Who's had recent success BRRRRing in Indianapolis?

Question

If you've recently BRRRR'd a property in Indy, I'd be interested to hear what you learned.  What went well? What went wrong? What would you do differently?

What neighborhood? How did you find it?  ... all the questions. Haha

Simon Stahl · Answer

I haven't closed on the loan yet. That will happen tomorrow. But I already know how the numbers will look. This was my first OOS BRRRR attempt, so I am still learning a lot. I got the property from one of those all-in-one wholesaler/rehab manager. They send you off market properties and also manage the rehab for you. They were pretty low with their estimate and I guessed it actually right when I thought that it will probably be about double. The two mistakes I made were:

• I ignored the property style when looking at comps. There were tons of good comps around that area, but the appraiser ignored them all and picked the ones that were in the same style as mine. So his ARV came in about $20k lower than what I expected.
• I guess I did not communicate clear enough with the lender. I thought they don't have a seasoning period, but then it turned out they do. That caped my max loan amount at the purchase price.

I think all in all, it went pretty well though. I left a bit more money in the property that what I wanted, but I definitely learned a lot. Next time I will pay more attention to the comps and either look for a lender without seasoning or just wait the 6 month out.

I hope that helps you a bit @Jean Laurin and good luck!

Simon

Simon Stahl · Answer

@Noam Ofan I actually added this property to my profile a few days ago including some numbers. Purchase price was $64k including assignment fee. Rehab was around $23k. Looking at the $80k appraised value, that does not look too good for me, but I opted not to fight it even though I still think it should be worth more.

Noam Ofan · Answer

@Simon Stahl, Can you share how much you paid for the property?

Thanks again for sharing all the above numbers

Simon Stahl · Answer

@Noam Ofan I believe the wholesaler did provide comps. I'm not even sure to be honest, because I don't even look at those. I usually get my comps from redfin - that is all I can get as non-realtor. That works pretty good for me, I just had to realize that not all property sales are listed there. Some comps that the appraiser used were still listed as "under contract" on Redfin and others were not there at all.

They were off 100% on the rehab estimate. But that is pretty much what I thought from the beginning that the rehab should be about double of what they first mentioned. They said $10k, I assumed $20k and it ended up at $23k.

I had to dig through my emails for the ARV that they listed. Looks like they were way off. They listed an ARV or $115k, but again, I ignored that from the beginning. I came up with $90k to $100k which would have been true when you look at all properties in the area with the same rehab level. Unfortunately the appraiser only looked at properties that had the same "look" from the outside and they were priced lower than the others. So we ended up with an ARV of only $80k.

Noam Ofan · Answer

@Simon Stahl

When you say you ignored the property style when looking at comps - Did the wholesaler provide you with comps or you got them elsewhere?

And how far off was the wholesaler on his:

• Rehab estimate
• ARV estimate

Thank you for sharing your experience

Chance Thurman · Answer

@Simon Stahl

Awesome, great info.  Thanks you.

Simon Stahl · Answer

@Marlo I. I've used Mainstay Property Group. Mostly because they were the ones that sent the deal to me, so I thought it would be ideal to also let them manager the rehab. I cannot say too much about them after only working one time with them. Everything worked out good. We stayed on time and on budget. The only miss that we hat was the initial rehab estimate, but I did not believe that anyways. The property is out in Cumberland, so quite a bit away from downtown. Seems to be a quiet area with rents a bit higher than some low rent areas.

@Chance Thurman I'm getting a 75% LTV loan. That seems to be the default that most banks will do on investment properties.

Chance Thurman · Answer

@Simon Stahl

What LTV did you for the refi?  Just curious, I’ve been working all my numbers on a 70% LTV but spoke to a bank the other day that said they would do 75%.  Would you mind sharing the address of the property?  I’m from Indy area and just wanting to absorb all the info I can.

Marlo I. · Answer

@Simon Stahl hey Simon thanks for the helpful info. I’m just starting to research the Indianapolis area and thought about going using same route with finding a property through an all in one service wholesaler/rehab. Could you share which company you used? And also which area in Indianapolis your investment is located in? Mahalo

Jay Hinrichs · Answer

rehab double ARV off by 20k..  its good you can absorb that others would be in a tizzy.. lets see how it all works out. its good you have a one stop shop though that should mitigate contractor issues that are abundant in those type of deals when your not local or a volume client .

Who's had recent success BRRRRing in Indianapolis?

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