Any advice on this area?

Question

Hi everyone, does anyone have any experience investing in or can tell me anything about this area highlighted? Any info or opinions would be helpful. Thanks.

Steve Lehman · Answer

@Mark De sagun

To your first set of ?s

How often are you seeing turnovers in Eagledale? From the PM's that I have spoken with throughout the years your turnover is every year to year and 1/2.

And how long are you seeing properties vacant for while waiting for a tenant? This I cannot answer because I have never done the data on this for this area.

What percentage of the rent would you save to account for vacancy in Eagledale? I would put in normal 8%.

As for your predictions on the property. 6.5% maybe about right if everything goes correctly. Yes, it's a base hit but there are better areas then this to get a base hit. You do not want to be in areas that you have so much competition. Like you said your rents will never go up, If you invested in a area that is a good mix of owner occupant and rental you will have better chances of not only raising you rent but resale value.

26th/MLK I decided to take a drive over there today to see if there has been any changes to the area. It is still a rough area but there are changes going on within that community. I stopped by one the restaurant over there and talked to some of the people in there and they said that the area is improving and the neighborhood gets together every month or so to clean up the trash on the streets and help some of the less fortunate homeowners with their properties.

There is still a lot board ups but not nearly as many as back in 2011. This is a good sign. There is also a non-profit that is trying to rehab some properties in the area. The greater 2020 is a good plan but it will still be a while before you see a significant difference. IMO estimated time frame about 5 more years.

This area is really not for OOS investors unless they have experience in dealing with rougher areas.

Christian Park/Twin aire The new courthouse will probably not bring in Judges and lawyers looking to live in Christian Park. What you will get is the other groups of people who run the court building and the jail. this will also bring in other business as well such as restaurants, bail bond companies, dry cleaners, etc. These people, I believe, will probably live more on the south of prospect and west of Keystone. A lot of this area is already being redeveloped. I also think you will see more homeowners than tenants. If they do go over to Christian Park on the south end prices for homes will not increase that dramatically but it would be good to see that side get more owner occupants then it has now. This is of course based on speculation and nothing more. I could be completely wrong.

@Jaron Walling I see where you are going with it. Yes, it could make for a good rental and you will probably have a better shot at getting a long term tenant to. I do agree with you that Speedway is booming and it is great to see.

Josh C. · Answer

@Mark De sagun

Not too far from the new jail and courthouse they are building. Still a little rough as mentioned above. But at least your tenants won’t have far to walk to court if needed. Could chance if other developers come to the jail area, but tough to predict.

Jaron Walling · Answer

@Steve Lehman - "These people, I believe, will probably live more on the south of prospect and west of Keystone"

aka south Fountain Square; it has the same ring as south Broad Ripple. I completely agree.

Steve Lehman · Answer

@Mark De sagun

Eagledale is an area that gets regurgitated every 3 years. This means it gets turned over every 3 years. The other OOS investors who were suckered into buying in this area are selling back there "GREAT TK properties" because they never worked. There is to much tenant turn over in this area and why shouldn't there be, tenants have a boat load of rentals to pick from. This area is filled up with more rental properties than any other area in Indy. The majority of the properties are all ranch style 3/1 with a mix of 3/2 because some TK company converted a small closet into a 1/2 bath. If you hear someone say they have a 4 bedroom that means they converted the garage. Rents in the area are at best $775 to $850. Maybe on occasions you'll get a $900 but very seldom. Anyone who tells you that is a good and decent area is trying to sell you their turnkey junk. This area has not changed throughout the years and will not. It will remain a giant cesspool of rental properties.

Speedway is a great area if you can find a property that works. Most of the properties are homeowner and the ones that aren't are being rehabbed to flip to homeowners. If you find a property in this area you are going to pay a premium price for it. Make sure your numbers work before pulling the trigger here. Your margins will be small. Finding property here will be like finding a needle in a haystack.

