All Forum Posts by: Brandon Sexton

Thanks everyone for the replies!

@Anthony Wick I will reach out to Luana and see if they do properties over 4 units, thanks!

I have been trying to find a conventional mortgage option for the purchase of a multifamily property of 5-10

Units with a purchase price of $300,000-$500,000. The property would be located in the Des Moines, Iowa area. I've reached out to many banks but it seems difficult to find a lender willing to do this type of loan. The banks I have identified offer 5 year fixed rates with 25 year amortization at 5-6% and 30 year fixed at 6.75-8% with the purchase of discount points. All loan options have been offered at 75-80% LTV. Are there any banks that people have had good luck with that offer good rates on this type of loan?

Thank you!

@Andrew Johnson I agree with with your approach to buying small suburbs and not traditional small towns. This is a good strategy on multiple ends because there is more demand and job opportunities. There is also more potential since your suburb may be in the path of progress which can lead to increased property prices and rents.

@Tiffany Ralston I like your idea of calling the local city to get more information on city planning and current trends. There is much less reliable information out there about small towns as compared to large cities and most information from small towns would be from the the local or state governments. How do the local towns present this information to you? Do they give you a stack of documents or do they make small "cliff notes" that give you all of your required information in easy to digest methods?

@Hadar Orkibi That definitely makes sense and I think my focus is midsize towns. I see that you are located in New Zealand, do you do any real estate investing in New Zealand? @Jeff Kehl Following the path of progress seems to be the best way to invest in small towns. One thing I’ve noticed is that small towns that are in the main path of progress are already seeing prices rise. I know it may be a little riskier but I feel like going towards areas that will be developed in the future but aren’t the headline towns may be a good strategy. It seems that it’s not letting me tag people so I apologize for that.

@Gino Barbaro I agree that small towns can often be “company towns” and they do great when the company is doing good but if there are lay offs or the company leaves then the town begins to dwindle as people search for better opportunities, such as Newton, IA which is well known in Iowa for being a former company town to Maytag. Small towns at least in Iowa have been on the decline for decades as people grow up and move to cities in search of better opportunities. Which is why I think it may be safer to do small town investing in diversified economies or within commuting distance to a larger city. @Rod Khleif Than you for the tips! I think property management would be more difficult or expensive to acquire as compared to doing so in a sizable city. Self-management would be a great option as long as the town is within a reasonable distance. Another thing you pointed out is in regards to the local rental market. I like your idea of “testing out” the market with rental ads before acquiring a property. That method would definitely help give you the data you need since it will be difficult to get accurate rental data in small towns. There are definitely many challenges with multi family investing in less populated areas especially when the deal looks great on paper but the real situation may be vastly different. Which helps to affirm that secondary and tertiary markets may have the best mix of risk and return for my goals. I also love your podcast and it has definitely helped to push me to learn and grow more in the multi family arena. Thank you for all that you do in regards to investing education.

Christopher Derr seems like small town investing is working for you. Are your properties within commuting distance of decent size towns such as Mason City? I don’t have a problem with purchasing in an area that is within 30 minutes of a sizable town because there will be jobs available and there will be a choice of different property management companies. Have you found it difficult to hire property management outside of Mason City?

I currently reside in Des Moines, IA and aim to purchase small multi family properties 4-20 units. I believe that Des Moines is a great market but many others are also starting to notice and invest here. Because of this I have expanded my scope to also look to other midsize cities in and around Iowa such as Omaha, Cedar Rapids, and the Quad Cities. During my property search I have come across many properties in small towns. Small towns have the pros and cons such as they are cheap and there is less competition but also obvious cons such as lower rents and uncertain volatile futures due to jobs coming or going. I do not plan on investing in small towns but it is sometimes quite enticing due to low prices. What are some of you folks doing in regards to investing in small towns such as strategies or horror stories. Thanks in advance!

The growth is basically in the same areas as they have been for the past 10 years (Western Clive, West Des Moines, Waukee, Johnston, Ankeny). The past 5 years have exploded with the growth moving farther West, North, and the Eastern burb "Altoona" is finally taking off. As others have mentioned there is some gentrifying such as in downtown, Ingersall, East Village, and parts of Beaverdale, amongst others. Population growth, job growth, and rent growth are all looking good but obviously you need to be familiar with the part of town you want to invest in. 

Let me know if you need help with information on the area.