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All Forum Posts by: Mike Knowles

Mike Knowles has started 10 posts and replied 71 times.

Originally posted by @Mike H.:

One thing I'd think you should consider would be the taxes. Indiana has a state law that property taxes can't be more than 1% or 1.1% of the assessed market value. So on a 100k house, thats 1k a year in taxes - or $100 a month.

Now if you hop over the state line to Illinois, the rents/price points might look appealing. But depending on what county - and sometimes even what town - you may be getting hammered on taxes. That same 100k house may cost you 4500 a year in property taxes (and yes, I have one of those myself so I know its true).

That can significantly affect your profits in a hurry. 

And I also think landlord laws plays a part too. Cook County evictions can take upwards of 5 months. Other counties, maybe 2 to 3. In some states, I've heard they can get someone out in a month.

But one last thing I'd add to the decision points is that sometimes when the market has a bunch of great points in its favor, it may become oversaturated with investors to the point that you can't find many decent deals and/or it makes it harder to rent the houses because there are too many rentals.

So there is something to be said for being a little bit contrarian. Its one thing to have the numbers work. Its another still to be able to get enough deals in an area where the numbers work.

 I think the 1% cap in IN is on owner occupied properties only.  For rentals, it's 2%.

I have a few units in Chicago and just one duplex in Indy.  I think they're both good markets.  You get significantly higher rent in Chicago, which really skews the logic underlying the 1%/2% rules, but there are downsides.  Specifically, PE funds and high net worth folks have bid prices up in most Class C or better neighborhoods so it's tough to find a good deal.

Post: Getting connected with flips / rehabs in Indianapolis

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

You can absolutely be all-in under 100k in Johnson County and make money.  I've done two in the last year (my first two) and both were under that amount.   The median home price is in the 130k range or so.  If you stick to the 70% rule, you're good.  It may be tight, but it's doable.  Make sure you have some reserves or line of credit to fall back on in case you have to hold it longer term.

To be specific, my first flip...bought for $21k in Greenwood.  Put $50k into it (way over budget...everything that could go wrong did).  Sold it for $90k and cleared about $6k after all holding and transaction costs.  Not great, but hey, I stopped talking about it and actually did one.

The second flip...bought it for $62k, put in $15k and sold it for $115k.  After seller assist, holding, and transaction costs, I cleared a bit over $25k.  This one was a no-brainer.

From what I can tell, getting a good deal is the tough part.  There are plenty of people looking for them and you're a small fish.  If a wholesaler lands a great deal, are they going to pass it to you or to a bigger operation that is reliable and will take every available deal.  Not a knock on you, because I'm in the same boat.  It's just reality.  If you want a deal with thick enough margin to flip, you'll likely have to go get it yourself.

Post: 5Br 2Ba Indianapolis turn-key with great cash flow

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

H Mike - what's the address (or zip code) on this one?

Post: SFH with Bowing Basement Walls

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

Here are two Indy foundation companies that I would recommend. (I have no affiliation with either one).  If I were you, I'd get at least one of them out there to look at it before purchasing.

http://www.indianafoundation.com/

http://www.americrawl.com/

Post: Indianapolis - Need a sewer inspection on property under contract

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

I always go with The Drainman for drain and sewer work.  I found them after several bigger companies refused to get dirty when I had a clogged basement drain with no exterior clean-out.

I've used them to clear drains, camera the main line, water jet the main line, and then excavate/replace the main line.

Post: Investor Brokers License - Worth it?

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21
Originally posted by @Drew Wiard:

@Evan Manship  - That's considerably more affordable than I thought for the course!  Do you (or anyone in the thread) have a link to said Indiana course?

Thx!

http://www.recp.org/ seems to be the big provider.  I went through them and had a good experience.

Post: 2 acres of dirt by small university

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

I'm under contract to buy a 2 acre parcel that is 2 blocks from a small, growing university.  (University of Indianapolis).  It's currently zoned residential and there is a single story house on it that needs demolished.

I've had a conversation with a civil engineering firm that tells me the site is suitable to develop (utilities readily available, etc).  I also went to the Zoning Board and proposed, at a high level, a 3 story complex, with 40-50 units.  They responded today with the following:

****

As expected, we discussed your proposed project. There didn’t seem to be objections about increasing the density from the recommendation of the subarea plan. There was, however, concern expressed about access and whether State Avenue would be able to handle the increased traffic.

It was also felt that a three-story complex would not be appropriate within this neighborhood of one-story dwellings. Would it be possible to decrease the height and still maintain the number of units by constructing two, two-story buildings?

****

So now it seems I have guidance that something "could" be built there and need to understand if it's economically viable to do so.

I have a good idea of rent comps in the area - there are two other small buildings (39 units, and 56 units) within a couple blocks, both 100% occupied.  For a 900sf 3/2 in the newer/nicer building, rent is about $1,200/month.  ($925 for 728sf 2/2 and $1,450 for 1,050sf 4/2)

I've spoken with a couple local developers to get a feel for construction costs, but am getting a wide range.  Anywhere from $60-90/sf.  In this area of town, one developer told me a cap rate of 7.5 may be attractive to investors.

Any thoughts or advice here?  I own a handful of rentals and have flipped some single family houses, but development is a new animal.

Purchase price of the land is $55k.

Post: Chicago Lease

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

I do, but not sure how to post it here. Shoot me an email and I'll send it your way.

Post: First Multifamily Fourplex in Chicago

Mike KnowlesPosted
  • Investor
  • Chicago, IL
  • Posts 80
  • Votes 21

I own a property in that neighborhood and can't imagine paying anywhere close to 355k for a 4-flat. Check out Redfin...you can type Greater Grand Crossing into the search box and pull up all multi-families in the neighborhood. There's a 12-unit building with an Ask higher than 355, but nothing else. Most are not even close.

That is not a class B/C neighborhood. If you choose to invest there, be sure your returns are commiserate with your risk. Consider that you can get 20% cash on cash returns in several cities (in better neighborhoods) if you look hard enough.

I use Doggcatcher to manage podcasts. It cost a couple bucks, but works really well. It's similar to BeyondPod that @Brian Woods mentioned.

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