Newbie from Brown County, Indiana

12 Replies

Hello BP Members,

I'm just introducing myself. My name is Karen Avery. I'm a PR professional in the Indianapolis area. My husband and I have owned two homes that we use(d) for our primary residence. We have talked for years about investing in income properties and believe now is the time. 

We are considering for our first purchase the house next door which is currently owned by the bank. However, after running the numbers on the BP calculator I'm a little leery about starting with this property. It's not the best looking property in a lakes community, has high taxes, long commutes, no lake frontage and is a small 3 bed/1 bath house that lacks in curb appeal due to the slope of the land and how the house sits. My husband worries about the property value of our primary residence being affected by the continued decay of the distressed property next door, but after my quick study of the BP site and forums, I'm more worried about investing in a property that won't produce good cash flow, especially for our first buy-and-hold. We are learning and always appreciate any advice. :)

Kind regards,

Karen

Hi @Karen Avery !! Welcome to the two of you! That's great you guys are ready to take action.

Well, it depends on what you're planning on doing with this property. If you're going to flip the property, then the attractiveness of the home would come more into play, as well as it's features compared to the competition of other homes in the area (as you mentioned, lack of curb appeal, lake frontage, size, inconvenient commute). However, it sounds like this will be a rental, so although these things come into play, they don't as much; specially if it's mainly an owner-occupant community, where the availability of other rental homes is already low. But again, this is me commenting without knowing the area.

I believe the big thing to keep in mind with a rental is that as the price point goes up, your return tends to go down; which is why the rentals don't make much sense in expensive real estate markets like California. Perhaps this is what your numbers told you once you plugged them in and noticed there won't be good cash flow.

Another thing you could do, however! You could rent this property on a service like airbnb and possibly make A LOT more than you would if you were doing long term leases. Again, not sure what the demand is where the property is located, but I know Brown County is always popular. Something to keep in mind as well :)

Good luck!

Cheers

Hey Karen! Welcome to BP. I have found the tools here to be incredibly useful and I think you are starting in the right place by analyzing the deal before you move on it! Just remember that the asking price is not necessarily the selling price! Best of luck!

Welcome @Karen Avery !

BP is such a wealth of knowledge when starting out and I believe for those seasoned investors too!   

Congratulations on making the decision to get started.  Unless it is for financial reasons, I say make your first purchase now, rehab over winter and you'll have it ready to rent by early Spring!

@Karen Avery

Congrats Karen and welcome to BP. I love Brown County!  My wife d I go there once a year and stay in a cabin. We love the Rustic Culture and the shops and treats.   Welcome again, I hope that you learn so much from this site.  Brett

Welcome to the site @Karen Avery glad to see you are taking the leap into your first investment. I would go with your gut on this investment if the numbers do not work I would walk away. 

There are plenty of great deals out there you just have to be patient and when that deal comes along make sure you are ready 

Great points on everything that has been mentioned so far! My wife and I are entering the market as well and have considered the AirBNB idea, especially for game days in Bloomington. Being in Brown County might not make that a good strategy for you but if you could get the purchase price low enough there are a lot of exits that could make sense.

Hi Karen, I'm down south in English Indiana. I have looked at properties in your area before. Was a little bit more than what I want to spend at the time.   I have been investing in real estate for profit for about two years now. I am a real estate broker who only got licenses for personal use. I have done very few deals to help others buy. I don't want all the drama that goes along with helping everyone else. I can tell you if you want to make an offer on that house then offer half of what the bank is asking for it. They want that property off their books especially if financed by a local community bank and will be willing to negotiate no doubt. This is the strategy that I use consistently and has worked almost every time for me, but I'm a cash buyer. I know how important it is to keep your own property value up and helps if you are in control of the property next to you. Good luck to you!!

Welcome to BP @Karen Avery .  I'm sure you will find lots of great info as you begin to participate on the forum. 

As for your dilemma, based upon your description of the property I would not buy it as a rental. Being so far away from town and really nothing special enough about it such as lakefront or unique lot I think you would have vacancy issues. What are the odds of buying it cheap enough to fix up and resell it, how long do homes in your community stay on the market. Even if you didn't make a ton on the flip you are gaining appreciation on your personal home, just a though and best of luck to you!

@Karen Avery , welcome to BP!

Is the property on Princess Lakes and/or is there lake HOA fees? This can be a variable that can kill cash flow.

If it's bank owned, just offer them enough to fit your calculation - don't pay any attention to the "list price".

Don't forget - if the offer doesn't embarrass you - it's too high!

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