All Forum Posts by: Jonathan Warner

Thanks @Erin Donlan, that does help. Can you tell me what kind of improvements you mean for 38th/Illinois? Private development or a City plan? Much appreciated!

P.S. I should mention that I'm buying these properties as rentals, but the cash flow scenario would require $1200+ per month, which doesn't seem justified by these 3/2 homes in Crown Hill. Ten blocks away, maybe.

Hi Indy experts:

I've been researching neighborhoods and am now under contract on two properties in Crown Hill. As I learn more about that area, it seems to be a C/D neighborhood with lots of falling apart homes (and a seemingly high concentration of sex offenders!?). That said, I can't tell if this information is obsolete. In 2013, it was deemed the 17th most dangerous neighborhood in the country, and yet they recently celebrated a whole year without a homicide. 

The seller describes it as "up-and-coming," and I'd love to hear from folks if that's your perspective. The properties in question are near 38th/Capitol and 35th/Illinois. Thanks in advance for any local insight you might offer!

Best,

Jonathan

This is a super helpful thread. I'm currently under contract for a couple properties in Crown Hill, and my diligence is showing it to be more like a C/D class neighborhood. I wanted to check in with people on this thread, @Erin Donlan and @Patrick B. in particular, to find out if things are changing. The properties I'm talking about are on Capitol/38th and Illinois/35th. The seller talks about this area as "up-and-coming," but I haven't found evidence of that. Any thoughts would be -very- appreciated. Thanks!

Thanks, all. Taken together, this is a great explanation of the upsides and downsides.  If I knew I was going to hold these property for eight years, and if it didn’t affect my max portfolio value attainable through maximal leverage, then i might consider the 25% down. But as you suggest, I probably do want the money sooner than that. It might be something to consider on a small portion of my portfolio when I’m approaching my max leverage anyway, but am seeing why that’s not a great place to start. Much appreciated, @Anthony Wick, @Andrew Postell, @Eric Veronica and @Craig Jeppesen  

I've been getting the advice that putting 20% down, when available, is a smarter choice than putting 25% down, all in the context of rental property purchases. The reasoning seems to be that a) 20% down keeps more cash free for additional investments, and b) it takes longer to cover the initial investment with cash flow. 

However, when the lower interest rate with the 25% downpayment is taken into account, my numbers keep showing that Cash on Cash return is better in the 25% scenario and in fact the initial investment is paid off earlier. If an investor is paying off principal with the cash flow, they will sooner arrive in the place where no debt service is required, and that extra/earlier cashflow in the 25% scenario seems to far outweigh the advantage of being able to buy more property with the additional leverage in the 20% scenario. 

What am I missing? Thanks in advance for your financial genius...

Example numbers (commentable Google spreadsheet here):

@Tom Gessells, did you find that Huntington was able to move fast and understands the investor's needs? If so, I'd love your contact. Thanks in advance!

@David Terbeek, have you found that NCCG can move quickly on investment loans? Thanks!

@Eric Schultz, when you say contact a local lender, are you talking about out-of-state properties? Do local banks and credit unions loan to someone from out of state? Also, I've heard that these smaller institutions often don't understand the business of investor loans and will slow down the process and often not complete the deal on investment properties. Do you have a different experience?