Rookie investor from Wy making a move in Indy

[Daniel Huang]

Hello everyone!

My name is Dan Huang and I am an Army Veteran turned tech entrepreneur turned Bigger Pockets podcast addict, who just made his first offer on a Near Eastside 1bd/1ba triplex in Indianapolis. Whoop whoop! Fingers crossed all this lurking around on the BP forums made me a smarter REI practitioner.

I've attached screenshots of deal analysis below for those of you who can provide feedback on what I did wrong - here to make mistakes, learn, and try again! If there's anything that I can take from my military experience it's to have thick rhino-like skin.

I'm focused multi-family units in Midwest cities situated along major interstates until I can trade up to apartments. I'm a sucker for older homes (modern homes lack the charm and craftsmanship) and absolutely love interior design (I've gotta thank my mom for that, she's got great taste). Transforming houses into a homes that's my game plan. 

Eventually, however, I'd like to get into commercial real estate, specifically restaurants. I come from a long line of restaurant operators and chefs (I chef around on a daily basis), and have been dreaming up restaurant concepts ever since I was a kid. 

I think that just about does it as an intro. If I sound like someone you'd like to get to know better, just drop a note and let's connect. The one advice I keep hearing and reading over and over is to network, even if we're not immediately in the same market now... who knows? The universe works in mysterious ways, doors close for others to open ;)

Looking forward to hearing from ya'll!

Cheers,
Dan Huang
Benchmark Ventures
 

[Greg Scott]

Dan:

Congrats on making an offer.  Here a few thoughts for you.  Since you said you had thick skin, I'll shoot straight.  I'm just going off the information you provided plus my knowledge of that market.

If the ARV of this property is $40K you are way over-paying for it. According to your figures you are all-in at $50,840 which means you just destroyed $10,840 of value. In this game you want to make money when you buy. You should be able to find a property where purchase + repairs is less than ARV.

East side of Indy has some pretty rough areas. Given the price point and ARV you provided, you are in one of those rough areas. That brings two other thoughts. Are you comfortable with your rent projections? At $650/mo for a 1BR, tenants will have the option to live in a nicer area. Also, if it is truly in a rough area, you may have a hard time with collections. I'd add a much higher factor for vacancy.

On the positive side, with such a low price it appears you are being very conservative on Operating Expenses.

Good luck.