First real estate deal

6 Replies

Last year I stumbled upon bigger pockets after deciding I didn’t want to work for someone else for the rest of my life. Today I got an offer accepted on my first real estate deal(seller financed) in the Indianapolis area in arsenal heights. It feels good to meet my initial goal of my first duplex by the end of the year. I am funding the rehab of the duplex with cash since I didn’t have to make a hefty down payment

Deal is as follows:

Asking price: 96k

Accepted offer: 70k

Earnest: 1k

Down payment: 10% 7k

18 month interest only @ 8.5% on 63k loan: 450 dollar payment roughly

Rehab: 50k

ARV: 165 (hopefully)

Rents: 800-850/ side.

As houses become less affordable in the fountain square/ woodruff area people are moving into arsenal heights following some gentrification and I am looking forward to commanding 1k rents or more.

Hopefully the ARV is good and I can be into this with no money once I refinance and rinse and repeat and buy the house next to it.

Long distance investing is scary but I am looking forward to the journey ahead 

Hey Matthew,

I'm happy to hear that you're starting to invest in real estate!

For my investment properties, I keep my rents at least 1% of my ARV. That seems like a great deal if you're getting 1600 total rent/month!

For our deal we don't usually depend too much on depreciation, so I would not rely on appreciation much. 

Happy Holiday's & Good Luck Investing!

@estienne Martel the intent is to get a > 1 percent ARV on the rental but that's actually my starting point. The area is part of a federal and state promise area to revitalize it and reduce crime and bring art and jobs into the area. It's centered on a large scale project the city is undertaking that'll make that happen within a couple years. Houses are being flipped @300-500 k in the surrounding blocks so it'll make for a good buy and hold strategy with a good depreciation write off on property improvements as I'm gutting the house.

congrats on  meeting your initial goal.

@Matthew Dunaway I hope you're going in to this with your eyes wide open. I've been active in Indianapolis for the last 7 years but have not been a big fan of multi family in Indy. Most are located in the older, rougher neighborhoods which I would consider Arsenal Heights to be. My advice is to talk to an unbiased property manager and get their input on the area, the types of tenants you could attract  and how difficult they feel the management would be. You should also get their opinion on the rent estimate. Depending on the street, the rent could be closer to $700 per side than $800-$850 but rents vary widely depending on the street. 

@Mike D'Arrigo yea I learned during the inspection that the neighbors were a lively bunch and not in a good way. That coupled with a slumlord who attempted to hide some major defects in the property convinced me that it probably was a project not worth undertaking for my first one. I hope the area will improve in the future as people get priced out of the more expensive area but want to stay close to the fountain square area so maybe in a couple years.. I grew up around there and can’t believe the difference.. for now it’s back to the drawing board. Paying for an inspection was a cheap price to pay to learn about the neighbors.

@Matthew Dunaway Hey, I just wanted to say congrats! It sounds like you got a deal deal and I love that area. Feel free to reach out if you have any questions about Indy. Praying for you on your journey.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here