OOS Investor - Just Opened Escrow on my First Indy MF

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OOS Investor - Just Opened Escrow on my First Indy MF

Peter Aziz
Rental Property Investor · Valencia, CA · Member since 2015 · 54 posts · 28 votes

Hey guys... Long time investor from CA (Los Angeles, all SFRs) that entered into contract on an Indy MF. The property is located off of E. Washington right across the street from Willard Park. The home is comprised of a 1+1 and a 3+1 pulling in about $1.8k/mo in gross rental revenue ($800 for the 1+1 and $1,000 for the 3+1). I have a few questions that I'm hoping the forum members can help me with:

1 - My understanding is that this is a C/D neighborhood - would you agree? Any safety concerns that should be taken into consideration? Is the surrounding area being improved and would one reasonably expect this neighborhood to perhaps upgrade itself into a B/C within the next 24 months?

2 - I've reviewed the lease agreements and it appears that the landlord is paying for all utilities. Is this common in Indy? In CA, I pay for gardening/pool service, but not for utilities. I'm considering perhaps lowering the rent a bit in exchange for the tenants taking on the responsibility for the utilities, but also understand that this may be a no-go in this area. 

3 - The rents appear reasonable to me based on my due diligence ($800 for the 1+1 and $1,000 for the 3+1) - would you agree?

4 - What would you estimate for average monthly power, gas, water, and trash (I know, this is going to be a wide range depending on # of occupants, climate sensitivity factors, etc)?

5 - If/when I have turnover, what's the timeframe to realistically expect to have each unit reoccupied in this area? 

6 - Given the neighborhood 'grade', should I be concerned about vandalism and/or theft if/when I decide to rehab the property?

I appreciate all the help and support. I'll be flying into Indy on the 12th and staying through the 14th and am happy to buy ya'll a round of beer :) 

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Kenny Hall
Property Manager · Indianapolis, IN · Member since 2020 · 122 posts · 64 votes
4y

@Peter Aziz hey!

Congrats on the new opportunity in Indy!

1. This is a C area in my opinion. Indy is very street to street and can’t be judged based on the zip code. I personally like the area you’re at - but there are area that will appreciate and stabilize faster. I wouldn’t plan on it heading to a solid B in the next 24 months. Look at areas south east of fall creek for that type of movement. Safety comes Into play primarily with targeted crime, otherwise vacant properties and appliance theft is high. I would say you’re probably good depending on your current tenant’s backgrounds.

2. Owners paying for utilities is common in lower income areas but not a best practice. If the opportunity comes to switch Into tenant’s name, go for it. Is the property separately metered? It’s understood in the prospective tenant pool in Indy they will pay for utilities.

3. Depending on the qualify finishes and overall condition of the units, this is better rent than I would have expected. However, I believe there’s about 10-15% of meat still left on the bone here for each unit.

4. Typically average $150-$200/mo in total for utilities, but request a 12 month average before close.

5. Turnover depends on the season. There’s a bit of a slow in the leasing right now, but will pick up again at the end of the year and January and then super hot again early Spring. A quality property manager will have means and marketing tools to help land a quality tenant within a week of listing.

6. When doing rehabs, typically recommend not putting appliances in until the very very end and even marketing without them. They can live in a storage unit or Lowe’s can hold them for you until a day or two before the tenant moves in. Just takes some Intentional planning. Also encourage a SimpliSafe per unit. Typically a $200 hardware investment and $25/mo monitoring fee.

Would love to connect while you’re in Indy - shoot me a message and let’s plan on it. Always happy to help!

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  • Kenny Hall
    Property Manager · Indianapolis, IN · Member since 2020 · 122 posts · 64 votes
    4y

    @Peter Aziz hey!

    Congrats on the new opportunity in Indy!

    1. This is a C area in my opinion. Indy is very street to street and can’t be judged based on the zip code. I personally like the area you’re at - but there are area that will appreciate and stabilize faster. I wouldn’t plan on it heading to a solid B in the next 24 months. Look at areas south east of fall creek for that type of movement. Safety comes Into play primarily with targeted crime, otherwise vacant properties and appliance theft is high. I would say you’re probably good depending on your current tenant’s backgrounds.

    2. Owners paying for utilities is common in lower income areas but not a best practice. If the opportunity comes to switch Into tenant’s name, go for it. Is the property separately metered? It’s understood in the prospective tenant pool in Indy they will pay for utilities.

    3. Depending on the qualify finishes and overall condition of the units, this is better rent than I would have expected. However, I believe there’s about 10-15% of meat still left on the bone here for each unit.

    4. Typically average $150-$200/mo in total for utilities, but request a 12 month average before close.

    5. Turnover depends on the season. There’s a bit of a slow in the leasing right now, but will pick up again at the end of the year and January and then super hot again early Spring. A quality property manager will have means and marketing tools to help land a quality tenant within a week of listing.

    6. When doing rehabs, typically recommend not putting appliances in until the very very end and even marketing without them. They can live in a storage unit or Lowe’s can hold them for you until a day or two before the tenant moves in. Just takes some Intentional planning. Also encourage a SimpliSafe per unit. Typically a $200 hardware investment and $25/mo monitoring fee.

