Need help from Indianapolis Investors
I am interested in a 3 bed/1 bath 2139 sq ft all brick ranch property in the Millersville 46205 area in Indianapolis, it is an REO with an asking price of $52k. Here are my rough estimates as I have not walked the property, this will be fix/flip. It has well/septic. Finding sale comps in Indy that are 1 mile or less away from target in last six months is challenge.
Purchase Price: $52k
Repair Estimate: $40k
Projected holding time: Max 90 days or less
Comps:
1. 3/2 sold Feb 2015 for $135,000 (0.4 miles away)
2. 3/2 sold June 2015 for $199,900 (1.1 miles away)
3. 3/2 sold May 2015 for $189,900 (1.7 miles away)
ARV: $174,993 - $30,000 required profit = $144,933 - $40,000 rehab = $104,933 - $20,880 realtor/holding/points/closing = $84,053 MAO ($32,053 below asking price)
Below is a conservative ARV based on $164k median home values in Millersville:
ARV: $155,000 - $30,000 required profit = $125,000 - $40,000 rehab = $85,000 - $20,880 = $64,120 MAO ($12,120 below asking price)
Any advise/insight would be appreciated.
If there aren't recent sales comps closer than a mile away then you're probably looking at a rental area. If it is in fact an investor/rental area you'll want to use a different ARV usually somewhere between 45-55 times rents.
Indianapolis is difficult to navigate investment wise as neighborhoods change dramatically from block to block. If you're talking about Millersville Road south of 46th you want to at least drive the block and drive your comps to confirm your ARV number. There are pockets of really good stuff over there by Cathedral High School and north of 46th off of Binford Parkway
Also Check to see if the property is in IPS or Lawrence Township because for that area being in Lawrence Township should typically command at least $100 more P/M in rents
Hi @Kerry Edwards unfortunately I am not that familiar with Indianapolis I haven't lived there since I was 9, but still have family there and my brother actually found this. Its on N Tuxedo St near Broad Ripple Park, Martin University and Holliday Park in Marion Country, not sure what township. Nearby schools include St Matthew Catholic School, Rousseau MC Clellan 91 School and The Challenge Foundation Academy.
I am trying to get comps from a couple local folks with MLS access, so hopefully they will be able to give me better ones than what I could research.
Good point a about the rental area versus owner-occupied area, I hadn't looked at that and yes Indy is very difficult to track comps and the non-disclosure rules make it even more challenging.
I was in Indy this past 4th of July weekend and was able to see the exterior and drove the area. If I am able to get under contract I will make another trip there to walk the property and get a better look at repair needs with contractors.
Any contractor referrals are also welcome.
Appreciate the reply.
Based on the very limited data you provided, I think you need to do a lot more due diligence.
N Tuxedo Street is not anywhere close to Broad Ripple Park.
The 46205 area code is pretty central Indianapolis, but you have a septic system - why are you even considering this?
If you cannot find comps nearby, you should be very cautious/suspicious? Ask "why are there no sales?".
Based on the information provided, there are a lot of red flags.
All good advise above.
Don't forget that most well/septic homes in the city limits do, or will have, orders to be connected to city water/sewer by the next owner - this can run $7500 +/-.
Also, I wouldn't go out to 1 mile for comps - the area can change drastically within that range.
@Matthew Schroeder and @Shawn Holsapple, a local BP investor/realtor is going by the property today and pulling MLS comps for me. Matthew I got the location information from the Redfin descriptions. I have a list of other properties from my visit but without MLS access to 1-mile radius comps and DOM Indy is a challenge.
I was in Indy this past 4th of July and saw the exterior of properties and drove the different areas.
Shawn I did research the well/septic issue and that kind of reduced my concerns about potential cost to convert if required. If I have the proper margins based on solid ARV, it's getting a solid ARV and rehab costs.
I have been lurking and reading all manner of RE material for a year, I made a promise to myself that I would have something under contract by end of July. So I registered to do business in Indy, have my attorney & CPA, launched my first Indy direct mail campaign yesterday, visited Indy to drive areas of some of the properties I was interested in.
Still struggling to find a contractor in Indy but I think they are not taking me seriously because I do not have a property under contract.
I am just need to start making offers and do the best I can to research area, prices, repair costs and re-sale potential. I am getting my RE license for VA and will hopefully be able to apply for a non-resident license in Indy. Hopefully this will give me better access to the data I need.
I appreciate your advise and welcome any guidance you can give based on your knowledge of the area.
Thank you,
@Juan R Perez, thank you for reply, I do have a couple properties on 42nd that I am reviewing also. Thankfully I have family in Indy that are familiar with the area, I am trying to get a handle on what actual ARV is because Indy really is neighborhood by neighborhood.
But within the neighborhood the sale prices can range from $50k to $250k because of investor activity.
I will have a property by end of July, whether it be this one or one of the others.
@Matthew Schroeder and @Shawn Holsapple, Indy has a lot of well established neighborhoods where people don't move/sale for 30-40 years which could impact the difficulty in getting 1 mile radius sale comps.
What is your experience with that and how do you handle? I have looked a properties in multiple areas and a price ranges and have yet to find consistent 1 mile sale comps. I know the fact that I do not have MLS access is a huge factor.
If you pm me the address, or even a general cross street, I will see if I can find some recent sales or other information for you. Not to worry, I am just trying to assist you in making an informed decision, and don't have any interest in that particular area/neighborhood of Indianapolis, so there is no conflict of interest.
@Matthew Schroeder just IM'd address. Thanks