Indianapolis Market question

19 Replies

Quick question for any local Indianapolis investors.

I am looking at a long term buy and hold property I have found off-market. The property is located near 46th and College ave. Can anyone give me some info on this area? I know it is close to Butler University, the fairgrounds, and also still fairly close to Broad Ripple. The house is in excellent condition with major rehab done in 2009. I am confident in the house but would love some advice on the area from people who have  experience in the area.

Thanks in advance!

I live very, very close to there, over closer to Butler. 

When you say close to 46th and College, which direction and how far? Because the area varies more than probably anywhere in Indy. Overall though, the general  area is doing great. 

Like most areas in Indy, they can vary greatly street by street.

That "area" is just okay - IMHO.  Older homes with decent rent.

How's the numbers look?

What's your property manager say about the area??

West of college vs east of college..   north of 46th vs south of 46th..    all different.  NW being the preference and SE being the less desirable quadrant in my opinion.   Overall like @Shawn Holsapple said its OK.  Some pockets are great others not so much.  49th and college has some pretty significant developments with the Sinking Ship and some other restaurants and shops..   but cash flow wise, you can have some pretty ridiculous property taxes over there because it is technically meridian-kessler.  So your lumped in with the governors mansion and all those huge million dollar houses over there...   

Originally posted by @Ryan Mullin :

West of college vs east of college..   north of 46th vs south of 46th..    all different.  NW being the preference and SE being the less desirable quadrant in my opinion.   Overall like @Shawn Holsapple said its OK.  Some pockets are great others not so much.  49th and college has some pretty significant developments with the Sinking Ship and some other restaurants and shops..   but cash flow wise, you can have some pretty ridiculous property taxes over there because it is technically meridian-kessler.  So your lumped in with the governors mansion and all those huge million dollar houses over there...   

Ryan, not sure property taxes are relevant to that area, or any, with the tax caps. All my rentals are at 2% of assessed value, due to cap. As long as assessment is valid, I wouldn't worry about taxes. If it's high, appeal and get it adjusted to FMV

Thanks for the replies. The house is right by 46th and Guilford to be exact. @ryan mullin, yes you are right with the high property taxes. I was in the process of figuring out what made them so high but your explanation makes sense.

 @Shawn Holsapple , numbers are as follow and have been verified. I have 5% management fee because I self-manage but have one maintenance person I use which is included in the 5%.

Purchase Price:60K

Rent $1,050.00

Annualized rental income $12,600.00

less

Vacancy $1,260.00 10%

RE Taxes $1,620.00

Insurance $782.00

Management $630.00 5%

Maintenance $1,260.00 10%

Utilities/HOA $-

Reserves $630.00 5%

Operating Expenses $6,182.00 55%

Net Operating Income $6,418.00

If you don't want it, let me know. I'll buy it :-)

@Blake McBee is it currently occupied?

Have you confirmed the rent amount?

That sounds a little high...

@Rusty Scott

 You are right on the 2% cap of the assessed value, but I think the issue that @Ryan Mullin  was referring to has to do with properties being assessed incorrectly/poorly. There are definitely areas where houses will sell for $50k but assess for almost $100k. The 2% taxes on $100k can really cut into the cash flow of a $50k property.

Shawn,

Rent has been confirmed for the past year. However, I am going to be receiving the past few years to see how they compare to current lease term. Market research tells me this is slightly high so I may use this as a negotiating point.

This will be my first buy and hold so I am nervous and excited at the same time. I'm trying to get all my ducks in a row and make sure I have accounted for everything. 

I appreciate the help, and as always I am open to advice.

Originally posted by @Rodney Kuhl :

@Rusty Scott

 You are right on the 2% cap of the assessed value, but I think the issue that @Ryan Mullin  was referring to has to do with properties being assessed incorrectly/poorly. There are definitely areas where houses will sell for $50k but assess for almost $100k. The 2% taxes on $100k can really cut into the cash flow of a $50k property.

 Rodney,

That's an entirely different issue, and one that's pretty easy to correct by contacting the actual assessor that is responsible for that area of town. They have been very easy to work with, in my experience and have been quick to adjust assessments for me. 

Now if you buy something way under market value (which is what we are trying to do as investors), you can't expect them to adjust all the way down to your purchase price.

@Rusty Scott

 Yeah I fully understand what you are saying and you are right on point. Just wanted to make sure it was understood what was being said. I haven't had to appeal an assessed value, but it's definitely something worth looking at when analyzing a property.

