All Forum Posts by: Darson Grantham

@Kenneth Taylor yes your contractor background can be an amazing link to optimizing real estate investing as you likely already know! 

I appreciate the tag Ryan! We hold a monthly meetup and also a weekly meetup locally here in Des Moines.

2nd Tuesday is the monthly event at a local restaurant.

Weekly on Friday mornings is the other at a local coffee shop.

Both are great events that if you pour in, you'll be poured into!

 Love this... "Ohio or Iowa is enough". Well if you need Iowa let me know! 62% of my units sold in 2023 were investor deals (and I had 50+ transactions). I don't agree with the sentiment that Iowa is boring, but it sure is stable. 

Unfortunately I don't know anyone personally down there, but send me a message and I'll reach out to two of my clients that I know have properties down in Chariton to see if maybe they know someone. 

From my experience that small-town investing is very localized.  I've owned 8 units (two buildings) in SE Iowa and there was no good option for management and I had to develop my Rolodex of venders and people to help me with the properties.  I set up systems so that it was mostly operational virtually, but did have the occasional vendor job that needed hired out. 

The tenants didn't mind because I was a better landlord virtually than most landlords that were in town (small towns have many landlords with bad reps and bad properties).

Good luck, sorry I couldn't be more help!

Hi Lucas,

I hate doing this but when you say rural Des Moines area, what do you mean, specifically how far away from downtown Des Moines and if out of the city, what direction?

Congrats on posting here to gather advice from all walks of life! Its how I started in 2018 and starting convos with other investors be it in person or online is KEY to learning IMO.  Below I'll answer your qestiosn, the best I can!  If you want to know the lay of the land in the Des Moines area let me know!  I help a lot of folks from BP get started in the Des Moines Metro.

First - Does anyone have experience in these locations, or have other suggestions for us to consider?  - Yes I have experience in Des Moines, both as an investor and an investor-friendly agent.  (I host multiple meetups for investors throughout the city)

Second - Should we begin with single family homes, or try multi-family to start? How much should we invest in the first property or, alternatively, how much should we keep in reserves for purchasing other properties? if you are set on MTR, I'd say evaluate both types an learn the returns and pros and cons of each.  MTR rents will be different at a SFH vs Duplex vs 10 plex.   You have the funds it sounds like to do any of them here in Des Moines, so then it just comes down to which attributes to you prefer about each type of property. 

Third - if y'all are, or know of any investor-friendly agents in these locations that are open to talking with us, we'd love to get a conversation going. - As i said above, happy to talk! 

There are a handful that you can find online but most of them are word of mouth only, which is super funny to me as a guy who LOVES marketing in all kinds of ways.

But to answer your question, Top Shelf (Mike Subman) would be a top recommendation, along with PMI (Chris Fisher). Both have solid businesses, not too big that they forget who they work for, but not onesy twosy managment that is barely a business and needs to nickle and dime to stay afloat.

@Nathan Faselt, not typically if you are going to occupy the property.  Commercial lender wont have a few terms as good as owner occupied (2-4 unit) properties.  

Reach out to Tyler Osby’s team. (Just google them) Tyler and is team are very familiar with house hacking. 

ah, thanks for explaining, I can attest, definitely not legal here in Iowa.  That has to be negotiated with the listing agent. Same result, but a different process.  Although, in my experience agents who discount commissions their own OR the other agent's commission are typically not at the same level of providing service and advice.  I might get some hate, but after a couple of hundred transactions in my short agent career, is VERY transparent, you get what you pay for. 

Now being from iowa I’m curious what is a buyer rebate? 

Long post alert! :).  Pros and cons of built for purpose AND pros and cons of Conversion rentals in Des Moines Iowa. @Cody Hawkins

Pros of built-for-purpose:

Age/condition: In Des Moines area, a built-for-purpose duplex is typically newer 1940 and newer, which means the issues that come up are issues a typical plumber can diagnose and repair with minimal tenant disruption.

Energy efficiency: Built-for-purpose duplexes are designed and constructed more energy efficiency in mind, which can lead to lower utility bills for tenants.

Tenant Profile: Typically because renting a built for purpose will seem more like renting a house than an apartment, commonly your tenants will be more qualified and you’ll achieve more rent.

Cons of built-for-purpose duplex:

Higher cost: At one point I rean the price per sq ft of built for purpose vs conversion and built for purpose was 2-3x the price per square foot. But don’t let that confuse you, that does not mean it is 2-3 x lower return on investment.

Fewer properties: I’m not sure if this is true data, but I’ve noticed over the last 5 years watching the Des Moines Market, many more converted properties come onto the market than built for purpose giving you fewer choices if that is the asset you want to choose.

Pros of conversion:

Lower cost: Back in the 70’s when most of these conversions took place, it was WAY cheaper to do that than build a new duplex from scratch. New duplexes today are selling for 275K per side and funny as that sounds, there are many investors buying those yet today!

Unique character: Older buildings often have unique character and charm that can be preserved during the conversion process.

Return on Investment: This is a broad-stroke statement, but the NOI on conversion will almost always beat a built for purpose on paper. In real life many investors will argue that repairs add up quickly depleting that NOI. Thsi will depend a LOT on the guts of the property and can only be determined during walkthrough.

Many more available: These come onto the market weekly and although not always everyone’s first choice, if correct due diligence is taken, are great first time investments.

Cons of conversion:

Wear and tear: Existing buildings may have wear and tear that needs to be addressed during the conversion process.

Quirky Layout: Since the design was left up to whomever originally converted the property, many of these are really strange and when you have strange layouts you get strange tenants.

City Rental License: Many owners of these properties do not spend money making them nice, they commonly have much differed maintenance and thus putting a target on their back from the city rental department. Now this can be alleviated if the property is unkempt, that doesn't remove the fact that the City of Des Moines in general is not excited about having conversions in their City. If a conversion doesnt get their rental licensed renewed, the city will not reissue a new one and that building will likely be turned into a single family home.

Inefficient systems: Older buildings may have inefficient systems such as heating and cooling that need to be replaced or upgraded.

Utilities paid by owner: In addition to the last bullet point, if you the owner are paying utilities and you have an inefficient house, that is costing you a lot of extra expenses that are not typical for a built for purpose.

With all this said, neither property is right or wrong, you just need to know the risks and rewards of each property. I’ve personally owned 4 conversions and sold dozens of them around Des Moines. It is very property specific, if you can find the right one, it will catapult your investing business, while buying the wrong one can frustrate you to no end!