All Forum Posts by: Ross Denman

I work for a property management company in Indianapolis most of my clients are out of state and out of the country. The prices are reasonable, the economy is stable, and landlord-tenant laws protect the landlords position well.

Many of the investors that I have that are in several markets are in the Midwest as a whole (probably for similar reasons.) The most important thing is to build a team in that market who you can trust. I would highly recommend contacting various wholesalers, investors, and property management companies in the area. Take a few days to visit and interview them. Ask for referrals and start putting the pieces together that you are most comfortable with.

This is pretty much our experience in Indianapolis. I know that every market place varies based on landlord-tenant laws though. That's exactly why we have a lot of out of state investors purchasing homes here (especially from CA.) Some states can take 6-12 months to regain possession depending on the situation. Obviously, that's a big hit... In Indy, we usually file after the tenant is about 2 weeks late, court is scheduled in another couple of weeks and we regain possession in about a week or so. Usually we can get through an eviction process in a few weeks and get the home back on the market pretty quickly.

Welcome Scott. If you are interested in the Indianapolis market, let me know. We have built a nice network and have several resources for the area.

@Robert Andrade

I believe this is pretty typical for a duplex, unless you can just get a killer deal. There are other benefits to take in to consideration though.

• FHA Loans. You can get bank loans with as little as 3.5% down. You will also get better interest rates. You usually can't do this with an investment property unless you have an established relationship and assets with a lender (usually credit union.)
• 203k Loans. Investors cannot get 203k loans (rehab loans to add to the mortgage) but you can get them for owner occupied homes of 4 units or less.
• Property Tax Deduction. I am not sure if is true in every city/state, but in Indianapolis an owner occupied homeowner pays half the property taxes compared to an investment property (non-owner occupied.)

Another way to look at this is that you are living in a home for only $255/mo and someone else is paying down the majority of the principal balance on the loan. You are getting about a $500 discount on your monthly rent... Isn't that a type of cash flow.

I have an owner of a duplex who is house hacking and using us as his property manager (he doesn't want the neighbors to know that he is the owner.) Only you can make sense of the numbers and situation. If you want more monthly cash flow, put more money down. If you are just needing to find an affordable asset to get you started because you are low on actual cash, then cash flow may not be the most important thing. If it makes sense to you, perfect... if it doesn't, then find something that does make sense.

Hope this helps!

I can share our favored Real Estate Agent. They specifically work with investors and investments. Contact:

Curtis White, CIC - Realty Group Insurance

I work with investors/clients all day long that leave other property management companies in the area. There are over 200 property managers in Indianapolis and only about 6 or 7 that offer good/competitive services. There are at least a dozen investors who sell to out of state investors (over-priced homes) and manage them (poorly.) I am not a fan of the one-stop shop solutions, at least in Indianapolis.

As far as vetting the PM's:

• Ask for referrals. Get at least 3 and make sure that they similar to what you do or plan to do.
• Check out the companies reviews on Social Media, BBB, etc. I don't put a lot of stock in reviews as people with poor experiences have are much more likely to post reviews. Familiarize yourself with the reviews and ask the PM's questions pertaining to the problems listed in reviews. For instance, if a tenant complains that they never fix anything, then get an idea of how they maintenance and protect your home. If an owner claims that they just place any kind of tenant, then be sure to inquire about there tenant screening. Also, do this with the referrals that you call.

I think finding the right PM can be tough, but finding the right one can be invaluable.

 I am more familiar with Indianapolis than NW Indiana, but here is how my out of area clients who are looking in Indianapolis. 

• Contact a local Property Manager. Even if you are not using their management services, they can help you navigate the local market and provide you with solid rental evaluations. They might even be able to connect you with a good project manager.
• If you are serious about purchasing... get some real numbers for the repairs. Interview some contractors and after choosing one, schedule a time to walk through the home with a contractor to get a better estimate.
• Have the home inspected. While a walk through may identify a variety of things, a true home inspection is not that expensive compared to the purchase price and may identify issues that can either save you money (in the form of concessions) or reveal issues that may kill the deal entirely.
• Restoration deals (i.e. mold, fire damage, etc.) can be very profitable, but you need the right team. If the mold is extensive, use a contractor that's certified in mold remediation (these guys can be expensive so shop around.) When dealing with a mold issue, make sure that you have solid rehab numbers... It depends on the penetration in to the home. If you find yourself having to rip out multiple walls, it could get costly. The contractor that we use charges around $20/sq ft I believe... but that is just the cost for remediation... not to rebuild and finish (i.e. drywall, paint, etc.)

 I just had a new client go through this. He contacted our property management office because they have a good reputation in his local market. I am not sure how he became associated with the seller... but it was a one-stop shop investment/property management company that he purchased from. Personally, I would never recommend any of my clients to buy in the area that he purchased. He purchased a tenanted duplex in a higher risk area. Unfortunately, he was already closing... so there was little advice that I could give him.

Two months in, we had to evict one of the tenants, he also has a major plumbing issue with the main sewerline... he's looking at about $2,500 to get the problem fixed. Unfortunately, it's not the best way to get started. Fortunately, he does have a good team here to help navigate. Here's my advice...

Regardless of whether you want to us a property manager, contact a couple of them for a rental analysis and ask them their opinion of the area and tenant pool demographic. Most MLS platforms have detailed information available.

Next, get a certified home inspection. Our company does fairly thorough inspections but we still are not as invasive or thorough as an certified home inspection.

Lastly, plan for the worst. What if you have to evict a tenant? What if a large maintenance issue comes up. With just one property, it's very important to have adequate reserves. Personally, I would suggest at least 6 months rent for your first one.

Best of luck and hope that helps.

I work in Property Management and manage several properties that are held in SDIRA's. Typically those owners have paid cash to purchase turn-key properties. Most of them are yielding 10-15% ROI. While there are other avenues for better returns, most of these owners are professionals who are not interested in learning about real estate investing (several doctors, nurses, attorneys, engineers, etc.) The returns they get in this manner are more stable and usually higher than most low-moderate risk funds available in traditionally managed retirement vehicles.

As a real estate investor, I don't think it's something that holds a lot of interest, but for a professional who has plugged in to a good team... it's one of the easiest, safest, and highest yielding passive income opportunities available.

Personally, I am a big fan of Property Management. The problem is that property management has become trendy since the economic shifts over the last few years and many property managers are actually realtors or one-stop shop real estate investors. Property management isn't nearly as profitable as brokering or rehabbing homes so the property management services are secondary. I have clients that come from those types of management companies with very poor and somewhat costly experiences. A good property manager should help minimize expenses because of the bulk business that they do, they tend to be more successful in getting on-time rents and higher performance of properties. Of almost 400 properties that we manage, our average tenancy is almost 4 years, our days on the market are considerably less than most of our competitors, and our average annual maintenance on our homes (including inspections and preventative maintenance) is less than $900/year... that includes all the major maintenance as well (roofs, furnaces, plumbing issues, etc.)

It seems that many investors consider property management as just a convenience, but I think that it is much more than that.