All Forum Posts by: Michelle VanDyken

@Alan Brown

It's in the early early stages of becoming industrialized. These are the big hurdles that need to be overcome:

1. There are no current markets, at least locally- as in the entire state of Montana, that take in large amounts of seed for oil. There are smaller operations that will contract a few acres but that would not fall into the industrialization of hemp. So why aren't there markets for large scale production? That leads us to #2

2. Because we were not allowed to grow it on large acreage amounts, very little/no research has been put into growing it large scale. Canada, just a few miles north of us has more experienced large scale growers by a few years but you would be surprised at how little information is shared across the border. So currently our industrial growers are being taught by smaller scale green-house growers of an extremely similar plant :) the cross-over does not translate as easily as you might expect because...

3. Hemp is grown completely different from other small grain or oil crops.  There Are many human mechanics that do not translate into machinery, or even hiring legal migrant workers. The amount of workers needed and the time to complete the tasks would not be possible. 

This is all just oil production, which is where the money currently is. Now, personally, I think the fiber market could be developed into an industry that would be easy to grow and harvest on large scale. Probably won't have the high $ return as oil. 

So to sum it up, the farmers here are trying to create an industrialized hemp oil market but it's probably more likely that it will remain a smaller scale production. Personally, if I could grow a crop and make that sort of money on just a few acres, I would do it in western Montana. Our location is more ideal for growing hemp because of our hours of daylight, temp, and rainfall; but you've been here, where would you rather have a small scale production? Western Montana is such a beautiful place to live. There are and will be more small scale operations in eastern Montana but it's people who already live here, currently own land, and are trying something new. On the other hand, who knows, maybe hemp is going to be the economic boost that eastern Montana needs...

Just one ladies opinion that knows far more about farming hemp than she ever expected to have to learn. Forced education. My perspective is limited to my area, but I'm sure other areas are running into similar issues. 

@Michael Rutkowski

Thanks for the info. It’s good to know I can useful info even about Conrad. 

My long term plan isn’t to continue to invest in Conrad. I’m getting my toes wet while I’m still here. My youngest daughter graduates in three years so I won’t be as bound to this specific region. In the meantime we will try the few houses that are worth flipping. Our first flip was put on the market Tuesday, it’s been shown a few times and there has been favorable response. I realize none of that means anything until there is an actual sale but it’s all looking promising for now. 

I’m very familiar with the hemp market. My “real” business is in the ag sector. I work directly with one of the first hemp growers, back when they could only have 50 acres per year. I’ve seen a lot of fads come and go in the ag market, I’m not certain that hemp is any different. 

Regardless, purchasing farmland and leasing with the long term in mind is actually a very good idea. It has also been my experience that most farm land gets sold before anyone in the area even knows it is for sale. Also, most farms in this area are several thousand acres, so we are talking millions instead of hundreds of thousands of dollars. Not that it isn’t doable, just that I personally would need to work up to that point. 

Having said all that, I still think you are on to something. Buying land and leasing to farmers. I like it!

Thanks for your tips!

Hi @Alan Brown! I'm surprised that I've already come across two people familiar with this area, normally nobody has ever heard of Conrad, let alone been here.

Conrad is definitely dwindling, which was one of my concerns with rentals. Right now the rental market is strong, homes in the C market are renting at prices that are easy to cash flow, even with all of the extra costs that you mentioned figured in. My brother and I bought my parents' business from them several years ago and I handle the financial/business side, he is more into sales. So I, like your wife, pencil everything out. I've found that being detailed, ruthless, on the financial side of the business makes the difference between making enough money to stay in business and  creating a lucrative business. My brother is like you, he sees the rosy side of everything. I, on the other hand, work in numbers. However, I will say the details (expenses) in real estate investment are much different than a normal business so I GREATLY appreciate you listing each expense to consider because it is hard to pencil something out when you don't know it is part of what needs to be figured!

I will set up an appointment with my accountant, he is really good at finding all the best strategies for reducing taxes. I will mention setting up as a real estate professional and see what he knows. Great tip!

