Looking for C+ to B neighborhoods

[Gabriel A.]

Out of town investor doing research in the Indianapolis Market. 

Looking for C+ to B neighborhoods with fixer upper properties ranging between 40 to 80k. Do those exist in these types of neighborhoods? I'm looking to BRRRR a property.

What resources can I use to further my research? I've been using areavibes as a starting point.

[Ross Denman]

I don't think that you're going to find C+ to B properties in that price range though... I guess it depends on how you classify them, but to me, you're probably talking about homes that demand $900-$1,200/mo in rent which I don't seen in the $40-$80k range. I do see $1,000 rentals in the $90k market throughout the year though. Typically, you can't refinance all of your money out on these though, but they out perform almost all other investments that I've seen. They just stay occupied and have less maintenance. They also appreciate much better than homes in areas where most properties are rental properties.

As @Andy Rumple mentioned, Eagledale is a very solid investment area in your price range. While I consider it to be a C Class area because it's in the IPS school district, I prefer this area to other areas in town with similar homes and rents. The tenant demographic tends to be a little better. You can find BRRRR's (or close) in this area, but you need to be "all-in" for around $60k as most of these homes are appraising between the high $70k's to the low $90k's and renting for about $795-$900/mo. You won't get the appreciation that you would get in the "township" areas, but the cash flow is going to be a little better.

I am a bigger fan of the township schools (non-IPS schools) as these tend to be more family oriented homes that draw in better tenants who usually stay longer because they are getting their kids through school. Understanding the costs of tenant turn-over will become a larger part of the decision making process once you go through a couple of vacancies and see that it may wipe an entire year of income out in lost rents, renovation costs, holding costs, and tenant placement fee (average of $4,000-$6,500.) Our best tenant retention statistics come from homes in good schools, with at least 3 bedrooms, 1.5+ bathrooms, 1000 sq ft+, and garage (preferably attached.) These are homes that your tenants are less likely to outgrow. Tenants outgrow bathroom space before anything else, so we can see a definite impact on tenant retention between our 1 bathroom rentals and larger rentals.

Our best investors are targeting township homes newer than 1980 and rent for no more than 85 X 1 gross month's rent. While the initial cap rate may not look great, by leveraging your money with the bank at 4-5 times the standard 2.5%-3.5% appreciation we see in markets like these actually produce a 10%-17.5% ROI in equity build. If the home likewise cash flows at 8%-12% and you purchased with decent discount from the beginning, you will find yourself doubling your investment in 5-6 years, if not sooner. I've had several investor who purchase these homes on a 5-10 year investment strategy and I have actually seen some investors triple their investments over 5 years... not necessarily the norm, but not bad for somewhat passive income and a lot less headaches than the lower end properties.

I'm working on a wholesale deal right now of $70k acquisition, $11.5k in rehab, $1,050/mo rental, $105k ARV. This deal is going to tie up about $10k of capital long term, but he will probably triple that investment in 5 years.