Any biggerpockets members in South Dakota?

Question

Any Bigger Pockets members in Rapid City South Dakota?

I recently moved here for work and I'm looking to explore the area, and its Market.

Derek Dame · Answer

I have found that a lot of the MF's are pretty old too. Some appear to have some value. I haven't looked into many SFR's. I would prefer to stay in the MF game. It looks like I have stayed away from the high crime areas thus far. How many properties do you currently own?

Pete Krentz · Answer

I have trouble getting almost all SFR's within Sioux Falls to cash flow, it's a bit easier out of town. The market prices them out pretty easily IMO. Not to say it can't be done but it's more difficult. The MF's are working a little better cash flow wise. But something I notice in this town is that the majority of the MF's are old, decrepit, a dumps. Big old houses poorly converted to MF's with single LL paid utilities run into the ground by bad management and slum lords. The nicer ones a snapped up quickly. Look at crime maps. There are pockets in SF as with all cities that have high crime and tank rents because no one wants to live there.

Derek Dame · Answer

Hi guys,

I am from Bismarck, ND. I am currently working on closing a deal in Sioux Falls with a partner. Homes are priced a lot better than Bismarck. Are you guys still having trouble getting homes to cash flow? I am primarily looking at multifamily properties for my investments. Does anyone have any tips for an out of state investor?

Peter Kottwitz · Answer

Hi All,

I'm a commercial lender in Sioux Falls, but I grew up in Rapid City. I couldn't agree more with the inflated prices in that market. I've heard that a lot of people from California have been buying up the real-estate due to the low tax in South Dakota and really inflating prices. Investors in nearby towns such as Summerset, Blackhawk, and Piedmont have all but been priced out of the area.

That said, I think there's some good deals, the rental market is incredibly strong. They do play some political games with Ellsworth AFB, but closing it would force them to relocate all the B1's down to Texas, and I just don't think they are willing to put all their eggs in one basket.

If you're looking to pick something up with solid cash flow, have you looked just on either side of Haines Ave? You're going to be renting to a lower income demographic, but there are always people looking to rent in that neighborhood,  I know a lot of people have had good luck in the Valley as well, such as the Twilight and E 53rd area. the houses are relatively modern, and go for pretty fair prices.

@Mark Gruetzmacher, a lot of financial institutions will go 25 years, maybe even 30 on single family, up to 4-plex as long as the structure is in good shape. That may help your numbers, if you're having trouble making a 20 year work.

Mark Gruetzmacher · Answer

@Jae Cunningham  I have to agree about the inflated market.  Prices have gone up a bunch just in the last few years I think out here in the Rapid City market.  I totally think that the buy and hold market is tough out here.  The rough/bad areas of town the prices are all close to the $100K mark and since your in a bad area the rents suffer as well.  I have looked at duplexes that are in the 80-100K range, the numbers were tough then which was a year or two ago.  By the time you accounted for all the expenses and then based it on a 20yr loan which was most what places offered for investments, then numbers were too thin.  I was talking to another BP member from the area and he was looking at a duplex as well but by the time I explained the numbers why I wouldn't do it he passed on it as well.  Again it is tough I think.  If you ever want to catch a lunch or just a soda or something hit me up.  I am always open to meeting new people from the area.  Sure wish we had a REIA out here or local meet up.

Jared K. · Answer

@Jae Cunningham

Right now my goal is to flip a house this summer to mainly gain experience. I have met one other investor from BP in person so far and he has been a huge help

Chris Pohlson · Answer

@Joe Splitrock I'm just getting started.  Currently trying to finish a foreclosure deal as my first deal (going through the redemption period).  I'm looking at everything from multi to single family to flips.  Just trying to find something that makes sense.

Joe Splitrock · Answer

@Chris Pohlson if you go below $100K, you can make better returns. You have to pick your neighborhood carefully and accept that you have a different class of renter. I started in lower income areas because that was all I could afford, but today I don't invest in that class of property. Just too many problems and the money isn't worth it to me. Sadly even the bad neighborhoods now have houses at $100K. I am mostly buy and hold, but I would flip the right deal.

What type of property do you invest in?

Chris Pohlson · Answer

@Joe Splitrock, are you strictly buy and hold or do you flip as well?  I'm having trouble making the numbers work on buy and hold for single family in Sioux Falls right now.  Agree on inflated market.  Below $100k neighborhood gets a little suspect and that worries me.  Think it's a mistake to ignore the "lower income" market?

Mark Gruetzmacher · Answer

I'm in the area as well.  It is a tough market  here I think.  It's nice to see a few people on here from the area.