Investing in Indianapolis area from overseas (Australia)

13 Replies

Hello,

I am relatively new to the forums though I have been lurking (reading and listening) for a few months now.  BP is an amazing website and thank you to all who offer their wisdom and experience so that the rest of us can learn!

My husband and I lived in the Indy area prior to relocating to Australia in 2009 (we both have US citizenship) and decided that since we know the Indy area (mostly suburbs, not so great on the city itself) and we have a trusted contact that is doing PM for us, we would start here.  We are not averse to looking into investing in other cities with recommendations  from BP members and after doing our due diligence.

Our plan is to buy and hold and generate a target income of $10K/month in CF over the next 10 years for our retirement.

We purchased a TH in Fishers in July while we were in the US and I wish we would have found this site prior to that purchase( (buyers remorse).

I believe the following have been our mistake and would welcome any feedback:

1. We purchased a property for retail (149k)

2. We put down 70k 

3. We purchase at the mid/end of the season and it still has not rented

4. HOA fees are crazy at 220/month

My questions are

1. Would you sell the property and then take the proceeds and do a 1031 exchange and use that money to purchase 2 or more rental properties? (buying much wiser this time)  I there a timeframe fro doing a 1031 exchange?  and can i sell one property and and buy more than one with the proceeds (not really proceeds, as I know we will end up taking a fairly large loss on our cash, not including our expenses for the last 6 months) 

2. Would you get a HELOC to purchase another property?

3, Would you leave it and save up cash (in about 1 year) to use for a down payment for another rental?

I know that 1 and 2 are probably the preferred and would speed up our plan as it would allow us to acquire more property, sooner than number 3.

As you can see and we have learned through the forums and podcasts, that we have made just about every rookie mistake in REI.

Ah well nowhere to go but up, now.

I look forward to your comments and questions.

Cheers,

Brenda Harper

Don't need a 1031 exchange because you will not have a gain.. Would need to see the whole picture but my guess you should sell what you have and develop a new path for success. Our investor are averaging returns that are 13%+ returns.we did 40 flips in 2016.. Developed some great holds for people that had equity plus great areas and easy to rent with excellent cap rates
.. Dave Short

I agree with David.  Sell and develop a plan.  But, be care who you trust.  Hang in there.  There are plenty of deals out there.  A good property manager will be more than worth their weight in gold.  Although I manage my portfolio in the market I live in (over 150 housing units plus commercial property), I use a property manager for the portfolio I have in another city.  I tried to manage from 100 miles away and it was just too hard.  I have actually taken some plays out of that PM's playbook (we are now upgrading out property management software to Appfolio).  Happy to answer other questions for you.

@Brenda Harper Indianapolis is a great investment market and since you've lived there and know the market, personally, I don't see the point in looking anywhere else. I would stick to the suburbs that you know and avoid most of the inner city unless you really know what areas are ok. I'm confused with your statement about buying a $149K property for retail but it's not rented yet. I consider retail an owner occupant buyer so I'm not sure why you're trying to rent it. If you are trying to make it a rental, it's probably not going to have a very good ROI due to the price point. We sell turn key rentals in Indy so I know the area well. Let me know if I can be of any help.

@Brenda Harper I agree with selling the condo. I'm guessing by your numbers it wouldn't cash flow or doesn't leave much for you at the end of the month?

I'm sure your PM is nice but why hasn't it rented after 5 months?  Are your comps off and so is your rent amount?  What's driving renters away?  

Thank you all for your replies!

@David Short What type properties and in which areas?  Could you give me some examples? I would be interested in chatting more.

@Ben W.  The property would CF about $230 when rented.  Our rent is competitive and in a new development.  I think it may be the time of year and that their are a few rentals currently available in this area.  Maybe we need to drop the rent to at least get someone into the TH.  I will need to investigate this more.

Cheers,

Brenda Harper

@Brenda Harper

You just bought the house a few months ago, so unless you have had a substantial appreciation in the past few months you would not need to structure a 1031 Exchange transaction.  You would likely be able to sell with no tax consequence (or potentially a small loss) and then reinvest on your own timeline.

@Brenda Harper

I deal exclusively in the Indianapolis and surrounding areas and have been doing so for the past 15 years. I'd be glad to answer any questions you may have about the Indy area or suburbs in regards to rentals and turnkeys. Get a hold of me by email or phone and I'd be happy to help out.

Best
Steve Lawson

@Brenda Harper - Welcome to BP!

I've worked several investors from down under and many of them have done the same thing you have.  They have now restructured themselves and are getting solid returns.

All good points above - a great team on the ground with a strong property manager in the middle is crucial to make the remote investing work.

Feel free to PM or email me with any questions.

@Brenda Harper - Welcome to BP!

You have come to the right place to expand on your knowledge about all things real estate. As you can see from the previous posts, you will find there is no shortage of knowledgeable experts in the Indy market. 

When it comes to buying, rehabbing and producing solid returns on properties @David Short is one of the best in the Indy market.

@Shawn Holsapple is one of the most active investors in the Indy market and a valuable resource on all fronts.

@Eric Gaudio is my go to resource when I am working with investors that need property management. 

Again, there is no shortage help and you have come to the right place. 

Don't forget to set up keyword alerts for topics that interest you, especially the Indianapolis market: http://www.biggerpockets.com/alerts

All the best in your RE Investments and if I can assist please don't hesitate to PM!

If you're in Australia and you own a house right now at all in Australia, you should be concerned about your own area and not Indy. Australia is in the biggest housing bubble in the world right now and all signs point to a 50% drop in 2016. I would be pretty careful about spreading yourself too thin. Right now is Australia's 2008.

@Bill Exeter Thank you for your input and expertise.

@Steve Lawson Thank you. I am sure you will be hearing from us in the future!

@Shawn Holsapple Great to hear someone that has some experience working with Aussies.  

@David Short Hi David the property address is 14048 Wimbledon Way, Fishers.  In the Pulte Avalon development.

@Glenn Antoine Appreciate your offer for assistance and I am sure we will be reaching out to you sometime soon.  And also appreciate you letting me know who you recommend.

@Vincent Crane Hi Vincent.  Fortunately, we are renting here.  We never bought property for the affordability reason (the prices reminded me of the US prior to the crisis and have made me very wary) plus we like the flexibility that renting gives us right now.  Real estate prices are out of control here.  For what we would pay for a 3BR/1Bath home here in our suburb (most suburbs), I can buy at least 3 or 4 properties in Indy.  Also the rents are calculated differently for considerably less returns.  Most people invest in property and negatively gear the property as they are can realise huge tax savings. 

Example a 3BR/1Bath home would sell for $400,000 and rent for approximately 400 per week....which equates to $1734/month!   And that is a Brisbane suburb.  Sydney and Melbourne prices are higher yet.  

And the have heard talk of a property bubble here ever since we arrived in 2009. Appreciate the heads up but our thought is: we can obtain much better performing property in the US at a fraction of the cost and the returns will be in US dollars, so for us it is a win/win. If the market here does something similar to the US in 2008, then we will definitely reevaluate our position. Who knows maybe we will end up with REI properties in the US and Australia?

Cheers,

Brenda

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