Getting started with doing out-of-state BRRRR in Indianapolis

[Kenneth Cowan]

My wife and I are ready to pull the trigger on a BRRRR project (2-4 units) in Indianapolis. We've been running into complications with getting any traction on finding good properties. We've identified the areas we'd be interested in but properties seem to be moving really quickly whenever anything does come available.

I was wondering if anyone would be willing to share advice on a best path for getting the first one purchased?  We've read David Greene's book, we've made contact with a few agents and wholesalers (no contractors yet), made a visit to Indy to scout our neighborhoods, we got the cash ready, just haven't been able to make it happen yet.  

[Ross Denman]

@Kenneth Cowan, I am curious as to why you haven't tried to bring a property manager to your team. Many of my clients and prospects utilize me as part of the acquisition, due diligence, and even project management phase of their projects. Most property managers are in the trenches daily, have off-market deals cross their desks weekly, and understand the markets better than most other real estate professionals because they are in so many neighborhoods with varying asset classes. 

I also have to agree with Lionel, taking on large Pre WWII rehabs from out of state is usually a very stressful undertaking. My last BRRRR was over $70k in rehab alone. I am experienced, connected, and local and still stressed quite a bit on that one. I would recommend targeting newer homes that have been trashed by tenants or taken back via foreclosure. They usually are a lot easier to rehab and have many better options. 90% of Pre WWII homes in Indianapolis have some form of settling and/or foundation problems. Many have old knob and tube wiring, cast iron plumbing, clay tile sewer lines with problems, plaster problems, etc. They are a lot of fun to work on, but expenses escalate quickly and it's easy to find yourself over budget.

There are a few places in town where you can find decent pre-WWII duplexes, but most places are lower income and finding good tenants or building equity is just a dream that your wholesaler is spinning. For your first OOS deal... as much as I hate to recommend this, I would finance a turn-key. This will give you an asset and some cash flow. Next, I would find a Post WWII home that needs less than $15k in work. Get it as cheaply as possible and refinance your money. It's possible that you will not have enough equity to pull all of your money out in this type of home, but you will have another asset that is performing better than the first. As you gain experience and fine tune your team, you can take on larger projects, but I think that you original plan is likely more risky than you think and I would recommend taking on something a little smaller at this point.

The only people encouraging you to do what you are wanting to do are the ones you're paying money to (seller, realtor, wholesaler, contractor, etc.) Those of us who have little or nothing to gain and a little experience would tell you to ease in to it.