Out of state Buy and Hold /

[Terron Winn]

Good Morning, Good afternoon, Good evening BP. 

I am a new investor looking at purchasing in the Indianapolis market. My strategy in purchasing a home is using a HELOC from my primary residence from California but I am a little confused on what a great rental is.

I have searched Zillow, Trulia , Mibor and I have also had a few realtors send me properties. I see a lot of properties that would work in my favor but I am uncertain on if it will ever be rented out. I take gross profit and subtract 40% to cover PM, taxes, debt service, and other expenses and I still have a decent net profit. However, when I see these properties my mind gets flooded with other questions that are crucial. Like Crime, vacancy rates, a,b,c,d class neighborhoods. 

My question is, If I locate a property that I think will work, would someone be kind enough to go over my finished analyzed project? I would give you my opinion of the property then you tell me why I may be right or wrong. . Kinda like homework for me :)

Please and thank you in advance. 

Terron 

[Com M.]

@Terron Winn as a SoCal Indy investor I would be happy to go over anything - most of the forum would as well if you post the numbers or neighborhoods.  So many rentals go through Zillow if you go through the history you can see how often the unit or units around are vacant, and how long they were advertised for rent. Having one that is only advertised once every couple of years, and is removed after 1-2 weeks is a strong rental unit  ;)

Do you have a trusted PM or Inspector?  I try to not bother the PM until you know the deal and are ready to make an offer. They are the ones that need to rent this out and they know the neighborhoods best of all. Also a good inspection can be expensive over time but IMHO but they are vital. A detailed inspection, from a seasoned inspector with pics can give you a better idea of what condition and costs may be incurred. 

So to be clear I run numbers on all deals, if one comes in with good numbers I research everything (schools, crime, vacancies, street view the neighborhood, google that address, etc),  if after that I still like it then I normally ask the PM, if they like the house/area/rental price then I make an offer and order the inspection. I also offer the PM the chance to be at the inspection if they want to see the property and give their opinion. The more trusted advisers that you have (realtor, inspector, PM, contractor) that lay eyes on your property the better. I prefer to have them all from separate firms so they all have a duty to you and not each other or the deal. Remember everyone has a frame of mind, the realtor wants to sell, the inspector wants to impress with his detailed findings, the PM wants to rent the unit out with as little effort/turnover/maintenance as possible - so you are able to get a detailed look through many different frames just make sure you are dealing with people you have researched and trust.

I know how stressful it is to buy the first because there is a lot of pressure on something new - and only having one leaves the business vulnerable, but as long as the numbers are great and you do your due diligence then you should be fine. I can't wait to hear about the first deal.