    Would love to connect while you’re in Indy - shoot me a message and let’s plan on it. Always happy to help!

    2Reply
  • Peter Aziz
    OP
    Rental Property Investor · Valencia, CA · Member since 2015 · 54 posts · 28 votes
    4y

    @Kenny Hall Thanks for the response. This is very helpful. Perhaps I can PM you the address and we can take it from there? It also looks like you're a PM, so maybe we can talk and see if we can work together on this one :) This is my first opportunity in Indy, but looking to scale up to a dozen doors by end of 2022... definitely need a team out there :) 

    1Reply
  • Kenny Hall
    Property Manager · Indianapolis, IN · Member since 2020 · 122 posts · 64 votes
    4y

    @Peter Aziz shoot me a message. Looking forward to chatting soon!

    1Reply
  • Kristen L GarnerBusiness Member
    Lender · Phoenix, AZ · Member since 2021 · 451 posts · 287 votes
    4y

    Hi Peter, I live in Los Angeles but invest in Indianapolis (my hometown). I don't have much to add to @Kenny Hall amazing answer but wanted to wish you the best of luck with your new Indy MF! 

    [email protected]213-880-0434
    1Reply
  • Jason L.
    Rental Property Investor · Delray Beach, FL · Member since 2014 · 224 posts · 169 votes
    4y

    I'll also add that you can often get away with charging a fixed utility cost to your tenants, even when the property doesn't have separate metering. I have a duplex a few minutes away from there that my PM charges $60/mo to each tenant, which is just shy of being at cost. I'd check the leases to see if it says anything about the tenants being responsible. If nothing else, I think the rents are that duplex seem on the high end for the area, so you could at least argue that cost was being passed down through the higher rates anyway.

    0Reply
  • Jeffrey Evans
    Investor · San Jose Ca · Member since 2020 · 125 posts · 115 votes
    4y

    Congrats @Peter Aziz on your first multi family !  I will be there for the symposium on the 12th also..  Looking forward to it.  

    0Reply
  • Tyler LingleBusiness Member
    Real Estate Consultant · Indianapolis, IN · Member since 2021 · 440 posts · 292 votes
    4y

    Here's my thoughts as I've helped clients close on homes in this exact neighborhood. (We just closed on  4126-4128 E Washington)

    1 - RE: My understanding is that this is a C/D neighborhood -- This is now C grade and rapidly improving. New, nice apartment complexes right next to it. 

    2 - It is most common for water / sewer only because it can't be split on the meter. 

    3 - Those rents are great and at market value based on my read. 

    4 - Citizens (gas) 100-150 per month per unit. Same for electric. Water/sewer around 200 for the entire property. 

    5 - Not sure, honestly.

    6 - You need a solid property manager. PM for contacts. 


    I hope this is helpful!! Tyler

      [email protected]
      Roots Realty Co. 562 Reviews
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    • Bonnie LowPro Member
      Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
      4y

      @Peter Aziz - you might look at Section 8 rents in this area if you have an inclination to have Section 8 tenants. Here's the link to the Fair Market Rents according to HUD for your area. It may not take you to your county, but you can search by state then by county to see the rates for efficiency-4 bedrooms. They tend to run slightly above market rates with lower turnover. You'll get all kinds of pros and con opinions on Section 8 but it can be a good option, particularly if you're looking for slightly higher cash flow in C markets and lower turnover. You just have to do your due diligence to vet the tenants.

      https://www.huduser.gov/portal...

      [email protected]
      2Reply
    • Account Closed
      Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
      4y

      @Bonnie Low thanks for sharing. I was not aware of this resource.

      1Reply
    • Aaron Singer
      Investor · AZ · Member since 2019 · 57 posts · 22 votes
      4y

      @Peter Aziz

      Congrats on the deal! I have a couple properties just north and east of that area. Agreed with much of what's been said and would underscore the importance of securing your property (SimpliSafe is a great option) and having solid PM. Appliances are like candy for thieves. Don't leave them in your property untenanted unless you can afford to get them stolen - ask me how I know.

      Feel free to PM me - happy to talk shop. Love the Indy market!

      Aaron 

      0Reply
    • Tyler Rickey
      Investor · Indianapolis · Member since 2017 · 5 posts · 0 votes
      4y

      Hey Peter, I moved to Indy three years ago from Northern California, have bought properties all over the city. Im actually renovating a Duplex into condos right by your property, mine is on market st. I think you bought in a good area for appreciation, you are right on the edge of some good stuff and near downtown. The area definitely has a lot of homeless people, Washington st. is notorious for that, but you should have bright future Neidhammer Coffee is right by you as well, great coffee shop and work space. 

      I would definitely make utilities the tenants responsibility if possible. 

      Vandalism is definitely a threat there. I would recommend a good security on any unit you are renovating in the city. Ive had an insane amount of furnaces and AC condensers stolen, not really a thing in California from my experience, and they can get expensive replacing.

      Timeframe for getting a place tenanted definitely has a ton of factors, how nice you make the units, price, etc...

      Feel free to reach out when you come out here. Could probably answer a lot of questions and save you a lot of money and headache. Blazing a trail out here was not easy!

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