Los Angeles, CA · Member since 2019 · 148 posts · 127 votes
6y
@Rachel Grunn I think you are far too optimistic on this one. Mars Hill is not a great area. Not that you shouldn't invest there...just you don't set your expectations too high. Rent on a 1 bedroom is probably going to be more in the $500 - $600 range and a 1 bedroom (or even a 2 bedroom) in that area is going to turn over quite a bit. Property taxes on a rental are going to be around 2% of assessed value so you may be a bit low with $600 per year. Typically you need to own the property for 6 months before you can refinance not 3 months and ARVs on C or D class properties can often come up way short of what is anticipated. Again, I am not suggesting you run away from this one. Just don't expect it to perform as well as your calculator says.
One more piece of advice...if you are investing in C- / D areas and you install air conditioning, make sure you chain the condenser down. They have a habit of walking away from vacant houses.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
6y
In lower-end areas it is best to have a higher vacancy figure. A 5% physical vacancy might be correct but you will probably have the occasional non-payer that takes a month to evict. In that case the home is occupied but nobody is paying.
In lower-end areas it is best to have a higher vacancy figure. A 5% physical vacancy might be correct but you will probably have the occasional non-payer that takes a month to evict. In that case the home is occupied but nobody is paying.
Thanks Greg! This is a good idea and a figure I will definitely take into consideration to make sure my numbers are conservative.
Los Angeles, CA · Member since 2019 · 148 posts · 127 votes
6y
@Rachel Grunn I think you are far too optimistic on this one. Mars Hill is not a great area. Not that you shouldn't invest there...just you don't set your expectations too high. Rent on a 1 bedroom is probably going to be more in the $500 - $600 range and a 1 bedroom (or even a 2 bedroom) in that area is going to turn over quite a bit. Property taxes on a rental are going to be around 2% of assessed value so you may be a bit low with $600 per year. Typically you need to own the property for 6 months before you can refinance not 3 months and ARVs on C or D class properties can often come up way short of what is anticipated. Again, I am not suggesting you run away from this one. Just don't expect it to perform as well as your calculator says.
One more piece of advice...if you are investing in C- / D areas and you install air conditioning, make sure you chain the condenser down. They have a habit of walking away from vacant houses.
Investor · Dallas, TX · Member since 2020 · 14 posts · 6 votes
6y
Wow this is invaluable information! Thank you! I wasn’t planning on actually purchasing this property (I think it’s pending anyway). Just want to get more and more familiar with the calculators so that I can spot a great deal right away. Thought I’d throw it on this forum for helpful peer review. Indianapolis is a target area for me, though. Thanks again Ric :)
Indianapolis · Member since 2019 · 288 posts · 179 votes
6y
Indianapolis is a great place to invest, particularly for OOS investors since its landlord friendly and is significantly less expensive then east/west coast markets. I do agree though - Mars Hill isn't an area where you are going to receive a great return or even long-term success. I would shoot for neighborhoods east, north, and north-east of the "mile square" monument circle, from Downtown. Lots of different REI opportunities available in these areas - BRRRR, fix-&-flip or to get properties rent-ready will be easier if you are closer to the downtown hub. Not to mention, Indy's economy has been on the rise in the last 5 years due to strong partnerships with tech companies that are bringing an influx of young professionals to the area that are in need of nice, affordable housing i.e Salesforce and the 16 Tech area (https://www.ibj.com/articles/16-tech-becoming-real ) Indy is sure to see more and more development - just depends on how long you are wanting to wait for appreciation if you decide to step further from the downtown area.
*This link comes directly from our calculators, based on information input by the member who posted.
Your repairs and PM are way too low in my opinion. Generally not a fan of these low dollar properties as well because they are super inconvenient to finance.
*This link comes directly from our calculators, based on information input by the member who posted.
Your repairs and PM are way too low in my opinion. Generally not a fan of these low dollar properties as well because they are super inconvenient to finance.
Kokomo, IN · Member since 2020 · 13 posts · 3 votes
6y
If you're concerned about vacancy rate or tenancy in those areas, I'd recommend checking on HUD. They will provide a better idea of rents. Also, a HUD approved tenant doesn't want to lose that certification and you know that portion of the rent will be paid even if the tenant doesn't. Finally, you can always go to HUD and report them, so if you make clear to them that you know that they seem to be more 'earnest' about ensuring the rent is paid.
Indianapolis is a great place to invest, particularly for OOS investors since its landlord friendly and is significantly less expensive then east/west coast markets. I do agree though - Mars Hill isn't an area where you are going to receive a great return or even long-term success. I would shoot for neighborhoods east, north, and north-east of the "mile square" monument circle, from Downtown. Lots of different REI opportunities available in these areas - BRRRR, fix-&-flip or to get properties rent-ready will be easier if you are closer to the downtown hub. Not to mention, Indy's economy has been on the rise in the last 5 years due to strong partnerships with tech companies that are bringing an influx of young professionals to the area that are in need of nice, affordable housing i.e Salesforce and the 16 Tech area (https://www.ibj.com/articles/16-tech-becoming-real ) Indy is sure to see more and more development - just depends on how long you are wanting to wait for appreciation if you decide to step further from the downtown area.
Best of luck to you!!
Thanks for this super insightful information Alora! I’m making notes!