Blake, 

We don't know the size/condition of the property....but even 2 BRs in that area can command that type of rent (I've seen them $1250 just a few blocks north), and a 3BR is definitely in that range. The area you are talking about is often known as SoBro (South Broad Ripple)....and it has seen quite a bit of progress in recent years (both commercially and residential). Honestly, it's tough to find a home that's rehabbed in that area under $150k....and I've seen rehabs all the way south closer to 38th coming on the market in the $200k range. 

I will also say you should have no problem whatsoever renting it.....the demand is very strong around there. I have friends that have had trouble finding rental homes anywhere in the area because they get snatched up so quick...particularly anything that it's in good condition. 

Originally posted by @Rusty Scott :
Originally posted by @Ryan Mullin:

West of college vs east of college..   north of 46th vs south of 46th..    all different.  NW being the preference and SE being the less desirable quadrant in my opinion.   Overall like @Shawn Holsapple said its OK.  Some pockets are great others not so much.  49th and college has some pretty significant developments with the Sinking Ship and some other restaurants and shops..   but cash flow wise, you can have some pretty ridiculous property taxes over there because it is technically meridian-kessler.  So your lumped in with the governors mansion and all those huge million dollar houses over there...   

Ryan, not sure property taxes are relevant to that area, or any, with the tax caps. All my rentals are at 2% of assessed value, due to cap. As long as assessment is valid, I wouldn't worry about taxes. If it's high, appeal and get it adjusted to FMV

 Property taxes are always relevant...   obviously they are capped at 2% but the assessments can get a little out of control over there.  In years past we haven't had much luck getting properties reassessed but I have heard they are easier to work with lately.  Most of the properties we buy are between 600 and 1200 per year.    1600 isn't that bad when rent is over 1000..   but when its 850 rents it can really eat into your cash flow.  

Originally posted by @Rodney Kuhl :

@Rusty Scott

 You are right on the 2% cap of the assessed value, but I think the issue that @Ryan Mullin was referring to has to do with properties being assessed incorrectly/poorly. There are definitely areas where houses will sell for $50k but assess for almost $100k. The 2% taxes on $100k can really cut into the cash flow of a $50k property.

 Yeah, this is what I was talking about.  SoBro and Butler Tarkington have this quite a bit.   Still not bad areas to invest in...   Like @Rusty Scott is saying demand is strong over there.   Investor demand is also strong too though...  Properties usually get bid up higher than I'm willing to go.   

I appreciate all the info guys! I guess I'll bring up another question why I have some of the local guys on here. Who do you use for real estate agents? As I stated earlier this will be my first purchase so I would like someone who has worked with investors and is knowledgeable. The owner of the home is a Indiana broker but I have heard it is better to have a separate buyer and seller agent...can someone confirm this?

I have an agent who I have worked with a little bit on past properties I was interested in but he is very slow and I feel like he is more worried about his commission than me.

I will be purchasing cash so I hope that will make the process easier.

Originally posted by @Blake McBee :

I appreciate all the info guys! I guess I'll bring up another question why I have some of the local guys on here. Who do you use for real estate agents? As I stated earlier this will be my first purchase so I would like someone who has worked with investors and is knowledgeable. The owner of the home is a Indiana broker but I have heard it is better to have a separate buyer and seller agent...can someone confirm this?

I have an agent who I have worked with a little bit on past properties I was interested in but he is very slow and I feel like he is more worried about his commission than me.

I will be purchasing cash so I hope that will make the process easier.

 Yes, it's always best to have your own, separate agent if possible but not a must.

With only one agent involved they are limited to what they can do for you since they represent both sides.

There are several investor friendly agents/brokers on here [I'm one].  I would suggest you work with one that is a land lord and/or an investor.

If you can't find someone, let me know and I'd be glad to help out any way I can.

Is the property listed?

Hey @Blake McBee ,  

I am a local investor friendly broker with FS Houses and work for @Ryan Mullin .  I actually live in the area in question just off of 46th and college and think your deal is extremely solid from what it sounds like.  I would be happy to help if you want someone who works quick and efficient and has my client's best interest at heart.  PM and we can talk more.  thanks!

Hey Blake!  Sounds like a great property.  I have 2 doubles near 42nd and College.  Rents are high and we get great tenants.  I just tried to buy a single family in the area at auction and it went for $43K, so a renovated property at $60K sounds like a great deal.  PM if you have more questions.  Good luck!  

Thank you to everyone who has offered to help. I'm continuing talks with the owner to gather more information. When I get a little closer to making an actual deal I will reach out to you guys.

I must say, this is my first real post on BP regarding an actual purchase. I am humbled by the willingness of everyone to offer their advice and expertise. It's great to know I have somewhere I can fall back on to ask questions, especially being new to single-family rental properties.

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