All Forum Posts by: Kirsten C.

I suspect it has more to do with houses sitting on the market too long and now they are being offered for rent. 

I looked at turning it into a MTR and there are 205 furnished rentals available starting any of the next 3 months. 55 that are more than 2bed 2ba. And the prices are similar for a furnished house with some 2bd and 3bd renting for 1800/mo. 

I live in Rapid City and have owned duplexes in the past. Currently my only investment is a commercial property, but now I am trying to rent out my moms house. It has a basement apartment so its actually a duplex but the main house is 3bd/2 bath plus an office. 2080 sq/ft plus  storage in the basement and the 2 car garage exclusive to it. It's in a premium neighborhood of 1-2 acre lots westside with its own hiking trails. 

Anyway, I've been informed by property managers that the market for a 3/bd/2ba sfr in this town is 1800/mo! The same house would cost you 300-400K to buy and supposedly there has been a shortage of housing here. 

They are building apartments that fill up immediately and they rent studios for $1100/mo. 2 bd are $1465 and there doesn't seem to be many 3b/2ba that we can find that aren't in not so good neighborhoods. Just a few years ago when our kids were looking to rent a house, everyone had turned them into STR or medium term rentals. There were no houses available no matter what the size. Now there are quite a few on the market but most are on the north side which is least desirable.

@Kai Kopsch

And adjust for odd features, like extra large lot, or a shop building, or a special location.

They compare the house to house and don’t account much for lot size unless it is a substantial acreage.

It simply states in the Walk through inspection: 'All personal property, including refuse, not included in the purchase price shall be removed by the Seller prior to closing. I don't see any mention of leases or potential leases in the PSA. I also do not think any lease was signed with the current owner and the business buyer. They are arranging a meeting between us and our real estate team and the seller. I have not contacted an attorney yet. 

We have only owned duplexes up until now. We are in the process of buying a large commercial building that we plan to section into 3 units and rent 1 unit to our s-corp contracting business. The other 2 units will be leased.  We had the option of 'taking' the dying ceramic business, but declined. The owner warned us that the 2 giant kilns were placed in the building by crane 60 years ago and could only be removed by cutting apart so if someone bought the business they could not take the kilns.

Now,10 days prior to closing, he has informed us that he sold the ceramics business to someone including the kilns and the thousands of molds etc that are occupying nearly all of the 12,000 sq feet and that the buyer would like to occupy 1 of the units to include the area with the kilns. This was presented to us a week ago with some questions as to how much rent would be for the space and the kilns etc. We said we would consider it, but had concerns about insuring the old kilns and that the current occupied space would need to be reduced to the approximately 1/3 of the building that they could afford. Now he said he sold him everything including the kilns and warned us to not be too lenient with the potential tenant on timeframes, because he "takes his time " and is currently not responding to phone calls or condensing any of the molds and stuff that is spread out everywhere.  The current owner now says he can't move the stuff because someone else owns it.

My realtor advised that he made moving the kilns his problem now, or I could lease the property to the buyer but I can't do background checks etc on the tenant until I own the property. I'm starting to be concerned that I am buying a building with potentially what amounts to a mega squatter with kilns that cannot be moved.

I guess it's possible that he has a better offer from the business buyer and he is trying to scare us out of the deal, but what are my options here? I'm not liking the risk of the potential non-performing tenant. If we just say no, the building needs to be empty upon closing, the closing will definitely be delayed further and we need these winter months to make the changes we need to occupy, carry out city requirements, etc. before our summer contracting business ramps up. 

First, If you have not incorporated your flipping business, you need to look into that immediately. Becoming an S-corp will save you thousands of dollars in self employment tax. I highly recommend 'The Tax and Legal Playbook' by Mark Kohler. (no affiliation)  If saving taxes is your goal, that will be huge, but its also a very good investment to own the property and rent it to yourself and others. This is usually done as an investment on the personal side, while your business (preferably an S-corp) pays rent to you. Your tenants also pay rent to you, not your business. This is income is then reported on the K-1 as a long term investment.

@Brady Aman

I think it’s hard to find people to clean them. Maybe I just didn’t know where to look but I didn’t get any answers to my request for a shared hosting on Airbnb. The cleaning companies that I called said they couldn’t take on more than one or two because they were always needing to be cleaned at the same time or something, or they just didn’t do them at all. The people I know who have vacation rentals, clean them themselves unless they own a campground or resort.

@Bryan Beal

That’s exactly what I was wondering. Investors had to see this coming with all the liberal policies in California and I’m sure other places too. Like Michigan! I don’t understand why the people of California have not gotten rid of Nancy Pelosi!

The market in Rapid City and the surrounding area is sky high right now. There is far more demand than supply and people from California and other states keep moving here and they are snatching up the houses as soon as they hit the market. You can not make a good ROI here unless you find a wholesaler and I have yet to find one.