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!
Property address:
549 W 52nd Pl, IN 46410@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.
@Annie Li- Coffee would be great! And, yes, if these are REO's, the price may show higher since the bank that forecloses on them buys them back at the Sheriff's sale. Then the bank lists them for sale, and almost always takes less than what the foreclosure amount was for. Your realtor should be able to get you a list of SOLDS for a given area directly from the MLS. I personally wouldn't pay anymore than $60k for Merrillville and only in certain areas. I don't ever expect any appreciation on my properties there, in fact, I expect the prices to trend down over time. This is due to the crime, schools, etc. I bought my properties here based only on Cash Flow, and need at least a 15-20% ROI in order for me to really consider it.
I wouldn't even consider your property you mentioned above due to the location of it alone. That area is only getting worse in terms of crime, high tenant turnover, etc. That's why I said I would only consider properties South of 73rd Avenue. It's a high priced PIG in my opinion that's only going to cost you more in the end.
@Ken Van Haitsma Jr - You can use www.gniarmls.com to do your own searches for properties and run your analyses from there. Then, contact your realtor once you find something that makes financial sense. Also, you should consider the Wholesalers in the area. They have some properties that might make sense for your first deal.
@Adrien C.- Thanks Adrien! Been doing this for awhile and glad to help the newbies. We still need to hookup for coffee sometime soon! I just picked up a property from your wholesale friends in Highland and they said hi!
BTW for the folks looking for stuff in Mville- send me a PM regarding the criteria for a house you want (bed/bath, size, max price, amount of rehab willing to do) and I'll go find you something all market. I'm not against realtors but it's hard to find one that has an investors mindset and looks at the house through our lens and w the numbers analysis we do. Remember most are trying to sell pretty houses at retail value, get a commission, and repeat.
@Adrien C. Yeah.... But by the time the newbies get a chance to even look at something on the MLS it's usually already locked up by them "wholesalers" lol if its a good deal!
I've have tried that before, and if its a great deal on the MLS (especially the REOs) its contingent the same day its listed. Some of the agents that do the REOs have their own 'investors' at the ready to grab any great deal. That's why it pays to use certain agents to get the properties you want.
Maybe there just aren't enough photos of the whole place but I'm not seeing any supply/return registers/vents. All I see are baseboards. Is the agent sure this place has a forced air furnace? I think you can find the same price point and ROI in a better area if you keep looking @Annie Li. If the deal was a great one it would spend much time on Coldwell Bankers site. In fact, it may not even make it to their site. I recommend you keep your options open until Adrien or one of the other wholesalers finds you a great deal. You'll know it when you see it and you will have to act quickly because they don't last long. Take the time to get to know the pockets you want to be in and be specific with your wholesalers. That will help them find what you want. Deals can be found on the MLS but it's tougher than letting the good wholesalers in the area find them for you.
Thanks for everyone's reply.
@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.
I think that would be a very bad idea to buy something in a "not so nice neighborhood once" to make it a good learning experience. There are much better and entertaining ways you can spend your money. I understand you want to be an investor, but not for the sake of just being an investor.
I wouldn't say Merrillville is as bad as @Jim C.is saying. I have done several flips in Merrillville with my partner and have some really good money in last 12 months. There are going to be good and bad parts in each and every city and as long as you stay away from bad sections, you will do fine. I have rentals in Merrillville and my highest one is $1,100 for a 3 bed/1.5 bath and $1,095 for the one on 52nd Pl. I have had my property on 52nd Pl for almost 3 years now with the same tenant. In Merrillville, we are renting our properties before we finish rehab. We just purchase one on 5400 block of Jackson and it's a 3 bed/1 bath (ranch with basement) and had a tenant lined up for the property even before the closing for $1,095/mo. And we are not renting it to just anyone. We check their credit/background and the tenants income. Another one on 5400 block of Carolina we are renting for $1,095/mo. It is 3 bed/1.5 bath with a crawl space.
I have a flip going on in 55th block of Fillmore St that we will be selling for $135k or above. I have one flip selling this coming week for $140k on 60th Dr. I had 2 full price offers on the property. There might not be as much appreciation as rest of the country, but you can pick up properties with equity and leave room to add value and sell them for profit.
I closed on a Merrillville property last week and one last month and it's a very hot market for investors because there are a lot of owner occupants moving in the area.
Also, like @Paul Stoutsaid the property might not have a AC unit. Please double check that if you decide to move forward with the property.
But again, don't buy anything just for the sake of buying a property.
@Adrien C.I agree with you. It's not a good idea to take such a big risk by buying in a wrong neighborhood. I hesitate to call off the contract mainly because the property manager I've been talking to is very confident on this rental and you also had success in that neighborhood. Furthermore, I love all brick houses, this one even has concrete (not block) foundation that you don't see in at least half of the brick houses in that area. It indeed has central heat and air which have been confirmed by the inspector. I'm thinking to try to get money for all repairs from the seller; if they don't agree, I'll withdraw.
@Adrien C.I have sent you PM and would love to get some wholesale deals from you.
@Paul Stout Thanks for the advice. I am open to all types of deals and have reached out to Adrien. I have a successful track record of acting quickly when I see a good deal. :)
In regards to your comment about the listing being so old on MLS, the original price in July was $79,900, then it was dropped 4 times to $64,900. I guess that's one of the reasons why it's stayed on MLS for so long, and neither my realtor nor me have had expected the seller to accept my offer of $52,000, but they did.
@Sharad M.I agree with you. It's not a good idea to take such a big risk by buying in a wrong neighborhood. I hesitate to call off the contract mainly because the property manager I've been talking to is very confident on this rental and you also had success in that neighborhood. Furthermore, I love all brick houses, this one even has concrete (not block) foundation that you don't see in at least half of the brick houses in that area. It indeed has central heat and air which have been confirmed by the inspector. I'm thinking to try to get money for all repairs from the seller; if they don't agree, I'll withdraw.
