[Calc Review] Help me analyze this deal for hard money to do the buy and flip or BRRR

Indianapolis, Indiana
Real Estate Deal Analysis & Advice
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[Calc Review] Help me analyze this deal for hard money to do the buy and flip or BRRR

Kristen Franks
Member since 2024 · 5 posts · 6 votes

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*This link comes directly from our calculators, based on information input by the member who posted.

New to investing an have limited cash 5k-10k to get started. I am looking at this flip in a small suburb east of Indianapolis. It is listed as 2 bed 1 bath, but has 1396 sq ft and is on Zillow listed at 140K, but been on the market 98 days so I would plan to go in low. I am thinking of using the bonus room in the listing as another bed/bath or possibly making the attached garage into a primary with en suite. It sits on an acre so plenty of room to build a garage if that fits the neighborhood profile. I would need hard money to purchase and rehab and then could either sell at the ARV $340K conservatively, or rent and BRRR once it has a year of rental history to get a DSCR. I wonder if I could just go straight to a DSCR since it has already been a rental and this would also mean not as big of a rehab to get rent ready. I ultimately plan to have a large buy and hold portfolio, but need some flips or BRRR to build capitol to keep the first few deals going. How do I find lenders to begin this conversation? Without a contract will a hard money lender even discuss options?

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Patrick Roberts
Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
1y

Not enough capital. You'll spend all of that on closing costs alone, leaving you 0 liquidity for the rehab.

Another thing - dont get anchored to the list price. Determine the appropriate price based on ARVs, rehab and carry costs, the value of your time and effort, and the risk youre going to take. What the seller listed it for is irrelevant. 

Just at a glance, I would also challenge the idea that a property listed for $140k and only needing a light rehab has an ARV of $340k and has been sitting for 3 months. Doesnt pass the smell test.

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  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
    1y
    Quote from @Kristen Franks:

    View report

    *This link comes directly from our calculators, based on information input by the member who posted.

    New to investing an have limited cash 5k-10k to get started. I am looking at this flip in a small suburb east of Indianapolis. It is listed as 2 bed 1 bath, but has 1396 sq ft and is on Zillow listed at 140K, but been on the market 98 days so I would plan to go in low. I am thinking of using the bonus room in the listing as another bed/bath or possibly making the attached garage into a primary with en suite. It sits on an acre so plenty of room to build a garage if that fits the neighborhood profile. I would need hard money to purchase and rehab and then could either sell at the ARV $340K conservatively, or rent and BRRR once it has a year of rental history to get a DSCR. I wonder if I could just go straight to a DSCR since it has already been a rental and this would also mean not as big of a rehab to get rent ready. I ultimately plan to have a large buy and hold portfolio, but need some flips or BRRR to build capitol to keep the first few deals going. How do I find lenders to begin this conversation? Without a contract will a hard money lender even discuss options?

    Hey @Kristen Franks, welcome to the BP Forum! Is this in Near Eastside or Tuxedo Park? I'll defer to other, actual HMLs on the forum, but I suspect you're going to need to put more than $10k into the deal as a new investor. As for a conversation, most lenders can give you a "soft quote" based on the address and your cost estimates you shared above. 

    [email protected]
    1Reply
  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    1y

    @Kristen Franks What neighborhood is this located? I lived on the east side for 6 years and know the areas. 

    It's unlikely the ARV is that high unless it's very near east side and a total gut remodel. Removing the garage can actually hurt your ARV in some cases because Indy is very car centric.

    1Reply
  • Tyler Reed
    Member since 2025 · 35 posts · 14 votes
    1y

    Hi Kristen, 

    Your strategy will ultimately depend on your needs and less on the property in this instance. With low starting capital, flipping will almost certainly be the best move to give you some cushion and propel you forward in your investing career. Getting crystal clear on your own situation and your plan will help make these decisions easier. Look for hard money lenders that are willing to spend some time with you up front to help you understand your numbers and your plan. Good luck!

    0Reply
  • Brandon Croucier
    Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
    1y

    Ultimately you are going to need significantly more capital.

    I wouldnt be looking to get into RE Investing until you have at least 30-40k.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y

    Your under capitalized for any kind of RE investing unless your flipping cheap lots that you pay cash for.. buy a cheap lot and sell on terms that will create cash flow safely. 