So, perhaps with the town dwindling and the potential for the market diving 10 to 15 years down the road we would be better off flipping houses in Conrad? Ultimately we want to build up rental properties but this may not be the best market for that. 

There are no property managers, at least that I am aware of, in Conrad. Which is unfortunate, because that is the part of renting that I really don't want to deal with. You know, the more I type the more I'm certain flipping in Conrad is the way to go for now. Maybe what I should be doing is flip houses here, try to partner up with someone in this community that has been doing rentals - profitably for a number of years (that is the analytical side of me) - and provide the financing for a share in the rental. Is that a thing or did I just make up something that can't exist? 

Thank you so much for taking the time to respond so thoroughly. I appreciate all the advice I can get!

@Sebby Gabre Madhin Also, one advantage to small towns is that very little advertising is needed, word of mouth moves quickly in a small town :)

Good to know about the capital gains, I thought I had read that it was capital gains when you sell a flip and inventory when you buy a flip, but I probably misunderstood. I listen to my real estate books while I’m doing all that painting ;)

@Sebby Gabre Madhin Thank you so much for your advise. My gut was leaning in that direction, creating a combo of flips and rentals, but I haven’t read anything yet that suggests this as a strategy. I’m typically too analytical in hopes of reducing my risk so I tend to stick to only doing what the experts or books suggest. I’m really glad you posted because it’s good to know that it’s a viable strategy to do both. 

@Joe Malisani Hi joe! Yes, I would be interested in attending. Can you give me the details? I’m in Conrad. 

@Ryan M. Thanks for your response, I think we will be following your advise. 

@Brant Richardson Haha! I paint too, somehow I got selected to be the painter of all paintable surfaces. Although he has to to the mudding and texturing, so I’m still coming out ahead on that deal. :)

It’s a small town so we don’t have markets but I would say for our town it is now in the B plus to A market of available homes for sale. Is there anywhere I can get info on how to grade a house or area? thanks for your input!

@Patricia Steiner Thanks Patricia, I started running the rental calculator tool and couldn’t make it pencil out either. Thanks for your help and reassurance!

Hello all! I’ve recently joined bigger pockets and have been reading everything I can get my hands on.

I’ve found myself inadvertently in real estate investment. Although I may not have intended to get into it, my husband and I are in love with it.

We bought our first property to rent to my daughter. We bought it for $50k, put $42k into it (which is way more than we would put into it as a normal rental, but we knew it was for my daughter so we put in upgrades we wouldn’t normally do). we rent it to her at the cost of mortgage, insurance, and taxes-zero cash flow. But I figure we are still gaining the appreciation of the house while she pays the house off.

Obviously that one isn’t a true investment property but we did discover that we love buying run down homes and renewing them. My husband is a contractor and does the work and I love creating the vision of the new house and bargain hunting to do it the least expensive way possible.

When we were finishing my daughters house a bank-owned home became available in an auction. Because it was an auction we had to pay cash for it and have rehabbed it with cash. I came across the BRRRR book while rehabbing this house and thought perhaps we had accidentally stumbled into the perfect method of investing in real estate.

Fast forward to now, we are almost done rehabbing second house, about two weeks away, and had a realtor give us a market value because we have two interested parties that would like to purchase the house. The house would sell for approximately $100 k above our purchase price and rehab costs.

Our quandary is do we flip and use that profit to buy more rentals or stick with the brrrr method? If we take the full 75% out of the house I believe the rental market would only bare $150 cash flow above mortgage, taxes, and insurance. I have no idea what to calculate for vacancy expense as we are new to this rental thing and our market, north central Montana, is too small to show up on the online estimators. The problem with flipping would be the capital gains tax. Ultimately we are wanting to create passive income from rentals, just not sure if this place would be better left as a rental or flipped and use the profit to buy more rental property.

Any guidance? Thoughts? Suggestions? Book recommendations? Keep in mind I am new so many of the acronyms are a foreign language to me. Thank you in advance for your help!