Christian Park is a great mix of owner occupant and rentals. If you look south of the park (south of English and east of Sherman) you will find this area to be more rental than owner occupant. There are a lot 3/1's and 2/1's, rents range 2/1 $625 to $675 and 3/1 $700 to $800. If you are looking north of the park (north of English and West of Emerson east of Sherman) You will find more owner occupants. Rent range will go up a little but not much, maybe $50 or so. This area is a good place to find your long term cash flow. tenants stay much longer in this area. There is also a possibility and I mean a small possibility that this area could increase in value with the building of the new court house.

@Jaron Walling Could you explain to me why the property on 13th st is a good deal? The ARV in this area for a 2/2 1700 sq ft is only $132K, from the pics I saw on the MLS shows that the property does need updating. I am curious to you thoughts on this, maybe I am missing something.

@Josh C. You want to add anything to what I said. You know these areas to.

Mark De sagun · Answer

@Ric Ernst thanks for the advice. I definitely plan to visit Indy soon. And I’ve definitely realized BRRRR isn’t the strategy I want to start with.

Ric Ernst · Answer

@Mark De sagun I don't know that area but you'd do well consulting with your PM. I would encourage you to take a trip to Indianapolis at least once and drive around with your REA and see some areas in person. Perhaps make a list of several candidates for your first purchase and visit them all. I promise you it will be eye opening. There may be some that you want to offer on right away and others that you won't even bother getting out of the car to look at. Photos on Zillow or Trulia or even from wholesalers usually look great (and maybe they are) but they don't always depict the actual neighborhoods which could impact your rent, potential turnover or red flags.

One more thing....BRRR'ing is C class neighborhoods is not a slam dunk in my opinion. I'm sure some will disagree. I invest in C class and, while the cash flow can be great, it is tough to get the appraisals high enough to capture the purchase, rehab and other costs. Not that you can't get some or even most of your cash investment out....just that you'll need to find some very very good deals to make that work.

Mark De sagun · Answer

@Ric Ernst @Angela Smith @Jaron Walling @Josh C. @Bryan Richardson @Jeremy Johnson

Thanks everyone for your feedback. I was actually under contract for a possible BRRRR in that area, but the inspection came back way worse than expected. Being out of state, I think I'm leaning more towards buying something rent ready for my first investment. Has anyone got advice on the Eagledale neighborhood? Everything I've read says its a stable C class neighborhood.

Jaron Walling · Answer

@Steve Lehman I considered it a great deal for two reasons. #1 Location, it's near a school, 5 mins walking to Main Street, new cultural trail, nearby houses are not trashy, and Speedway is cool. #2 Other than a new kitchen, bath, and painting the updates looks inexpensive. It could be a long term rental. That's just my 2 cents.

I have a friend than owns a house around the corner. He purchased it for $95k last year, fixed a few things, and his agent told him it's worth $140k if he wanted to sell.

Mark De sagun · Answer

@Steve Lehman Also, why do you say there is only a small possibility that home values in the southern part of Christian Park rise due to the criminal justice center? I would think that more professionals coming to the area would be a good thing that could improve the tenant pool. Similar to a hospital?

Mark De sagun · Answer

@Steve Lehman thanks for your detailed response. You obviously know the area very well because you described almost exactly the property I'm looking at in Eagledale. It's a turnkey 3/1 renting for $850. Tenant just renewed so it's leased until Oct 2020. How often are you seeing turnovers in Eagledale? And how long are you seeing properties vacant for while waiting for a tenant? What percentage of the rent would you save to account for vacancy in Eagledale? The current property manager did say that with all the other rentals in the area, even a $10-15 raise in rent can cause tenants to look else where. For my analysis, I've done my best to account for a turnover every 2 years and I'm predicting ~6.5% ROI if rents never raise. Not a home run, but I think a good, more predictable base hit to start my real estate investment portfolio. Also, I've had people who are not selling me the property vouch for the Eagledale area. Thanks again for your input, I'll continue to do my due diligence.

I was also just shown a 4bed/2bath property on 26th St and MLK St. in the King Commons area renting for $900/mo. This property was really interesting to me because of https://www.greatplaces2020.org/king-commons-1. But my research shows that this specific area currently has a lot of turnover and vacant houses so probably not for me at this time. But curious to hear if anyone thinks this area is worth investing in right now in hopes/anticipation for gentrification and appreciation.

Any advice on this area?

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