Getting started with doing out-of-state BRRRR in Indianapolis

8 Replies

My wife and I are ready to pull the trigger on a BRRRR project (2-4 units) in Indianapolis. We've been running into complications with getting any traction on finding good properties. We've identified the areas we'd be interested in but properties seem to be moving really quickly whenever anything does come available.

I was wondering if anyone would be willing to share advice on a best path for getting the first one purchased?  We've read David Greene's book, we've made contact with a few agents and wholesalers (no contractors yet), made a visit to Indy to scout our neighborhoods, we got the cash ready, just haven't been able to make it happen yet.  

Hey @Kenneth Cowan , definitely a good strategy using BRRR (about to complete my first) however I'd take extra precautions looking at 2-4 units in Indy. Most MFRs around the inner circle seem to be pre-war buildings, I really don't see many newer builds. On paper some of these properties look like homeruns but in reality they have outdated electrical/plumbing and things that you would prefer not to hassle with on your first OOS deal in Indy. Not to say it's a deal that's impossible to work but like many locals or pros of Indy would mention in the past, they're a very 'hands on' project and in need of experts handling these rentals with a different kind of tenant pool. Also, the BRRR strategy works better with forced appreciation with a good rehab + some decent appreciation from a good neighborhood. If your property is the best on the block but you're surrounded by 'pigs' it won't help your appraisal thus ruining your BRRR strategy.

I believe in Indy as a great rental market but I just use a different investment vehicle (SFRs). Either way I wish you luck on your investments!

Hi @Kenneth Cowan , Indianapolis is an incredible market, full of potential.  I'm a rehabber and turnkey provider.  I can share a list of B class areas and neighborhood map as well as info on financing, Why Indianapolis and example deals.  Hopefully you will find it helpful as you are looking to purchase your first investment properties in Indy!

Hello Kenneth,

If you need rehab assistance for your properties in Indianapolis, feel free to send me an email. We can do rehab from low end rentals to fix and flips that sell for more than $400k. We work hard to make sure every rehab is on budget, on time, and done right!

@Kenneth Cowan , I am curious as to why you haven't tried to bring a property manager to your team. Many of my clients and prospects utilize me as part of the acquisition, due diligence, and even project management phase of their projects. Most property managers are in the trenches daily, have off-market deals cross their desks weekly, and understand the markets better than most other real estate professionals because they are in so many neighborhoods with varying asset classes. 

I also have to agree with Lionel, taking on large Pre WWII rehabs from out of state is usually a very stressful undertaking. My last BRRRR was over $70k in rehab alone. I am experienced, connected, and local and still stressed quite a bit on that one. I would recommend targeting newer homes that have been trashed by tenants or taken back via foreclosure. They usually are a lot easier to rehab and have many better options. 90% of Pre WWII homes in Indianapolis have some form of settling and/or foundation problems. Many have old knob and tube wiring, cast iron plumbing, clay tile sewer lines with problems, plaster problems, etc. They are a lot of fun to work on, but expenses escalate quickly and it's easy to find yourself over budget.

There are a few places in town where you can find decent pre-WWII duplexes, but most places are lower income and finding good tenants or building equity is just a dream that your wholesaler is spinning. For your first OOS deal... as much as I hate to recommend this, I would finance a turn-key. This will give you an asset and some cash flow. Next, I would find a Post WWII home that needs less than $15k in work. Get it as cheaply as possible and refinance your money. It's possible that you will not have enough equity to pull all of your money out in this type of home, but you will have another asset that is performing better than the first. As you gain experience and fine tune your team, you can take on larger projects, but I think that you original plan is likely more risky than you think and I would recommend taking on something a little smaller at this point.

The only people encouraging you to do what you are wanting to do are the ones you're paying money to (seller, realtor, wholesaler, contractor, etc.) Those of us who have little or nothing to gain and a little experience would tell you to ease in to it.

@Ross Denman all excellent points. I should be leaning on the valuable insights of a good PM, but I haven’t yet ventured down that path. I’ll reach out via PM to connect and discuss, but wanted to thank you for your thorough and thoughtful response here. It’s got me thinking a lot.

I am in then process of buying my first OOS investment SFH in Indy and I've used @Ross Denman as an incredible resource to help me understand the market and evaluate properties. I'm very happy to follow his advice and our first deal with a basically rent-ready property as a way to 'ease into' OOS investing. Our next deal we will look for a 'lite' BRRR SFH and will definitely be using PMs for their advice.

Thanks for your kind words @Erin Carpenter . While she didn't land a home run, she is closing on a good home that should rent at a fair price, provide a decent ROI, and draw in pretty good tenants. In the long run, we may even look back at it as a home run.

Hey Kenneth,

There are opportunities in Indy for sure but lots of areas I avoid. Much harder to find deals than it was a few years ago. So, learn the neighborhoods that will work for you. Building a team of agent(s), contractors, PMs, etc. is also key. I am using the plural but one good one is enough. 

You are so close in Chicago, it would be worth a few visits to really learn the parts of town you’d be comfortable with. Then you will have some real world touch points to help assess things you see online. 

This is not a comprehensive list of course. But one last point. Be ready to analyze and pull the trigger fast. Indy is no longer an undiscovered market. The really good deals go very fast. 

Good luck. Feel free to message me with follow up questions. I’m a private investor like you. Happy to help you if I can. 

Best,

JW

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