All Forum Posts by: Jonathan Harms

I’m trying to formulate an action plan to address the below problem I am facing. What are your thoughts? (TLDR at bottom) When I was getting quotes to switch insurance companies, the company I chose gave me premiums quotes on my rentals with deductibles of $1k each. A couple weeks later, I signed the contracts. A couple weeks after that, I got the policies in the mail and noticed the deductible had been changed from $1k to $2k on three (located in same area) of my four properties. (the 4th is 5 hrs away from other 3) In between signing the contract and receiving the policies in the mail (before I knew about the change to the deductible), a hail storm occurred in the town where two of the properties are located. I met with the agent to ask about the deductible change. He explained that was one of the reasons he wanted to meet face to face. He explained to me that the paper copy quotes he gave me included the $1k deductible, but the insurance company’s policy is to have a minimum $2k deductible on properties in that location. As a result, my agent told me he “made a business decision to protect his client” and he followed the company policy to increase the deductible as opposed to keeping it at $1k which he told me would make my policy defunct, therefore...no policy. I responded that I made the decision to go with this insurance based on the quotes he gave me, and that the increased deductible felt to me, like a bait and switch. He responded with empathy and said that he has done his best and that we should get some quotes on fixing the hail damage. If those quotes come to less than $1k to fix per property, then this deductible question doesn’t matter. He also said that I will get dropped as a client if I hold the insurance company to their $1k deductible they quoted me. In this scenario, it comes down to me paying $4k worth of deductible or $2k worth of deductible to get the hail damage fixed; that is if I prevail with holding them to their quote. TL;DR I switched insurance companies and the agent changed deductible from the $1k I was quoted to $2k on three of my four rental properties, then hail damage occurred before we could discuss this un-prompted change.

@Mike Stadel Yes, your accountant and @Kuba F is probably right about getting a South Dakota Contractors Excise Tax license. Source, I used to work for the SD Dept of Revenue and oddly enough, managed the staffer who wrote that document Kuba F linked to.

Welcome to BP Dan. Good luck in your real estate endeavors!

This is my fourth rehab and just this week, I am forming an opinion that different decades have different smells. And yes, this is anecdotal, but fun evidence! Behind a drawer in the dining room built-in, I found a sack of balloons with printing on them announcing a wedding date in 1985. So naturally I blew one up and it immediately brought me back to my childhood in the 80s. Yes, I’ve blown up contemporary balloons and not been hit with nostalgia. So my conclusion on the balloons is that in 1985 they made balloons with ingredients they don’t allow anymore and my 1985 balloon this weekend felt just like 1985. And now I’m sitting on the kitchen floor leaning against the cabinets typing this message. Peeling off the yellow tack paper that is highlighted with 1970s glittery gold fleur de lis symbols hits me with an entirely different olfactory sensation, it smelled like that dank and stale smell of an old house; you flippers know it and so do I! So with the balloon experience in hand, maybe that smell isn’t stale, rather it has kept it’s odor fidelity all these years! It’s just that technology and government regulations are creating an odor time capsule in old homes. Any BiggerPockets folks come to the same conclusion? What is your insight?

Good question, a quick google search doesn’t show anything obvious, but I did find a Brandt Williams in Sioux Falls. Aberdeen’s Century 21 calls themselves the “Investment Realtors,” so there’s that.

@Keegan MacNichol, Congrats on least six doors in Rapid City! Best of luck to you on Sac Town, USA. And thank you for your service! Looks like we employ a similar strategy for Real Estate investing. And having lived in Rapid City myself, I’m sure we can share some common stories about the town. I currently have only SFH, but am dying to get into the MFH investing, probably even in Rapid. The last real estate I bought there though was back in 2010. Since then, prices have soared. So what is the latest chatter in town for the direction prices are going? Also, my property manager advised me to keep rent level for another year because of all the apartment complexes that are being built, will that taper off soon? Sincerely, Jonathan

The rule of thumb...is that SD doesn’t have a state income tax, which is great! But, the State has to earn revenue somehow, so property taxes in SD are that earning agent and they are higher in order to make up for that loss of revenue opportunity. MN does have a State income tax which relieves the pressure on the property tax to earn. Although, having no sales tax on food or clothes may bubble that burden on property tax up just like no income tax in SD does... My two cents...

Auto-correct got me on that last post darn it! :) *taxes property higher...

Hi Kayla, I have one rental in Rapid, a 2/1 SFH in the good part of town. I don't know the MFH market, but I do know that my property manager advised me not to raise the rent this year because the market is flooding with new apartment buildings being constructed. One point you might be interested to know is that Keller Williams in Rapid used to be Kahler Prudential and they also had a property management division too which is still in operation, I'm pretty sure (I think it is Kahler Property Management or KPM). I chose not to go with them because they were rude to me. I use A&A and have been happy. NWE is another mgr in town, if they are still open, I haven't checked in a while, but I seem to remember they have more commercial and outlier residential. A new one that has popped up is Black Hills Property Management and I may be mistaken, but I think it is a one woman show and she is also a real estate agent for Keller Williams. You might get an idea of what rent you could command by calling the Candlewood apartments, Kirkwood Meadow apartments (managed by KPM), or Harmony Heights these are west Rapid apartments that command nice rent, my guess is $850 - $900. Ended up being a long post, and what I would tell you is that I exited the Rapid City market once the prices started to sky rocket in about 2012. Another reason I choose not to invest in Rapid anymore is because it got hit with yellow letters in about 2015 which means to me that there are too many out of staters who are now also competing. And the last reason, is that property taxes end up being a little higher in SD because we don't have an income tax here, so to make up for that revenue source, our State government takes property a little higher than other states.

What are your thoughts on giving tenants a receipt each month after their rent check clears? I have been doing this and using it as a communication tool and also to perhaps create goodwill with the tenants. On the other hand, perhaps it is only busy work that isn't providing a benefit for my rental business or the tenant.