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  • Josh Kesselman
    FL · Member since 2024 · 12 posts · 3 votes
    1y

    Depends on the lender.  Some who work with newbies may be willing to discuss options with you.  The question is really how to show you prequalify as a borrower.  That is going to largely depend on proof of your current liquidity and knowing your credit score (and other things like whether you're affiliated with the mafia or something).

    0Reply
  • Kristen Franks
    OP
    Member since 2024 · 5 posts · 6 votes
    1y

    It is out in Fountaintown.

    0Reply
    • Jaycee GreenePro Member
      Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
      1y
      Quote from @Kristen Franks:

      It is out in Fountaintown.

      @Kristen Franks How long will the rehab take to complete? Would you add a bedroom in the rehab?

      [email protected]
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    • Jaron WallingPro Member
      Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
      1y
      Quote from @Kristen Franks:

      It is out in Fountaintown.


      You would need to remodel it into a 3/2 (possible with 1400sqft.) and keep the one or two car garage to achieve an ARV of $340k. That ARV is approaching more desirable locations.

      0Reply
  • Patrick Roberts
    Lender · Charleston, SC · Member since 2019 · 1k+ posts · 1k+ votes
    1y

    Not enough capital. You'll spend all of that on closing costs alone, leaving you 0 liquidity for the rehab.

    Another thing - dont get anchored to the list price. Determine the appropriate price based on ARVs, rehab and carry costs, the value of your time and effort, and the risk youre going to take. What the seller listed it for is irrelevant. 

    Just at a glance, I would also challenge the idea that a property listed for $140k and only needing a light rehab has an ARV of $340k and has been sitting for 3 months. Doesnt pass the smell test.

    3Reply
  • Mike Klarman
    Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes
    1y

    I can tell you, if you go into this with 10k and even if someone does give you 100% financing up to 70% btw, they forget to mention that and properties on market when the rehab is added in, they rarely have a 70% project cost to ARV ratio. Cause if they did, would they be on market for 98 days?

    10k is 10 cents in this world.  I've seen deals where the investor was making 50k on paper and they wound up losing 50k.  You're telling me you have 10K?  If you came to me, I wouldn't even put you in a loan or offer you one.  Why would I ask you to jump into a pool and then ask you to also hold these weights?

    You have to be careful.  Agents are trying to sell.  Lenders are trying to lend.  Brokers are trying to broker.  None usually have your intentions ahead of their commissions.

    With 10k, do not, I repeat, do not even think about a project.

    1Reply
    • Ryan Stuckey
      Lender · Member since 2022 · 217 posts · 148 votes
      1y
      Quote from @Mike Klarman:

      I can tell you, if you go into this with 10k and even if someone does give you 100% financing up to 70% btw, they forget to mention that and properties on market when the rehab is added in, they rarely have a 70% project cost to ARV ratio. Cause if they did, would they be on market for 98 days?

      10k is 10 cents in this world.  I've seen deals where the investor was making 50k on paper and they wound up losing 50k.  You're telling me you have 10K?  If you came to me, I wouldn't even put you in a loan or offer you one.  Why would I ask you to jump into a pool and then ask you to also hold these weights?

      You have to be careful.  Agents are trying to sell.  Lenders are trying to lend.  Brokers are trying to broker.  None usually have your intentions ahead of their commissions.

      With 10k, do not, I repeat, do not even think about a project.

      As a lender, I agree with Mike. 10k is not enough savings to support REI of this type. You should have absolute minimum 20k in available capital and that is to support a modest project in a lower-cost area of the country (e.g. some but not all parts of IN). Having 30-40k is more robust and would enable you do a bit more. Most lenders will want a 15-25% down payment for no/light experience on a purchase and rehab project. Closing costs are another 6-7k at least. We offer 100% financing (i.e. no down payment) but still have minimum liquidity requirements above this 10k number....
      1Reply
  • Oliver Zafar
    Member since 2025 · 17 posts · 1 vote
    4d

    Hi Kristen, saw your deal analysis question on the hard-money flip/BRRRR. I do underwriting for investors and would be glad to run through your numbers with you. - Oliver

    0Reply
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