[Calc Review] Help me analyze this deal

[Vanessa Switzler]

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Hi All,

Was looking for any thoughts/pearls of wisdom on this deal. It is a duplex that was purchased by a builder in May 2023 for 140k.  The builder has gutted and is converting to a 4plex 1bed/1 bath per unit.  He is looking to sell now at 200-220k so he can move into another project.  An additional 75-80k required to finish the rehab (all in).  

Space could be LT ($800ish) or MT ($1200-$1600 I am told as there is a market for traveling nurses in this area).  I was thinking to split the units (2 LT and 2 MT) to start and if all works out, have all be MT for higher cashflow.  The building is in an ADU zone with ample room to put a 2-4 car garage and additional 1-2 units on top in the future.  The neighborhood (Fountain Square section of Indy) is gentrifying with lots of building and rehabbing.

I am in NJ and currently have one investment property (commercial and two residential units) that I manage myself. This would be my first out of state investment. 

I'm nervous and looking assistance! Thanks so much!

[Adam Oldham]

Echoing what @Dan H. said, definitely underwrite it as a long term rental, I have mid term rentals but they're not always rented due to turns between tenants. The second thing would be that in my experience tenants who rent a 1bed 1bath are more likely to stay for a shorter period of time say one year and then need to find a bigger place. So your tenant turnover I expect to be higher & usually the quality of tenants is not good. However, you mentioned the house is new construction and located in fountain square which are both huge advantages. I would say if you are all in on a 4plex for 300k in fountain square you should do alright. Let me know how this deal goes!