All Forum Posts by: Mark McCollum

To follow up on my original post and some feedback received in this thread, I would like to begin my search in the Bozeman and the surrounding area. Any suggestions on how to locate an investment focused realtor in this region? The Bozeman prices are out of my range, so I am also interested in finding local like minded people who are also looking for partnerships. I did find bozemaninvestorclub.com which looks like it could be a useful club for someone new to REI like myself. Are there other suggestions for connecting with people?

@Don Spafford, from my perspective, the market is nuts here to say the least. A condo I looked at a couple of weeks ago in Bozeman sold for approximately $110k over asking. If you don't have cash, don't go over asking, or have contingencies, you can forget about it. As far as sfr in the Bozeman area, there are a few listings sprinkled here and there $550k or lower, but the majority are starting at $625k plus. Competing at these prices, maybe flipping is all that can be done, but hold and rent just doesn't make sense. Your 3 fourplexes would have probably been a great deal especially with the rise in rent and basically zero vacancy.

@Chris Davidson, this is an interesting to include the other factor to make the low ROI look better. But if I were to just throw that same money in an index fund and get 10 - 13%, doesn't that make more sense? I personally would rather have the physical asset that builds equity but is seems more of a gamble to bank on that with a low or negative ROI. This definitely has also kept me out of the market for way too long as well.

@Michael Rutkowski, I think that Gallatin county and Paradise valley are next to impossible without a lot of luck. I personally think that Madison and Shields may have better prospects in the immediate future. I haven't done too much research on these smaller towns. I suppose a property manager would charge more for working them? Are you aware of the rental demand say in either the Ennis or Wilsall areas? I'm curious if this is an opinion on the Butte market? Butte is full of rehab projects that would be great for Tech students. Though Tech's attendance is in decline.

@Melissa Zimmermann, thank you for the tip on this one! I will check it out.

@Account Closed, thanks for the suggestion of looking off market. While I don't think this will work in Bozeman, I will try it in Billings and other surrounding areas.

@Melissa Zimmermann, I am closer to Bozeman than Billings. My preference is Bozeman as I would actually be able to manage the property and do rehab myself. Billings is second since it is close enough that I could run over there in the evening (depending on road conditions) and on weekends. I would not be able to manage or do rehab/large maintenance in Billings. Helena, Butte, Great Falls all are in the same category. Heck, I'd even take a stab at Idaho Falls. With the large number of realtors in these areas, do you have suggestions on how to pinpoint those who understand investing?

@Michael Rutkowski, are you referencing Belgrade and Livingston? If I wasn't doing a BRRR, I couldn't sit long on a property that isn't cash flowing in the bozeman area for long. Bozeman is so inflated that BRRR probably wouldn't make since right now. I'm curious of the local areas around that would cash flow?

Thank you for clicking on my post. I have been working hard and can't resolve two questions. I am hoping an expert here can shed some light on my struggles or point me in the right direction.

My first question is I can't find any local properties that will cash flow. Am I doing my calculations wrong (examples below)? My second question is, since nothing locally cash flows, how do I go about finding a market outside of my area?

First a quick background - I am trying to buy my first rental property in the state of Montana. Since this is my first property, I would like to buy in my city or at least state, but I can't make the numbers work. Below are some examples (with a lot of assumptions included) of several of the most popular cities in the state. What am I doing wrong?

Example 1: Largest city in the state is Billings, MT. The cheapest 3bd+ property for sale now that is not in a trailer park is $190,000 for a 3bd 2ba single family. Taxes are estimated at $150 a month and insurance about $70. With 20% down on a 30 year mortgage with a 3.3% interest rate, the monthly payment would be around $885. It would rent around $1200 a month minus 20% for repairs and property management fees for a total of $960 remaining. After mortgage, I'd clear $75 monthly and $900 annually. With an initial down payment of $38,000, my ROI for the first year would be 2%.

Example 2: A smaller city than Billings, but a large business and college city is Bozeman, MT. The cheapest 3bd+ property for sale now that is not in a trailer park is a 3bd 2ba condo for $399,000. Taxes are estimated at $270, HOA $100, and insurance $150 monthly. With 20% down on a 30 year mortgage with a 3.3% interest rate, the monthly payment would be $1,730. According to craigslist, this would rent for about $2,000 a month. Again, taking 20% off for fees and repairs that would leave $1,600. This would result in a negative monthly cash flow of -$130 and with an initial down payment of $79,800 the first year RIO is -2%.

The above two examples are similar across all areas that have a rental demand within Montana. Is my analysis wrong? I have just about come to the conclusion that I cannot purchase real estate alone in my local market and will most likely need to look elsewhere. My search outside the state feels aimless like throwing a dart at a map. In addition to the above question about my local market, I would appreciate any advice on real estate investing from a distance. I have about $65,000 to begin with. Thanks