All Forum Posts by: Kent Ritter

@Vince Lucas there is definitely a need. I’ve helped multiple OOS investors from California get there footing in Indianapolis. It’s almost impossible to beat our local investors without someone local with knowledge and the relationships to get the quality deals.

Hey everyone,  I grew up and currently live here in Indy.  I have a team a local team and we focus on flips and SFRs including AirBNB.  I'd love to connect on the Indy market and happy to provide any insights I can.

Kent

@Jeff Owen as everyone has said cap rates can be difficult to lock down especially in smaller markets. I recommend focusing on the return you expect and using that to determine the price you will pay vs. trying to stick to a certain cap rate. If you know you want a 10% cash on cash and the investment will give you that then that is all that matters. Especially on a value-add deal the entry cap isn’t as relevant as the exit cap.

@Pratik P. I don’t seen anything that immediately sticks out on that OM, but you are right to be concerned. Why would anyone sell almost half of what the property is worth? Just keep both eyes open for what they are not telling you as you get into it.

Yes, I agree good value-add deals are harder to find, but not impossible. 

@Colten Adams you don’t need it. Educate yourself on the buying process and build direct relationships with the brokers that sell in your market. You can communicate your message and credibility better than anyone else. When buying you want to be communicating as directly with the seller as possible. A buyers agent works like another person in the telephone game in school and distorts your message a little bit more.

@Jason Merchey Building from the ground up can be a great strategy when cap rates are low because you get more value per $ spent. The problem is that it’s speculative and that it doesn’t cashflow. You are hoping that market dynamics stay favorable during the couple of years it takes to build and you get a big payout at the end. Fingers-crossed.

Personally, I prefer buying proven businesses, class B and C apartments that have a history of cash flow and occupancy. Then maximizing those assets through a value-add strategy. This provides the perfect balance of mailbox money while you hold, less risk, and the flexibility to sell when the time is right.

It looks like @James Kojo has you covered operationally to understand what’s happening on the property.

Tenant-wise - you should send a letter to the tenants day one. Informing them on new ownership and management if applicable. You should also highlight some of the planned CapEx you have planned. Then go improve something noticeable: landscaping, parking lot, exterior paint, signage. Do something quickly do yo I rest a buzz about the "new owner" and the improvements going on. Also, think about tenant appreciation events.

@Jose Martinez in a market look for growth: population and employment. Also, favorable land lord laws. Favorable taxes. Also look for places where supply is constrained and/or the absorption rates of new units are high and understand what new supply is planned. Major cities will provide more of a margin for error as you have a large tenant pool and more diverse employment. Cities with a high proportion of steady jibs: government, education, and healthcare are usually good. I hope this helps get you started. Indianapolis has all of these characteristics. That’s where I invest. 

@Chris Fi you are doing it right. Subtract your capital reserves from your free cash flow before you calculate our COC. Also, take out your debt service.