Indianapolis Area Closing Costs, Insurance, and Vacancy

[Matthew Bonaski]

Hello all,

I'm hoping I can get some input from Indianapolis investors, agents, or lenders. 

I built a rental property calculator to help me analyze deals and have been running numbers. I sent an analysis to my agent using these values:

A. ACQUISITION COSTS
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Purchase Price: $180,000
Down Payment: 25%
Closing Costs: $6,300
Closing Costs (%): 3.5%
Rehab/Repair Costs: $2,000

E. MONTHLY OPERATING EXPENSES
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Insurance: $175
HOA: $0
Utilities (Landlord-paid): $0
Maintenance/Repairs: $200
Vacancy Rate: 7%
CapEx: 5%
Management Fee Type: Percentage of Monthly Rent Per Door
Management Fee: 10%

I want to be conservative in my underwriting. I hear it all the time on the podcast. 

I am looking for a duplex, about 200-350k. Am I being too conservative with my closing cost, insurance, and vacancy rates? He was advising I should use the following instead:

Closing: 1.5% - 1.75%

Vacancy: 5%

Thanks for your input!

[Josh C.]

@Matthew Bonaski

I would say your closing costs are too high. You’ll get a property tax credit which would be around $4,000 depending on when you close. You’ll get a rent credit if occupied. Closing costs are usually split. I’d think you’d pay have that or less if closing fees.

I also thought your insurance was too high. Should be around $100 for a 250k duplex.

Indy is a great market. We are flat fee property management if you ever need anything or have questions. CityPlaceIndy

Good luck!