Good morning Bigger Pockets,
My husband and I have own rental properties in Riverton WY, a very small town. We are wanting to branch out and are looking in the Rapid City SD market. My family is from the area so that combined with the market research we have done, it made sense to go that direction next. We are looking at several multi family units this weekend in Rapid City. I am looking for any advise that you may have for us in that market. Any areas of town we need to completely steer clear off? Do you know of any great property managers? We are working with Keller Williams Realty.
Also we are very open to any off market deals you may know off.
Thank you in advance.
Hello Kayla, I live in that market. Where are you looking at properties? What price ranges? Truthfully I think the market here sucks. Are you looking at duplexes or bigger units or ?
We are looking at properties right in Rapid all under 200K, all duplexes. Can you say more about why you think the market in Rapid sucks?
Guess it depends on what your seeing. But the market here stinks. Everything is expensive for what you get. Most of the cheaper duplexes are in rougher areas if they are cheaper. Once in awhile you will see a semi newer one with in the last 30 yrs but they are usually really expensive. Some of it I guess depends on how your financing goes also. Most places want 20% down and only do 20yr Amortization. So your payments are higher. I guess it depends on how much a month you want to make. Prices here have skyrocketed in the last 3 years a lot.
For an example a few years back I looked at a duplex that was maybe 90K. I thought wow, that's a low price. Ok so you do 20% down at 5% gives you a $475 P&I, $68 for insurance, $150 for taxes gives you $693. Add in 10% property manager, 5% for CAP Ex, there is another $100. Then you have vacancy and the cost of the PM to rerent the unit. So in that example it was bringing in $1000 a month for both sides. With out figuring in any extras you were at just $200 profit for an old run down place. I think rents are more now but in those cheaper older areas the rents are low. The tenants you get are not very good either. I think tenant turn over is higher because of the type of tenants you get also. I have never dealt with PM as I do it myself but I have heard complaints about a lot of them. A&A is one I would not give a chance just because I called them 3 times and emailed in regards to one of their clients selling some homes and NEVER got a call back. I do know 3 places off the top of my head that are smaller PM and I would check into.
Rents in this area are all over the board also. If you want to private message me some streets or address I would let me know what I thought about the area.
I have one rental in Rapid, a 2/1 SFH in the good part of town. I don't know the MFH market, but I do know that my property manager advised me not to raise the rent this year because the market is flooding with new apartment buildings being constructed.
One point you might be interested to know is that Keller Williams in Rapid used to be Kahler Prudential and they also had a property management division too which is still in operation, I'm pretty sure (I think it is Kahler Property Management or KPM). I chose not to go with them because they were rude to me. I use A&A and have been happy. NWE is another mgr in town, if they are still open, I haven't checked in a while, but I seem to remember they have more commercial and outlier residential. A new one that has popped up is Black Hills Property Management and I may be mistaken, but I think it is a one woman show and she is also a real estate agent for Keller Williams.
You might get an idea of what rent you could command by calling the Candlewood apartments, Kirkwood Meadow apartments (managed by KPM), or Harmony Heights these are west Rapid apartments that command nice rent, my guess is $850 - $900.
Ended up being a long post, and what I would tell you is that I exited the Rapid City market once the prices started to sky rocket in about 2012. Another reason I choose not to invest in Rapid anymore is because it got hit with yellow letters in about 2015 which means to me that there are too many out of staters who are now also competing. And the last reason, is that property taxes end up being a little higher in SD because we don't have an income tax here, so to make up for that revenue source, our State government takes property a little higher than other states.
Auto-correct got me on that last post darn it! :)
*taxes property higher...
Hi Jonathan, thank you so much for the information. We actually came last weekend and looked at about 6 duplexes but did not find the right match for us. I really appreciate the feedback from everyone.