market' surrounding cities, and I won't name them specifically, is that there's not the depth of the market to support top of market rents. Or maybe put a different way, the spread of doing really quality work doesn't pay off nearly as much, as compared to a larger metro such as Des Moines. I'm not comparing Des Moines to NYC but although you see much higher rents in NYC, you have pockets that are multiple times the average. In some of the towns that have been thrown out above, you often have only a $100 spread in the rents for a nice vs. dumpy place with the same measurable features, such as SQ FT, bedrooms, etc.
What this pushes landlords in these areas to do is focus on doors/volume, instead of focusing on the things that really build value.
The lack of regulatory oversight, I get - as a business owner. However, in many cases this oversight brings with it more consistency and keeping the housing stock up, over time - which is one thing that drives appreciation. It doesn't always work that way, but a lot of folks that are either intimidated or value the lack of oversight from a business perspective, are not adequately appreciating what they are 'giving up' by not having this.
Thanks Jim for the reply. I completely understand what you are saying. I think some of the rent prices in my area will go up as ownership of rental properties switchws hands. I currently rent(long story with a divorce n remarried) and my wife has lived here for 8 years prior to us meeting. Her rent hasn't changed one time in 8 years. I believe the reason being is the current landlord is cash flowing just fine at the current price so there is no reason to increase. Don't tell him but the house we rent could easily be another $200-250 a month. But he has great tenants and many that have been there for years. I do believe as he retires and new owners take over the rent will increase. Hopefully I can be in position to be that new owner. L
I am not saying I wouldn't ever invest in the metro area but feel I need to get my base built up and more experience before trying the Metro market. I listen to bigger Pockets and read alot of material on real estate investing and many times think that what most of these investors do is in a greatly different market than where I am. I am happy where I live and definitely won't ever be moving to a different area. Also agree with the regulations keeping people in line. In my career I see many disgusting places that people live in and landlords profit off of. I feel it is up to me no matter where I am at to provide a service/unit that is quality. What I am talking more about is that I might not be licensed in everything(HVAC, electric, plumbing, etc)but I know how to do the work. For a beginner it can save me alot of money doing everything I can myself and I would never do anything shady.
I absolutely love the responses and the interactions from you guys that have responded!! It feels good to interact with people that think like I do about real estate. I get the "I would never rent a house" "it will get trashed" response from most of my family and friends so it's refreshing to actually discuss things with like minded people. My wife is an accountant by trade(currently has a clothing consignment store, that isn't open!!) So she can figure out the financial benefits but she is overly worried about tenants!! Anyhow thanks for the discussions!!
What is your thoughts on purchasing real estate to either flip or hold right now? I personally believe it could be fine and as always depends on the purchase price. I just wonder if the prices will go down or if homeowners will be more willing to accept a lower offer in a month or two?
Thanks for the replies!! I am addicting to this forum already!!
Agree completely on the licensed trades cost stuff. It hurts sometimes to deal with them, but we've made it over the hump to where now when we're taking on major work/value add, even with those costs built in, we're able to do some cool stuff. Andrew Carnegie when asked about inspections and such, fully embraced them. In his view, it was free quality control and a way to market / build his brand. He did pretty well, so I'd invite you to change your perspective on the oversight as you grow.
I will definitely change to being less involved as I build my brand up. My goal would be to be the general as I still enjoy and want to be involved. I started this journey with a 15yr plan so I can retire and being hands off by then is definitely a goal. There is no doubt that skilled tradesman do better work and would be faster than me. Figuring in the cost for skilled labor to the rehab may put me ahead in time and quality. Which in turn builds my brand. Great advice and a perspective that I have considered but quickly dismiss cause "I can do it myself"