Rental Property Investor · La Puente, CA · Member since 2015 · 87 posts · 20 votes
I'm under contract with another Indiana SFH. My realtor has concerns about the neighborhood (at boarder of Gary and Merrillville), but my property manager thinks it's no problem to rent it out for $1,200/month. Please kindly share your thoughts if you are familiar with the area. Really appreciate it!
@Annie Li We bought it in the end of 2011, sold it in 2014, and i dont like to be negative, but this area will never recover, there is no chance for this area near Gary to recover, have you driven just down the block onto Broadway, you wont even have to go 3 blocks to see burned down, boarded and destroyed commercial real estate, tons of burn homes. Etc. I just left there earlier Dec. and someone was killed just a few blocks from this place.
I dont personally know @Sharad M. but i know quit a bit of investors and wholesalers out there that know him, and this is his area, he knows it well, and it takes a certain type of investor to invest in areas like these. You have to understand the type of renter this property will more than likely get. You should take a trip out there for a week, and just drive the area, get a feell for it and your eyes will open up, and it will give you more insight on where an out of state investor should buy, dont get me wrong, Lake County is gem to me, and this county has alot of nice house for cheap that rent well. But you have to know the area. It so important if you want to be as successful like someone like @Sharad M.
And I dont want to discourage you, but its so important you actually go there and understand the area and how much one street to the next can change. Homes prices here are kind of a mirage they look great from far off but as you get closer they dont make sense. 52k, you can find propertys for that price in a better part of the city. Patience is the key until you can development a nice marketing ninch to find better off market properties. My last purchase there was a 2400sq ft home we got for 48k. In a very nice part of the city.It took some direct mail, but it came out of no where. I think you should just keep looking, and get something that will bring in nice qualified renters that will make a property their home.
You may be able to get $1,200 for it, but you will need to spend some money to fix it before you can get that kind of rent. The property is very dated.
I own a property on the same street and I paid $28,000 for it and spent about $5,000 to fix it and I get $1,000/mo rent on it.
Check on this property to see if it has central air or if you can add central air to it down the road.
Honestly, $1,200 might be a little high for this property.
One other thing, even though the property has Merrillville address, it is in Gary school district. My tenants don't have any kids so they don't care about the school district and want to buy the house in a year or two from me.
@Sharad M. Thanks for the info, very helpful. My realtor had a video call with me while he was in the house. This is a well maintained house, central air, all hardwood floor, very spacious, partially finished basement. I'll probably spend about $3000 on paint and minor repairs. Does your house have high turnover rate? How long did it take for you to rent it out?
there are some decent pockets up there. I was looking at a house on the other side of Broadway about 5 minutes from yours and it was a nice neighborhood. Getting $1200 for a brick 3/1.5, 2 car garage witha Mville address isn't unrealistic. Even at $1000- it's good ROI based on your purchase price and getting it at 2/3 ARV.
@Sharad M. Thanks for the info, very helpful. My realtor had a video call with me while he was in the house. This is a well maintained house, central air, all hardwood floor, very spacious, partially finished basement. I'll probably spend about $3000 on paint and minor repairs. Does your house have high turnover rate? How long did it take for you to rent it out?
I think you will need to spend more than $3,000 on the repairs. I don't see hardwood floors throughout. I have had zero turnover on that property since I bought it 2.5 years ago.
From the pictures it looks like a little more than paint and minor repairs:
I was just looking at assessed value and listing history. There's a few houses just a block or 2 south selling over 100k.
I'm estimating you'll be all in after repair around $75k unless you got it way under list. I'd take that amount and go south more into Merrillville so you can get the higher rents, experience better appreciation, and deal w different tenants. I don't know how you and your realtor find stuff but you should be able to find something, be all at at $60k after repair, and get over $1g rents. I agree w Sharad that getting $1200/m on that property will require more than paint.
@Sharad M. I offered $52,000 and got accepted right away. I should have tried even lower...
You are right. Kitchen and dining are vinyl. All bedrooms and living room are hardwood (it's underneath the carpet in living room).
In that area, you are in Gary school district but paying Merrillville taxes. Taxes on that property will be around $2k or above. $52k is not a be price but in order for you to sell for $100k or above, you are looking at lot of updates. Better rental than flip, IMO.
I personally wouldn't buy anything in Merrillville north of 73rd Avenue and expect any sort of appreciation (in fact prices have gone done north of 73rd due to an abundance of foreclosures and crime). I agree with all above about the unlikeliness of $1200 monthly rent in that area for that condition house. My Merrillville properties get anywhere from $800-$1200 depending upon size and location, but none are north of 73rd Avenue, Just my $.02.
I'm currently looking at a property just south of 73rd and west of Taft. It is listed at ~$90k but I'm considering putting in an offer closer to $80k (assessed at $115k). My realtor assures me that houses in this area can get anywhere from $1100 to $1300 rent in the area. It's a 3 bed 1.5 bath, needs some work in the kitchen, flooring, paint job, but nothing huge.
