Familiar with Indy, 46201? Thoughts on this deal?

Question

Hello BiggerPockets Members!

I've purchased my first out of state property in Indy about 2 weeks ago (mid-Jan), and am looking for the 2nd.  Details on the deal:

• Address: Emerson Heights, Indianapolis, IN   (I'd prefer to not put the address in this post though willing to share over direct message)
• Purchase Price: $115K
• Rehab Estimate from Contractor: $60K
• ARV: $210K
• Rent: $1200
• Bedroom/Bath: 3/1.5
• SqFt: 2172
• Lot Size: ~6400
• Year Built: 1923

I'll likely make this a fix & flip as I can't really get the numbers to work on a hold.  However any thoughts on the ARV?  Am I being a little aggressive?  Additionally the inspection did find some roots in the sewer which the rehab estimate doesn't cover.  For those familiar with the Indy area, is a sewer lateral inspection & fix required at the time of sale?  And there is some minor slopping in the floors.  Is that expected in this area with the age of the property or would this scare away prospective buyers?

Thanks for the insight and any other thoughts you have!

Tchaka Owen · Answer

Emerson Heights isn't the issue (it's neither spectacular nor bad). Here's the problem:

Purchase Price: $115K, Rehab Estimate from Contractor: $60K, ARV: $210K, Rent: $1200

At what point in your research leading up to purchase did these numbers make sense? @Aaron Signer suggested you'll walk away with $10k on a flip; that's IF your numbers are correct. One slip and you're making ZERO. Renting at $1200 after you've put in $175k? And that's not including closing costs. Terrible numbers.

You're not in SF so you need to get your numbers out of your head (I have a number of friends in the area and am aware of your numbers) and remember that this is the Midwest.....totally different set of numbers. Cashflow is a given. If you're not getting cashflow, go to the next. Indy has been one of the hottest markets for OOS investors, many from CA and many of you are being taken to the cleaners. Deals in Indy do exist, but be patient and walk if the numbers don't work. Because there will be another deal before long.

Aaron Signer · Answer

Based on the numbers I am running off the above, you are looking at less than a $10K profit on the flip (57% CoC ROI vs 7% CoC ROI holding post refi (interest rate and how much you are borrowing are big variables).

I think you are making the right call and I wouldn't touch the sewer but budget "walk away money" to give in credits at time of sale on the flip.

Regina Sloan · Answer

Hi Micheal, I am new to REI in Indy, but I am familiar with that area and my husband and I have looked at many properties in Emerson Heights... it is an up and coming area. You have a good room/bath ration and decent size. I would ask who gave you the ARV? it's usually wrong when we are dealing with wholesalers... also, if you are buying off-market, likely neither of those issues would be fixed at time of sale by seller.. the properties are going to fast. 46201 is an ok area, but I'm seeing great flips in 46203 and 46218/9 areas more. Again, it depends. You're usually good, if the numbers work out, if it's close to downtown, near Irvington, Fountain Square, Avon, speedway.

I'm not really experienced, but I Know the areas pretty well, talk to people who are more experienced than I am, and have done alot of reading,etc.

Can you tell me you do your numbers to knw that it's not a good buy and hold? This is where I struggle.
also, you bought your 1st property here 2 weeks ago... was that a flip/buy and hold? We're struggling to get a property under contract. Waiting to hear about one now, would be the 3rd we've put an offer in on.

We're looking for flips (1 at a time) and rental properties.

Steve Lehman · Answer

@Michael Sykora My business partners and I are local investors in Indy. We have been buying, managing, and flipping Little Flower, Bosart Brown, Emerson Hieghts, Christian Park. Irvington, Etc for over 13 years. I am in these neighborhoods and surrounding communities daily. I would be more than happy to help you evaluate your deal. DM me if you still need help.

John Rankin · Answer

Hi Michael, I also picked up a deal in Emerson Heights recently with similar features to yours. I think the rent could be higher but really it all depends on your level of rehab. One of the challenges I've found in this neighborhood are that the property taxes are a lot higher than some neighboring areas which eats into your cashflow. Because of that I am planning to sell mine rather than hold as a rental.

Mike D'Arrigo · Answer

@Michael Sykora Emerson Heights can vary by street so there's no way of knowing if the projected ARV is accurate or if this is a good area. The further east you are towards Emerson, the better, but if you are on the west side of Emerson Heights, which is right by Grace Tuxedo Park it gets pretty rough and I would not recommend it. As far as roots in the sewer, that very common in Indianapolis and a lot of the midwest. You've obviously had a sewer scope done. As long as there are no cracks or breaks in the line, the roots can be cleared out easily.

Familiar with Indy, 46201? Thoughts on this deal?

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