Indianapolis SFH Turnkey Analysis

[Jason L.]

Hello BP!

I'm currently evaluating a SFH 3/1.5 in Indianapolis. House is 1150 sqft. The home will be completely rehabbed (cabinets, bathrooms, flooring, roof, furnace, windows, etc.). Built in 1978. Zip 46221.

Any investors out there familiar with the market who can provide some feedback? This would be my first turnkey investment! I want to make sure I'm not overpaying for the risk/return that I'm going to be getting.

Price $87k
Downpayment $17,400
Closing $2000

Estimated rent $1000
Vacancy 10% $100
Maint 9% $90
PM 10% $100
Ins $50
Tax $145
Mort (30yr @5.25%) $385
CF: $130

Annual NOI: $1,568
COC: 8.1%

Are these assumptions conservative enough? I don't mind lower returns if they come with the corresponding lower risk. This would be my first turnkey and I'm just looking to take baby steps here.

Any feedback would be appreciated! Thank you!

[Raghuveer M.]

seems like a good home as a primary residence. You need to also budget for capex which is where all your cash flow will disappear. Have a trusted home inspector inspect every aspect of the house and get his opinion on when major things may need replacement like boiler, ac, roof and if any issues with plumbing etc and make sure to get an estimate of replacement cost for each of the items if replaced with similar things. Make a 15 year projection of your capex and see if you still come out ahead. Vacancy rate is another killer. Make sure you call other property managers in that neighborhood and check what is the typical vacancy rate when someone moves out and check with your turnkey provider if they charge first month rent for replacing tenants.