Newbie Investor Question about Specific Indianapolis Property
Homeowner · Marion, IN · Member since 2021 · 13 posts · 5 votes
Newbie Investor Question about Specific Indianapolis Property
Most Popular Reply
Darren HaworthPro Member
Rental Property Investor · Columbus, OH · Member since 2016 · 6 posts · 4 votes@Nicholas Hindes
Hey Nicholas,
Right out of the gate, I’ll tell you I graduated from IWU. Some great memories made in Marion!
Anyway, I live in Columbus, OH and have owned two properties in Indy, just sold one last month. So, I’m about 160 miles away. As you know, this would be a pretty easy drive down to this property for you. This place needs work. A new roof, it looks like a couple windows are broken, and I’m guessing there is a lot more on the inside. One pro, these windows are not original. They appear to be vinyl replacements which means that’s a future expense you don’t need to worry about, other than the aforementioned broken ones.
I’d be curious about utilities as this is a 4-plex with one electric meter. I can’t see the gas meter but I’m assuming there is only one of those, also. There’s also the question of water being submetered, the hvac, separate water heaters, etc. I have a feeling this place is set up in a weird way, which I’ve learned is a pain to deal with. Also, how is lawn care taken care of?
Assuming Zillow is correct, the owner only paid $28k a year ago, so there is probably some room for negotiation. But that also throws up a potential red flag. If I have a property that’s producing $2600/mo and I’m in it for $28k, why would I sell it? I mean in one year you have all of your money back and it’s just pure profit... well I’m sure there is some headache too. This is a rough area. But if you can buy it for $10 or 15k per door, that’s an amazing return. And given the area, maybe you factor having a higher vacancy rate. So, you factor in a high vacancy, maintenance, lawn care, etc, and this is still an amazing return.
I’d say it’s worth pursuing. But do your due diligence, ask for leases, get an inspection if you aren’t familiar enough with what to look for when walking through the place.
Just as an FYI in case you aren’t aware, with that roof and the broken windows, and the price point, you probably aren’t going to be able to use conventional lending. So, you’ll need cash or a hard money loan. Also, given the location, this may be in flood zone, I know some of those areas off the river there require flood insurance as I was looking to purchase a place just north of there a couple years ago. Once I added flood insurance costs, the numbers didn’t work.
Just know going into it, you’re probably going to have come out of pocket $25k+ right out of the gate to get this place back to par.
Hopefully that gives you some things to consider.
Good luck!
9 Replies
- Rental Property Investor · Toledo, OH · Member since 2018 · 309 posts · 264 votes5y
Zillow is showing it was sold less than a year ago for $50k less than it's listed right now, but if the numbers work, they work. I doubt with it only being listed for 3 weeks at this point they'll take 50% discount on it, but there is absolutely 0 harm in submitting the offer! Worst they say is no and you're in the same situation you're in right now. I would double check the rents with the actual renters and make sure they're paying. I have a hard time believing someone who purchased a property for $28k and has it rented out at $2,600/month would be "highly motivated" to sell unless there are some serious problems with tenants or the property itself.
- 5yDarren HaworthPro MemberRental Property Investor · Columbus, OH · Member since 2016 · 6 posts · 4 votes
@Nicholas Hindes
Hey Nicholas,
Right out of the gate, I’ll tell you I graduated from IWU. Some great memories made in Marion!
Anyway, I live in Columbus, OH and have owned two properties in Indy, just sold one last month. So, I’m about 160 miles away. As you know, this would be a pretty easy drive down to this property for you. This place needs work. A new roof, it looks like a couple windows are broken, and I’m guessing there is a lot more on the inside. One pro, these windows are not original. They appear to be vinyl replacements which means that’s a future expense you don’t need to worry about, other than the aforementioned broken ones.
I’d be curious about utilities as this is a 4-plex with one electric meter. I can’t see the gas meter but I’m assuming there is only one of those, also. There’s also the question of water being submetered, the hvac, separate water heaters, etc. I have a feeling this place is set up in a weird way, which I’ve learned is a pain to deal with. Also, how is lawn care taken care of?
Assuming Zillow is correct, the owner only paid $28k a year ago, so there is probably some room for negotiation. But that also throws up a potential red flag. If I have a property that’s producing $2600/mo and I’m in it for $28k, why would I sell it? I mean in one year you have all of your money back and it’s just pure profit... well I’m sure there is some headache too. This is a rough area. But if you can buy it for $10 or 15k per door, that’s an amazing return. And given the area, maybe you factor having a higher vacancy rate. So, you factor in a high vacancy, maintenance, lawn care, etc, and this is still an amazing return.
I’d say it’s worth pursuing. But do your due diligence, ask for leases, get an inspection if you aren’t familiar enough with what to look for when walking through the place.