Running the numbers with just $1000 rent seems good to me, about $200-$250 cash flow per month. Based on the above info it seems like this would be a good deal? Or should I look more into something like Annie found in the $50k-$60k range?
greetings, my partner and I first investment property was 1 block on 52nd st.., im from CA to, born and raised, long story short, alot of family there, i love it travel there at least 3 times a year, so i know the area just like i know my own streets. we have a couple in Merrillville now...but Anyway
Thats a very tough area, its extremely close to Gary, literally one block. A lot of high thief and burglary crimes really close to that area. we bought our property fairly cheap, rented it for $1100 and that lasted about 2 years. We could not find long term quality renters, its not a desirable area, the house kept getting broken into, and vandalized. I figured because it had a Merrillville address it would pass, however its just too close to Gary. And for the price plus rehab, its not worth it, i think you would buying a headache this close to Gary.
@Jason Farmerwhich year did you buy that house? I wonder if the area could have got better since @Sharad M.bought on same street as mine and is doing fine. The house has been vacant for several months but air compresser is still there; there are no bars on windows of houses in the neighborhood, it's just a very quiet residential area without anybody wandering on street....I'd love to buy in a better area of Merillville, but can I get it for a similar price? I doubt it. I'm a new investor so it might be a good learning experience for me to buy in a not so nice neighborhood once.
@Ken Van Haitsma Jr- @Annie Li- Before you buy anything in Merrillville, I would ask your realtor to show you SOLDS in your area within the last year. This will tell you what houses have been selling for for the last several months. I bought 1 south of 73rd and West of Taft (Independence Hill Area) for $17,900. Most are selling around 30k to 70k for Fixer Uppers, while the ones already Rehabbed are bringing only around 80k.
@Annie Li- Please don't buy something just to buy something thinking the area will get better. I can assure you it won't. Most tenants in that area don't stay long due to crime, etc.
You should do your do diligence and don't buy blindly. You will wind up with a PIG that will be a total money loser. There are properties in decent areas of Merrillville for less than $60k, you just need to be patient as they come up from time to time. BUT, I would suggest any new investor to only buy South of 73rd, and for $70k or less.
My highest rental rate in Merrillville is a 4 BR for $1100 in the Independence Hill Area. It rented out a few months ago, and took me 2 months to find a good, qualified tenant.
If you need any additional help or information, I would be glad to help out.
@Jim C. - Appreciate the information. Would you recommend only buying houses south of 73rd for $70k or less, even if the numbers make sense spending a bit more? The one I am considering I may be able to get for about $80k, but it is assessed at $115k, and similar houses nearby have sold for $105k-$125k.
I'm not planning on selling soon if I do make a purchase, but even getting $1000 per month for a home I spent $85k total on makes sense to me. Is there something I'm missing that would make this a bad deal?
@Ken Van Haitsma Jr- Yes. I personally wouldn't spend more than 60k in Merrillville. In fact, here is some houses that I was looking at and what they sold for recently:
7841 Whitcomb St - Sold for $44,000 (10/21/15)
7531 Marshall PL- Sold for $35,000 (12/2/15)
7495 Whitcomb St- Sold for $49,000 (10/8/15)
Yes, these houses needed some work, etc. but most of the houses in Merrillville do anyways due to age, neglect, etc. Never go by Assessed value when determining price. It's not reliable. Spending 85k for $1000 month is not a good return in my book for Merrillville. You won't have much (if any) appreciation, and your CAP EX will be more since these homes are older.
I'd be more than happy to grab coffee with you and go over in more detail about why I think your numbers don't work for me. As an example, in the above Solds above, most of these only needed about 5k to 10k to make them rentable. So, In the 1st sold, all in would be around $50k for $1000- $1100 a month. Not to bad. Does this make more sense to you finanacial wise? Do be too quick to pay retail for something that can be had for wholesale.
@Jim C. - That does make sense, and I'm definitely trying to think in terms of deals rather than buying retail. I think what I need to work on is making this clear for my realtor. I just recently began working with her and she is aware that I am looking for a good investment, but I'm also aware that she works on commission. So far she's been leaning to the properties at the top of my price range, which isn't surprising, so I'll probably need to use the information you provided to re-define what exactly I'm trying to do. I mentioned to her that I didn't want to do much more than cosmetic updates and no major repairs, so this might be why she is directing me to the $80-$100k properties.
I might take you up on coffee sometime soon so I can get as much info as possible going in so my first investment isn't a flop.
@Michael HillYou are right, there is water damage in basement when a faucet broke but the listing agent said they found that only a few hours later. The inspector didn't mention anything about potential mold in his report though.
@Jim C.I'd love to have coffee with you when I'm visiting the area again, which is very soon. I've sent you colleague request. In regards to the 3 listings that were sold recently, they are all through auctions and the unpaid balances are much higher. Is it possible that the sold price may not truly reflect how much the buyer actually paid in order to get the property? How much do you think the property I'm under contract with is really worth if I have a good property manager?