All Forum Posts by: Joe G Rampy

Make that 3 post and a vote! Bump bump bump bump!

Wow! Three bumps of my original January post in one evening.  (Two posts and a vote).

@Mike Baker If @Cody Baker is one of your clan, I've been reading some of his posts.

I was over in Bozangeles earlier this evening and completely spaced that you guys were up the road in Belgrade. My daughter's SO manages maintenance on 170 apartment units over there and I was catching up with her and picking his brain.

Maybe I can plan better next time and we can share some coffee and conversation.

@Jerry W. I've been through your lovely "Thermop" many times (more than I can remember). The weather's getting warm enough to take a soak at the park and think about rafting the whitewater on the Wind River. Right?

Regarding the market, I can't speak for the Gallatin Valley, but the Billings area is just chugging along normally. When a town is the largest city in a 4-5 state area, not much slows down.... or speeds up either. Higher education, medicine, farming, ranching, rail, mining, tourism, oil & gas, financial center, tax free shopping for Wyoming residents ;), Billings has it all. 

Except for critical mass. Montana is the 4th largest state in land area. Population is barely 1 million. Billings population is 100K. 11 million tourists visit Montana each year. The biggest influx of money is tourism that visits and goes home. The second biggest influx of money is tourism that visits then builds or buys a vacation home or condo before going home. There simply is no industry in the traditional sense. Therefore the state has the fifth lowest wages of all states because most employment is service industry. All of those factors mean that it is damned difficult to make a business work with very few regular customers. No critical mass. But I can't think of a nicer place to live.

The Billings downturn in the oil patch has only affected those who manage operations in ND and WY or who commute there to work. Not enough people to notice the impact. The biggest local single layoff was SanJel closing its Billings repair and training depot. 20 people total. ConocoPhillips has a good sized regional engineering office in Billings, but I haven't heard anything about that.

The northeastern part of the state (Miles City - Glendive - Sidney) has seen some serious downturn because of the reduction in capital budgets at the oil companies. CapEx cuts always hit drilling and completions first. Baker is mostly production with emphasis on secondary and tertiary recovery programs. Current CO2 and steam injection programs may see some cutbacks due to the price of oil, but won't have a huge effect on business around Baker.

Most of the hits overall will be in western ND (Williston Basin), eastern WY (Niobrara) and the DJ Basin down in CO. Although just north of you, around Powell and Cody, there have been cutbacks on legacy enhanced oil production.

As you are probably aware @Jerry W., the price of natural gas hasn't improved much since early 2009. I don't understand why the oil producers didn't learn the lesson of overproduction from that collapse. Strangely enough, I just heard that BP (British Petroleum) is getting ready to kick off a CBM project in Wyoming in the near future. Probably in the Sheridan / Gillette area.

Changing back to the main topic (REI), after a couple of years of casual self-education and several months of serious study, going forward I will be focusing on multi-family housing. Preferably apartment buildings. Not writing off any particular size at this point. I've discovered that @Michael Blank seems to have the cookbook that most suits my style. So I'm following his advice and creating a Sample Deal Package to present to prospective investors.

Comments and feedback welcome.

Tushar,

Find out the owner's reason(s) for owner financing. i.e., will any other lender finance the property?

I recently found a MF property that offered very attractive owner financing terms. Upon closer examination, I discovered that the buildings pre-dated zoning for the area. The lot was too small to build anything except a SFR on under current zoning codes. If a tenant caused a grease fire that destroyed the building, the only replacement structure that could be permitted would be a SFR. The banks would not touch the property because there was no insurable collateral. Therefore, the only way the owner could sell was cash or owner financing.

Renter's Insurance with high liability value. Verified annually.

Vaccination records up to date. Regular verification.

Refundable deposit. Pick a number. I've paid as much as $500 deposit. Monthly "pet fees" are douchebaggery at best.

No male cats or dogs. Neutering just doesn't deter some behaviors.

All animals spayed.

Dogs must be crated when renter not at home.

Landscape damage (holes, shrubs, etc.) is at renter's expense. Renter is responsible for keeping yard clean of feces.

Controversial, but I suggest cats be declawed.

Large dogs with sweet dispositions can still be destructive if the owner is not around. (Usually anxiety driven. I have a Border Collie who rearranges rugs and bed coverings to get my attention. Also have a sweet but scary Weimaraner watchdog with 1.5 inch claws and serious teeth who acts out by going through drywall in seconds when ignored.)

Interview the prospective tenant and the pet together at the property before renting. Observe.

Trying to learn as much as possible. Refining plans before implementing them.

Most important question: How does one use the "@username" tag to respond / address someone in the forums?

Thanks

Lynn Currie Magpies are quite common here in south central Montana. Also an irritating, ill-behaved, noisy traffic hazard. Not as bad as the pheasant community, but still able to put a dent in your car.

Just joined BP, and am finding your video series very informative.

Thanks for sharing it.

Jamie, what you described sounds like a whole bunch of heart ache. With a purchase price of $50K, you're buying just the land --- a "tear down". Add another $100K for rehab (maybe more if unforeseen issues arise) and you're already above the price of the best comparable in the area. Leaving little room for equity appreciation long term. How are you financing? If all cash, where's your ROI after ALL operating expenses, and free cash flow?

If demographics of the neighborhood will support a quality multi-unit rental property, I'd negotiate the price down from $50K. Then demo the building and replace it with a quality set of units. Hopefully keeping the total for new construction under $200k --- if those numbers can work long term.

Barring that, I'd walk past that building and find a better opportunity. This one probably won't even flip.