HELP! Indy SFRs Have Been Vacant for Months...

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HELP! Indy SFRs Have Been Vacant for Months...

Annie Li
Rental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votes

Hello Everyone...I have been struggling with finding tenants for my last two SFRs in Indy and would love to get some advice from people who are experienced in Indy rental market.  Any help is greatly appreciated.  I hope my experience may also help other investors who are interested in or have just started in Indy buy and hold market.

I am a newer out of state investor.  I started from Indianapolis buy and hold market and have closed 3 SFRs there since December, 2015 (the other 3 SFR transactions fell through for various reasons).  I was planning to purchase at least 7 more by end of 2016, but because of the challenges I have been facing to find tenants for my 2nd and 3rd SFR, I have decided to slow down my pace or change my strategy until all my properties have been rented out.

The 1st SFR was rented out easily because my property manager happened to have a tenant that wanted to move to a larger rental quick. The 2nd one was closed in the beginning of January, the 3rd one was closed at the end of April; both have been vacant till now.

The addresses for my 2nd and 3rd properties are: 

5405 E 21st St, 46218 (750 sf, 2 bed 1 bath with basement, central heat, no air-conditioning, built in 1953)

2401 N Sheridan Ave, 46219 (1173 sf, 4 bed 1 bath, no basement, central heat/air, built in 1949)

Both properties are in very good shape, all new paint and flooring, both have double-pane windows, 2nd property has brand new exterior paint as well.  2nd one is listed for $675/month, 3rd one is listed for $700/month.

I tried working with section 8 through my PM on my 2nd property since the beginning of March and have found tenants twice, but the inspection and paper work with section 8 are extremely slow, so both tenants went for different properties.  We are marketing for regular tenants now.  

I used a different PM for my 3rd property.  After rehabs were done at the beginning of June, I listed it for $750 and lowered to $700 at the beginning of July.  I asked my PM why there are still no qualified applicants for the 3rd property after rent was lowered, he said there are many rentals on market, but for a property with reasonable rent, good shape and 4 bedrooms, I can't think of why nobody wants to rent it other than 3 applicants that had eviction or criminal records (their applications were rejected).

I have a full time job in California; even though I can fly to Indy if needed (I am a remote employee), I feel quite helpless when things like this happen.  Please help.... 

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Matthew Schroeder
Investor · Carmel, IN · Member since 2014 · 332 posts · 245 votes
10y

@Annie Li  According to public records, 5405 E 21st sold for only $17,500 in January 2016.  Is that your purchase? It is not in a great part of town.  It is only 2 bedrooms.  No aircon.  You are asking $675/month - while that is not expensive in Indianapolis, that is also not cheap.  Do you see any disconnect here?  Although you may not want to hear it, you should happily lower the rent, attempt (make sure!!!) that you get very good tenants who pay a reasonable rent, as your financial numbers will still be very good!

2401 N Sheridan is a similar story.  Paid $24,000, right?  No matter what you hear to the contrary, that is not a very nice neighborhood.  Anyone can buy houses in the neighborhood all day long for $20,000 - $30,000, although a lot of investors/locals simply choose not to play in that sandbox.

For future purchases, you might want to try a different neighborhood, if nothing else, than to diversify your risk.

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  • Alain Perez-Majul
    Investor · Indianapolis, IN · Member since 2015 · 394 posts · 116 votes
    10y

    I agree with @David Ceo. Seems pretty ridiculous to be paying him $100 a month while it's not producing and he's not doing such a great job at getting it rented. Which leads me to the next point:

    "He said if he posts on Internet, it would be too much hassle dealing with applicants from all over the places. I'm not sure how to comment on this."

    This just sounds like he's lazy and doesn't want to deal with a lot of traffic/doesn't know how to handle it. What does he mean "from all over the place"? Who would be wasting their time applying for a rental property if they're not going to be living there, specially not being from or looking to live "in the area"? You WANT the exposure- my PM lists on all the sites you mentioned and on top of that, the MLS.

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  • Tanya Smith
    Real Estate Agent · Saint George, UT · Member since 2016 · 33 posts · 14 votes
    10y

    @James C. if you dont mind; where did you buy? how diversified were the areas? and how many properties did you begin with?

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  • Annie Li
    OP
    Rental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votes
    10y

    The lease for my 3rd property was signed today.  I guess posting on BP brought me good luck; I will visit BP more often.

    @Account Closed I realized that as soon as he told me about this charge.  I overlooked this clause while signing PM agreement; if I have seen it, I wouldn't have signed the agreement.  But it seems like he didn't take advantage of this clause and tried to rent it out as quickly as he can, which I am grateful.

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  • Joseph Leonard
    Fishers, IN · Member since 2016 · 57 posts · 9 votes
    10y

    @Annie Li - glad to hear they all got rented out. I own a rental about 10 mins from your 21st St. property. Mine is around 16th & Shadeland. It was actually my first rental in Indy and I just picked it up about 1.5 months ago. It took me about 3.5 weeks to get it rented out. 

    I didn't use a PM and did all of the advertising myself. I put a sign in the yard, posted it on Postlets.com and also on Craigslist. I had a lot of applicants but I ended up passing on several of them because they didn't meet my criteria. It is a 2 bed 1 bath with an attached 2 car garage. I first had it listed at $850 and ended up dropping the price after about a week and a half because the market was telling me I had it listed too high. I, like you, was scratching my head a bit at first but started to realize that 1) it's not a very desirable part of town and 2) I had it listed a bit too high to start out with. 

    In your explanation about your PM, I also have to agree with some of the other members that it seems he was a bit lazy by not advertising it online. When you're listing a property for rent, you want to create the largest funnel of applicants you can get. It was also a bit strange that he made more not having it rented than he did having it rented. That seems like he's looking out for his best interests and not your best interests as the customer. Let me know if you would like a recommendation on another property manager for future rentals as I have a couple I could recommend to you that manage rentals over in that area. Good luck!

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  • Annie Li
    OP
    Rental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votes
    10y

    @Joseph Leonard Thank you for sharing!  I'm glad yours was rented out without much delay.  I will PM you for PM info.

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