Just as an FYI in case you aren’t aware, with that roof and the broken windows, and the price point, you probably aren’t going to be able to use conventional lending. So, you’ll need cash or a hard money loan. Also, given the location, this may be in flood zone, I know some of those areas off the river there require flood insurance as I was looking to purchase a place just north of there a couple years ago. Once I added flood insurance costs, the numbers didn’t work.
Just know going into it, you’re probably going to have come out of pocket $25k+ right out of the gate to get this place back to par.
Hopefully that gives you some things to consider.
Good luck!
- Rental Property Investor · Concord, CA · Member since 2021 · 10 posts · 9 votes5y
Nick, I recommend you or someone else drive by the property. Indianapolis is very street by street. Also, I have received advice as a fellow new investor to avoid investing in multi-family properties in Indy. Especially if rents are $650/mo you'll likely be renting to lower income tenants and risk higher vacancies.
- Homeowner · Marion, IN · Member since 2021 · 13 posts · 5 votes5y
Thanks guys that super helpful info to think about it. Got in touch and got some more information. Looks like the seller is not even open to anything low at all. They have had a couple offers from others with my similar line of thinking and rejected them. Turns out everything is vacant now too. @Gabe Sasser where did you hear about not investing in Multifamily units in Indy? What was the reasoning behind that? Very nice to meet you @Darren Haworth and @Landon Bleau
- 5yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Originally posted by @Darren Haworth:
@Nicholas Hindes
Hey Nicholas,
Right out of the gate, I’ll tell you I graduated from IWU. Some great memories made in Marion!
Anyway, I live in Columbus, OH and have owned two properties in Indy, just sold one last month. So, I’m about 160 miles away. As you know, this would be a pretty easy drive down to this property for you. This place needs work. A new roof, it looks like a couple windows are broken, and I’m guessing there is a lot more on the inside. One pro, these windows are not original. They appear to be vinyl replacements which means that’s a future expense you don’t need to worry about, other than the aforementioned broken ones.
I’d be curious about utilities as this is a 4-plex with one electric meter. I can’t see the gas meter but I’m assuming there is only one of those, also. There’s also the question of water being submetered, the hvac, separate water heaters, etc. I have a feeling this place is set up in a weird way, which I’ve learned is a pain to deal with. Also, how is lawn care taken care of?
Assuming Zillow is correct, the owner only paid $28k a year ago, so there is probably some room for negotiation. But that also throws up a potential red flag. If I have a property that’s producing $2600/mo and I’m in it for $28k, why would I sell it? I mean in one year you have all of your money back and it’s just pure profit... well I’m sure there is some headache too. This is a rough area. But if you can buy it for $10 or 15k per door, that’s an amazing return. And given the area, maybe you factor having a higher vacancy rate. So, you factor in a high vacancy, maintenance, lawn care, etc, and this is still an amazing return.
I’d say it’s worth pursuing. But do your due diligence, ask for leases, get an inspection if you aren’t familiar enough with what to look for when walking through the place.
Just as an FYI in case you aren’t aware, with that roof and the broken windows, and the price point, you probably aren’t going to be able to use conventional lending. So, you’ll need cash or a hard money loan. Also, given the location, this may be in flood zone, I know some of those areas off the river there require flood insurance as I was looking to purchase a place just north of there a couple years ago. Once I added flood insurance costs, the numbers didn’t work.
Just know going into it, you’re probably going to have come out of pocket $25k+ right out of the gate to get this place back to par.
Hopefully that gives you some things to consider.
Good luck!
Where do you invest in Columbus, Ohio?
- Lender · Manhattan Beach, CA · Member since 2017 · 423 posts · 268 votes5y
Hi Nicholas,
I invest in Indianapolis. I would just caution you to also investigate if the property is allowed to be a quadplex based on the zoning. Some "multi unit" properties in Indy are hacked single-family units and sometimes the mechanicals doesn't support the number of people living in the property.Blessings,
J
- Rental Property Investor · Concord, CA · Member since 2021 · 10 posts · 9 votes5y
@Nicholas Hindes I heard it mentioned multiple times on the Indy Investor Podcast that Simple Wholesale puts out. There were particular well-known flippers and property managers on the show that advised not to go the multi-family route in Indy when just starting out. It's your call. At any rate, I highly recommend the podcast to stay current with the market.
- Homeowner · Marion, IN · Member since 2021 · 13 posts · 5 votes5y
@Gabe Sasser thanks gabe that’s awesome and really good to know!
- 5yNick GiulioniPro MemberRental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
Hi Nicholas! My name's Nick. I would love to help you out in any way possible and share you some of my experiences. Please feel free to reach out.
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