All Forum Posts by: Keith Knobloch

I would encourage you to reach out to Eric Kerkvliet.

Being from Sioux Falls also, I know they MUST have completed this study in the summer... :)  No, it really is a great place to live...it's just hard to be happy in January when it's only light from 7:30 am till 4:30 pm, it's 8 degrees, overcast with horizontal snow and 30mph winds all day!  Thankfully, the distinct seasons, the nice summers, and the rest of the factors do indeed make it a great place to live.  I am surprised it made that rank in the list!

There's nothing like having boots on the ground...whether you are in Sioux Falls or Chicago.  Numbers are useful, and can help, but often don't tell the whole story. @Erica, it sounds like you are optimistic, so just do your due diligence and try to err on the side of realistic.  You know the area, you know your comfort level, and you probably know the types of tenants you will be dealing with in a buy-and-hold scenario.  I am in a part of Sioux Falls that isn't the greatest, but I also am hopeful that in 10-15 years, it will be a different story, and my properties will be paid off (or almost) and will be much more valuable then.  In the meantime, I'm bringing home a little cash in addition to my full-time work, learning the business, and letting tenants pay off my assets.  All the best to you as you begin this journey...it sounds like you are doing your homework, so you should do great - just be prepared for the ride (no matter what city/neighborhood)!

Congrats Joe! I think you can do great in either of those markets, just be patient... Great idea planning ahead, also, don't forget to take full advantage of your VA eligibility--great for helping with house hacking. Do some homework and find out what kind of properties (think "outdated" rather than "distressed") you can buy with a VA loan and live in while you build equity. Wish I had started this at 23!

Here's a couple ideas:

1.  Negotiate an agreeable split on the final profits (after all is said and done - don't forget tax implications for you on the sale profits). Make sure you discuss what your roles will be ahead of time to prevent heartache going forward.

2. If necessary, build in a "base plus bonus" structure for him in case things go south for some reason...market tanks, etc.  Guarantee him a certain hourly rate for his time plus materials, and then a smaller percentage of the profits in the end.  

Even if you can't do much of the work, don't minimize the value of putting your money to work on the purchase, carrying costs, and the additional tax burden.  Never having had that much cash to do that part, I see the value in it...

I would base it on the neighborhood and the target market.  For an average home, I don't think they really add any significant value to a property unless it's a really cool set-up...private back patio area, etc.  What will it look like if you take it out? Like there's supposed to be a hot tub there?  

Michael,

While I was writing this up, Karen (and others) have already said some of the same things, nevertheless, here goes:

1. Find a partner/investor.  Figure out what you can bring to the table and find someone who can complement you to work with...maybe someone who has cash to invest, but no rehabbing skills; maybe someone who has some cash and more experience with construction but no time (who can oversee and advise you during the process).  I'm pretty new to BP, but this seems like a good way to connect with people.

2. Find non-conventional financing. VA (if you've been in the military), FHA, or rural development can get you a property with little or no money down, but you'll need to live there...and there may be issues with "distressed" properties not qualifying (although just outdated usually will). You can also look for sellers willing to do a contract for deed with little down...just make sure you get a legitimate contract in place to protect yourself (use an attorney).

3. Education and networking...same as Karen said above.  Eventually you'll find a way to get started.

Good luck!

Myself and several family members have used Duane Anderson with Hegg for multiple purchases/sales.  He's got a pretty good grip on the market for rehabs and rentals and is very easy to work with...he'll show you what you want and give you realistic, conservative estimates...not what you want to hear!

I'm planning on using Alpine Property Management for my rentals if/when I ever leave the area.  They are kind of the new kids on the block, but they are working aggressively to grow the business and I like the way they operate.  Last I checked, they were 8% + fill fees.  They offer an online dashboard and staff a couple handymen full time.

I currently live and hold rentals (as do my son, mom, and sister) in the area boxed by Grange Ave on the west, 14th St on the north, 7th Ave on the east, and 18th St on the south.  I've had rentals there for about 10 years now, and I think it's a good area...especially south of the RR tracks.  It's a good mix of rentals and owner occupied, there's a little crime in the area, but nothing like the E 10th - E 14th west of Minnesota area.  If you want to avoid tenant problems, I'd recommend trying to get larger units, even in the cheaper parts of town...they seem to keep tenants longer.  I have a 2bd/1bd duplex, and in 10 years, I'm on my second tenant in my 2br unit, and I've probably had 18 in my 1br unit!  In the central part of town, the further south you go, generally the better the properties get until you get near the college rentals around USF and Augustana.

Agree with Pete entirely, there are lots of "pockets" in Sioux Falls so it's tough to shop off a map alone...boots on the ground are good.

Thanks all for the useful info...same topic, additional questions--hopefully this is an okay place to ask them!

Here's the deal I'm looking at right now: I own my SFR and two duplexes in one town, but I've been trying to find a way to move across the state for a while now, and my day job will actually allow me to do it. I've just found a HUD home with good potential up for sale in an area full of rentals for a great price (agent expects it will be competitive bidding...). When I move, I will rent out my current SFR also since it will cash flow nicely. Due to circumstances, I can't move until after Memorial Day, but I could make regular trips to my "new home" across the state to work on it, moving full time this summer (hopefully in a much more livable state then anyway!). My questions are:

1. Will I be in trouble if it takes more than 60 days to do the rehab since I will be commuting across the state to do it (technically, one of my sons could live there full time...after the plumbing works anyway)? I might be able to "live" there more than 50% of the time, but I will miss my wife.. :(

2. Can one of my sons be the "owner occupant" if we all move into it together, but then he stays and we move out to a different property before the 12-month period is up?

3. Does anyone know if it is legal to refinance a HUD purchase if you paid cash before the 12-month period is up? I'd like to recoup expenditures as soon as possible...

4. Does my situation raise enough red flags that I should not pursue this?  I don't want to push the envelope as I am only a part time investor just getting started.  I prefer to avoid any and all legal trouble (please don't call on me if you see the dumpster there right away!).

What I'm doing would be very similar to what I did with the place I live in now, only my current home was purchased at deep discount from an estate, and held longer before refinancing and renting it out...

Thanks for any advice you can offer!