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All Forum Posts by: Benjamin Aaker

Benjamin Aaker has started 15 posts and replied 1495 times.

Post: First Deal! - 4 Plex Break Down

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

Congratulations on getting this deal under contract!  I think it is a great deal in Sioux Falls in this market. I blog about this and I see 0.8%-1.2% as my typical (rule) right now in Sioux Falls. I agree with @Jennifer T. that you should account for vacancy. South Dakota Multifamily Housing Association is a great resource and very reasonable to join. Their most recent survey is from July of 2019. The average rent for 2/1 is somewhere in the mid $600 - $900 range. Your sqft is smaller than typical so you would be at the low end but you still have room to increase the rents. The vacancy rate is 7.73% as of this survey. I'd write each tenant a letter upon closing stating that you do intend to raise the rent, but slowly. I do a maximum of $25 per year if they sign a new lease. You will hang onto the property for a while, I suspect, and you are at least close to cash-flow neutral, so you are not in a rush to increase the rents. Hopefully these are good tenants and they will see that you are keeping the place up and want to stay.

As far as diligence: scope the sewer, take off a toilet if you have to. Might want to consider asbestos with the age of the property. Make sure that you explicitly state that the deposits turn over to you at closing. Interview the tenants.

Best of luck and let us know how it goes.

Post: 2020 in Sioux Falls South Dakota

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

I agree, at least short term. The market in the Midwest generally continues with cautious optimism. We rarely see the large dips that others do. I think we will see a scary dip nationally within the next few years. At that time, the big companies that have gotten into the Midwest market will sell off their portfolios as rents decrease. That will be a great time for the buyers who are interested in the longer play. Right now, the short game is what you should be playing.

Post: Historic District Homes as Rentals

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

I don't know much about historic districts, unfortunately, but you asked for any things to watch for: Lead has already been discussed here and it is unlikely to be a problem if there is no flaking or rubbing areas on the paint. You are buying a duplex, so you will have a tenant who might not be as concerned about it as you. They could cause some issues if they try to do some modifications. You should get a test done in your diligence.

Have your inspector pay close attention to the wiring. Those old houses will have knob and tube if not updated. Knob and tube usually works just fine but future buyers can be scared off and insurance companies sometimes get queasy about it. While they are looking around in the attic have them look for evidence of bats.

Basements like to flood. If you have a basement, make sure the inspector looks for evidence of water. This time of year, it'll be dry as a bone down there, but in the spring it can be a lake.

Some of those old houses will have remodels where they put in vermiculite insulation in the walls. This contains asbestos. As long as it is in the walls it is not a problem for health but once you do remodels it will be a major cost. Find out now if it is present. It will take putting a hole in the wall(s) to find out so make sure that the seller is comfortable with it. Don't just inspect the attic, vermiculite may not be there. Another place that they put asbestos is in floor tiles. Same deal here: as long as you don't disturb them its probably not a problem. Hopefully you have all wood floors in your prospective property and don't have to worry about this.

If this is a place you intend to live long-term these issues are not as acute. Since it is a duplex, you may have tenants that are concerned about it. Find out now to avoid problems later. Good luck. Those old houses can be beautiful and more solid than the newer ones if they are well cared for.

Post: Creative Problem Solving for First Time Investors

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

If you are looking for an owner-occupied place for the better loan terms, it is difficult in this area. If you are handy you can get one to fix up but even finding one at the 1% range takes a lot of time. As @Joe Splitrock says, off-market will likely yield a better deal for you.
Have you considered medium multifamly? If you don't mind having one outside of Sioux Falls but within driving distance, there are still deals to be had every so often. 

Post: Looking to Learn more About Real Estate in Sioux Falls SD

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018
Hey Nickolas, I think we can find a way to work together. I'll send you a PM.

Post: South Dakota Tax Haven

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

Thanks @Troy Albers I tend to agree with you. All South Dakotans are still liable for federal taxes. The benefits we enjoy come from living here. Not a lot of people. A lot of beautiful land. A lot of snow. No state income tax / capital gains tax. It's our best kept secret. Just try not to let the word get out.

Post: Real Estate Investors

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

Hi Melvin, welcome to South Dakota. It's always nice to see our neighbors on BP. Hopefully I'll see you at one of the meetups around town. Good luck in real estate. And football!

Post: LLC startup - is lawyer needed?

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

For your first one, I recommend an attorney. I used Legalzoom and it was very cookie cutter but if you are a single-member LLC than you can change it as needed and reuse. If you are bringing on a partner, I'd suggest an attorney. I use Eric Kirkvliet at Lynn Jackson. He has also done a PPM for me.

Post: 7-Plex closed in Sioux falls

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

Congratulations Adam! Multifamily is the way to go, in my opinion. Best of luck with your new property.

Post: New in Sioux Falls, SD

Benjamin Aaker
Professional Services
Pro Member
Posted
  • Rental Property Investor
  • Brandon, SD
  • Posts 1,508
  • Votes 1,018

Hi Michael,

Welcome to BP. And investing in Sioux Falls!