Annie,
No one can tell you how to spend you money on investment properties. My team and I have our own system of finding tenants and managing properties, so I can't say anything about how other property managers run their business, but your $3k repair number seems light on rehab and $1,200 seems a little high for rent, IMO.
And don't fall in love with this property because it's a brick house. It's great to have brick house with concrete foundation, but there are other fundamentals that are more important.
If they accepted your first offer of $52k means you probably could have had it for lower.
@Sharad M. I will probably laugh at myself several years later when I see my own comments about brick house with concrete foundation...
I'll call Merillville police record dept to see if they can provide some insight on crime rate in this neighborhood, which seems to be the only factor to determine whether I should keep the house or not.
@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.
@Jason FarmerThanks for your kind words.
@Annie LiYou seem very much inclined on purchasing this property. It's great to be ready to pull the trigger, but do all the due diligence before make a decision.
I have had a really good tenant who in about 3 years has paid me almost the total amount of money that I had put into the property (purchase and rehab), but I know the area really well and have a fantastic team. But I also do 6-8 properties a month pretty much every month and I am able to get the benefits of economies of scale and economies of scope, so my cost of getting something done will be lot less than a newbie investor.
And just don't call the Merrillville police department, call the Gary police department also because the county records show it as a Gary property.
There's a lot that can happen before you get to the point where you are laughing at buying something because it was brick house with concrete foundation..
Good luck with your decision on this property.
@Jason Farmer- Amen! That's what I had been saying all along. That area is NOT for a novice investor. If @Annie Li can get out of the contract due to inspection I would highly recommend her to do so. I posted some solds for much less in better areas. Patience, Grasshopper.
@Jason Farmer@Sharad M.@Jim C. I can't say thank you enough for being so caring and helpful. I will not proceed further with this property.
I was in Merrillville earlier this month to look at another property 5 streets south of 52nd (on Jefferson Place) which was selling for $84,000 but was much smaller with no basement. The neighborhood was so tranquil with charming brick houses and neat front yards. I also drove around a bit (probably didn't drive far enough). At that moment, I decided to buy at least one brick house in this neighborhood once I came across a good deal.
I thought I got a good deal until you guys started warning me about this neighborhood...It's a good lesson learnt, and I am grateful that because of your help, I wouldn't have wasted more of my money and time. I will definitely seek savvy investors' advice before I sign any contract until I'm familiar enough with the area; apparently I have a long way to go.
I want to thank @Jim C. for scaring people away from the area that has been a huge money maker for me for years. Thank you sir!
Just another note, please realize if you see the RE Taxes, yours will DOUBLE. Yes taxes are cheap now, because it was OO, if you hold it as rental it would be NOO. And the tax rate goes to 2%. SO it will about double. Still a solid area for rental.
Yes, 52nd while a M'ville address is part of the Gary school system. Just sneak a few blocks south and you are in the M'ville system. Easy rentals there. The key is to have a solid manager that actually screens tenants, not just places tenants. And REGULARLY checks on the property for you. Not just one that does when tenant calls.
There are several management companies in that area that aren't worth the paper the contract is on.
I have also noted many people on BP giving information that isn't correct with reality. Meaning they aren't actually landlords in the area and it is somewhat troubling to me. SO be sure to do your own research and fully investigate every item (to include the free advice you get from a free message board), before you go investing from thousands of miles away.
I have several properties just south of this one, the most I have paid was 32k for them. All needed work, and from the photos on this one, you need quite a bit more than 3k. Can you get that rent, possible, but on 52nd, closer to 1k. Just south I am getting 1200-1350 all over.
@Dale Stevens Yes, I'm aware RE tax will double during reassessment if it becomes a rental. Thanks for reminding me. I will also look into south Merrillville more since you are making tons of money down there. :)
I'm in need of good PM recommendations so will PM you for that. In regards to due-diligence process, I'm still learning about what needs to be done. I use BP, realtor.com, zillow, zilpy, padmapper, craigslist, county records, google maps, video calls with realtor, inspector, etc., I will physically be in the house at some point before sales contract is finalized. I am not sure if there is anything more I can do. Any advice is welcomed.
@Dale Stevens- Sure! No problem! As long as you don't buy any south of 73rd LOL. North of 73rd is definitely NOT my area. I grew up around there and can assure you in a few short years you'll be wanting out of that area. Maybe not now, but give it a few years.
Now what @Dale Stevens says is correct, but he is speaking from an investor that can get in his car and drive there in less than an hr..
These places are great for the local guys, all across the U.S there are little pockets area where investor clean up, because its home to them. i know an old guy with hand over fist properties in torn down Gary and he does extremely well and hasnt worked in over 20 years. but hes a local guy and can drive by everyone of his properties daily if he wants, everyone in the city knows him and respects him which adds tons of value to the situation. There is an absolute way to make a lot of money even in an area as rough as this one so i would agree 100%. But since your starting out and further more out of state its rare without a really good and solid team it would work for you.
@Jason FarmerI am not satisfied if I am just being a typical newbie and buying turn keys in an area that everybody has been talking about. I think I can accomplish much more if I try harder. I will be more cautious while selecting neighborhood and will build a good local team eventually, it's just a matter of time.
for me, it depends on what you honestly expect in annual returns. Be honest about that, and it can help you determine what you should be doing, and how to approach it.
@AnneLi definitely find an experienced inspector in your investment area. We are InterNACHI-certified, so we like using InspectorSeek.com to recommend others from InterNACHI. There is also ASHI and NAHI to recognize inspectors nationally.