I’ve been looking into purchasing a few properties in Indianapolis, however I haven’t had much luck lately finding cash flowing deals. I’ve heard that in Indianapolis, property tax is 1% for owner occupied and 2% for investment properties, and that difference could be up to $100/mo. It seems like deals that meet the ballpark “1% rule” cash flow negatively, or are extremely thin deals because of this.
Has anyone had any similar experiences they'd like to share? Am I being too conservative with the expense calculations? I assume 10% of rent goes to repairs and maintenance, 5% goes to CapEx, 8% due to vacancy, and 10% to property management. The rest is utilities, insurance, etc.
What do you think?
@Justin Dao - it's often better to err on the side of conservative. That said, you could get by with reducing repairs to the 5-7% range and vacancy down to 5%. Other than that, you appear to be calculating correctly.
Hi @Justin Dao
I just purchased a SFR in Indianapolis. You are correct about the 2% property taxes. I will be paying around $1400~ annually for this. Which honestly isn't that bad at all.
Cap Ex, it depends how renovated your property is. For example, if you're purchasing a total fixer upper than you can lower that Cap Ex rate because you will be fixing the roof, HVAC, furnace, etc before you get it rented.
Vacancy: Sounds about right, but once again it depends where you are purchasing and if your rent is priced right. I purchased in an area with 3 schools within one mile of the house, good area as well. The house rented in 6 days including the time it took to review and accept the applicant.
Insurance: This will vary, there are so many variables that come into play: flood zones, neighborhood crime, claims, condition, home security, pools, trampolines, age of house... etc. As low as $600 and as high as $2000.
I hope this helped.
Let me know if you have any questions.
@Jason Martinez Appreciate the response. I’d love to ask you a few questions, can I PM you?