First rental property in Sioux Falls

[Kelly Byrd]

My wife and I considering a multi-family or SFR rental in Sioux Falls. Once concern is that it's a smaller than other metro areas we're looking at so information seems a bit harder to come by. I am hoping to connect with folks on these forums that are willing give referrals for turnkey operators, property managers, agents who know something about investment property, contractors, or maybe just talk numbers and expectations for the overall rental market there. Obviously if anyone has specific deals, I'd like to hear about those too!

We're serious buyers, but I want to be upfront that this will be our first RE investment deal. I invested in some note funds last year, no actual property yet. We'd like this first deal to be pretty hands off, not looking to rehab, and we'll place it with property manager. 

[Kelly Byrd]

Congratulations to you!

Before our offer, we did little on the property itself. We took a look at the neighborhood, crime data, average rents, Google street view, and the pro forma from the seller, which I then turned into a "worst case" set of numbers I believed in. Based on that, we made the offer.

Since then, we have asked for things like this:

- Current rent roll

- Last twelve months of income and expenses (sometimes called a trailing 12 or T12)

- Bills to match against the T12

- Last two years of IRS Schedule E for this property.

- Evidence of property taxes being paid (the county website will tell you this)

- Leases, tenant application info

- Home/Building inspection

- Appraisal

- Bank statements

I'm very new at this, but from what I have read, the idea is that few owners will have every document, and you don't actually need everything because some documents have duplicate info. What I am trying to do is look at all the expenses, income, and security deposits and then trace it back to an actual bank deposit or bill. We ended up asking for explanations for several categories on the T12 in an effort to figure out what was an improvement vs what is likely to be recurring expenses, then I re-ran my spreadsheet with those numbers to make sure we still wanted to purchase. For the leases and tenant info, I wanted to know who I was inheriting and verify actual rents being paid in the T12 vs the lease.

I'm sure I missed something we asked for, or missed something altogether. Hopefully others will chime in with better info.