Knoxville vs. Indianapolis

[William Vreeland]

I'm planning to BRRRR single-family homes, but I can't decide between Knoxville and Indianapolis. I live in Southern California, have family in Tennessee (Nashville), and real estate friends in Indianapolis. I will be purchasing the properties in cash, likely from mortgage or tax deed/lien auction. Looking to connect with local investors in each market and discuss the pros/cons. Thoughts?

[Evan Polaski]

@William Vreeland, Nashville to Knoxville is a 3 hr drive, so unless you family is consistently in Knoxville, I am not sure how having family in one city is beneficial to investing in another.  

Do you know how the auctions work in the counties you are investing in in either Knoxville or Indy?  

How much do you trust your friends in Indy?  Are they willing to actually help/co-invest with you?  If your friends are real estate agents that have never invested in, rehabbed, or generally owned property, than I can't foresee them being much help.  But, if they are flippers/rehabbers, investors, property managers, I could see that being a benefit.

And I would certainly be looking at flight options into either market, as I couldn't imagine putting hundreds of thousands of dollars into investments in a market with visiting those investments at least a couple times per year.  If Indy has direct options and Knoxville is connecting, that would be another check in the Indy box, assuming friends would actually be helpful.

But as others have stated, BRRRs are basically buying a flip and turning into a long-term rental. I couldn't imagine flipping a house from afar on my own.  I have seen too much of how bad of jobs contracts can do when left to their own devices.  But, again, if you friends  in Indy know a thing or two about investing and can partner with you, where you both have a financial stake and they get "more" of the pie relative to their equity contribution in order to oversee the success, that would be the ideal scenario in my book.

As for broadly in markets, both are considered pretty good.  And SFRs can succeed in any market, really, as long as you know what you are getting into.  Both Indy and Knoxville are major cities.  Both have good pockets and both have bad pockets. 

And remember, both will appear cheap to you, but that doesn't mean they will necessarily be good investments.  Bad contractors can cost you 10s of thousands if they mess up the rehab.  A tenant can do $20k of damage pretty quickly and skip town never to be found again, if you aren't careful.