New to Real Estate · CA · Member since 2021 · 8 posts · 4 votes
Hi everyone, I have been looking at properties in Indianapolis and have been really deeply entrenched in getting to know areas from out of state- my plan is to go there soon- but work is tying me up at the moment. I am getting an offmarket duplex in this area. Purchase price is 110k and total rent around 950$. The numbers work out well from cash flow perspective but can one get stable tenants in this area?
I read on another thread that most of MFH in indy are generally not in desirable neighborhoods so i was wondering whether this is going to be a headache in long run.
This is close to fountain square but not in core FS, so Is there a possibility of future appreciation on these streets too. Just wanted to get an idea on the experts from this area.
I won't speak for Fountain Square, what I will say is that in Indy, it is unlikely that I would pay $110k for a duplex that's generating $950/month gross. Emphasis on "unlikely".
There's no one way to invest or single rule, but it's safe to say that a $110k duplex should gross in the $1200-1400 range (and easily could be higher). Again, that's Indy. Each city is different.
I won't speak for Fountain Square, what I will say is that in Indy, it is unlikely that I would pay $110k for a duplex that's generating $950/month gross. Emphasis on "unlikely".
There's no one way to invest or single rule, but it's safe to say that a $110k duplex should gross in the $1200-1400 range (and easily could be higher). Again, that's Indy. Each city is different.
Just be careful of the river for flooding issues. DNR has a map you can see.https://dnrmaps.dnr.in.gov/app... As for tenants, yes you can have issues with finding good tenants. The area has seen improvement and its not as bad of an area as some to the East of that area. I'd only look at it if I can get a DSCR of 1.25 or better, and with a PM you prob cant. MFH have headaches and even with using a good PM you may find its not worth it. It really depends. What are the individual units size? 2/1 ? I ask bc 2BR units don't find as good of tenants as 3BR and larger IMO. Did you calculate the higher taxes, and standard PM costs into your numbers? I ask bc you don't meet the 1%rule and for a MFH that's rare. Hope this helps!
Can I chime in with Tchaka? Literally today, there was a wholesaler selling one of my PM clients for $105k a duplex in Shelbyville IN (suburb donut county to southeast of Indianapolis). This duplex generated $1400 in rent rev, with seller floating near $300 a month in utilities. I advised against the deal as we have 4 plexes here that generate $2200 in rent rev with utilities separate and they sell for $120 to $140k.
I can't speak for other variables there in Indy as I push the suburbs. So if there is a long term hold/gain scenario, I hope there is. You should be able to do much better with your cash.
Hey @Allvin Dsouza! First off, I agree with @Jeremy Johnson on checking for flooding issues. Being in a flood plain can be an immediate "no" for investors for good reasoning as it can have a negative impact on your forecasted cash flow.
The company I work for currently has a few PM units that are SFH in the Fountain Square neighborhoods. I think finding high quality tenants can for sure be a headache for some over there and other problems like crime can arise in certain locations as well. However, I think tenant screening process is crucial in terms of leasing your property and can lead to a better scenario for yourself & property management. We have found that detailed screening processes allow for higher quality of tenants, especially in an area like FS that has a mixture of young professionals but also areas that are just starting to gentrify.
I would be happy to connect more and shed some light on how the numbers as well as our experiences have been with working with investors and managing/finding deals in FS.
Can I chime in with Tchaka? Literally today, there was a wholesaler selling one of my PM clients for $105k a duplex in Shelbyville IN (suburb donut county to southeast of Indianapolis). This duplex generated $1400 in rent rev, with seller floating near $300 a month in utilities. I advised against the deal as we have 4 plexes here that generate $2200 in rent rev with utilities separate and they sell for $120 to $140k.
I can't speak for other variables there in Indy as I push the suburbs. So if there is a long term hold/gain scenario, I hope there is. You should be able to do much better with your cash.
Absolutely! And thanks for chiming in - your input and experience is valuable (to me as well).
@Jeremy Johnson - Thanks for your inputs. There are two duplexes - 1/1 each side and the other one just says 3/1 duplex ( not sure if the bathrooms are 1 in total or 1 on each side). I will definitely check the flood map. You are right. Considering higher PM costs dealing with tenants, capex and mostly higher vacany /tenant turnover this doesnt look like a good deal.