I was hoping to get some opinions on my current plan to get started in real estate.
To give you some background information, my girlfriend (25) and I (23) currently live in Honolulu where we make around 90-100k a year combined. We're both originally from the east coast. Our plan is to move to Indianapolis and find a house cheap enough to buy cash that we can fix up. We will have about 40-45k to put into a property (not including renovation costs) when we make the move.
I have some experience in carpentry and finish carpentry. We're willing to do floors, drywall, cabinets, counters, windows, fixtures, and insulation if necessary. Essentially we want to avoid plumbing, electrical, and structural issues.
What neighborhoods would suit our goals? I’ve been reading @Sterling White 's guide and I’m interested in Beechgrove, Garfield Park, and Christian Park. However I have no idea what a reasonable price point is for what I’m looking for. Could anyone suggest a good way of finding heavily distressed properties? I am ideally looking for a small 2-3 bedroom home so I don't bite off more than I can chew on the first home. Is there a ball park number of what I should expect to pay for a single family home under 1500 square feet? I know there is lots more research I’ll need to do; I’m looking for more of a starting point than an all inclusive answer.
The long term plan is to HELOC the property when we are finished and use that as a fund to BRRRR other properties. I want to know if our 40-45k budget is enough to get into a home or if we should change our strategy entirely and plan on using financing.
Thank you in advance!
I have a two great properties in great neighborhoods for sale in Indy.
1. A little bit more than your budget (55k) but almost everything renovated. I just replaced the kitchen, new doors, painting, new furnace. 2bds, 1 bath + garage.
2. For 50k but at this moment it's rented, so if you don't need to move in immediately, you can continue to rent it until the end of the contract with the existing tenant. 2bds, 1 bath + basement
Please let me know if you interesting and I will send you more information.
Ps I have another one maybe I can sell for less
You need to learn how to analyse markets first, then you need to understand how money works in REI, then develop a plan based on your financial needs. I would do all of this before you buy anything.
Also, your initial short term plan, as described, will probably the most expensive, most time consuming, and longest to complete potential plan you can choose.
...and, don't do your own rehab. You may think you are saving money, but you're not...it's not possible. On the surface it appears as though you are...but when you apply the domino effect to it...you are going to lose money hand over fist.
I'd find a good agent to help you out, given that you don't know the market. Going the wholesale route definitely has price advantages, but you won't get the same level of service. I highly recommend @David Moudy who has helped me acquire >50 units over the last two years but I'm sure there are other good agents as well.
@Nathan Christensen It all depends on the extent of the rehab needed. $40-$45K isn't going to go very far on properties that only need a light rehab. To be in a reasonably decent C class area in Indianapolis you're talking about properties with an ARV of $70K or more. To be in a B class area it's in the range of $90K to $110K. How much you need to spend to acquire the property will depend on how much you need to put in to it.
I think doing a live in flip sounds great... until you do it, but I think it will be a great experience. I love the neighborhoods that you are targetting. I believe that Sterling upgraded Christian Park as it used to be a D, but I've loved the area for almost 2 years now. You might consider checking in to an area just west of Christian Park that doesn't usually show up on most neighborhood maps called Twin Aire. There is a city initiative going on there that should increase your momentum over a couple of years. You can check out some information here.
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