Looking at SF in Indy and want to make sure it's a good deal

[Jeb Brilliant]

Hi All, 

I'm really new to all of this but got brought a deal I may be buying. I'm flying to Indianapolis next week for an inspection but wanted to know what you all think. 

It's a 1920 single family residence 3 bed 1 bath, in what I believe is a C neighborhood of Indianapolis (I'm from LA and it looks like a B area to me). It is $22k (yes that's the price) with a tenant paying $650/month and she is in a lease for 10 more months. I've run the numbers to the best of my ability and I come up with an annual gross cash flow of $4050 or $337 monthly. 

Is this a good deal? 

Thanks in advance for your input. 

[Ryan Mullin]

Thanks @Dennis Weber.  But I don't know every crack in the streets..  just the bigger pot holes.  :)  

Here's the deal with that house...  Like Jeb said the seller is stubborn as hell.  My offer was 18k.  I figured we would meet somewhere around 20k and close it up and move on.  Nope.  They want 22 or whatever the exact amount was.  Agent wouldn't play ball so I walked.  

The tenant (by appearance of the inside of the home) is horrible.  Clutter everywhere, messy, etc.  Definitely not at work all that often because she was home in the middle of the day 2 different times for my showings.  The first time she was laying on the couch and wouldn't get up to let me in!  that right there will put a few extra days on market...  

But hey..     Maybe she pays like clockwork and I'm just judging a book by its cover..  maybe not. 

My offer was contingent upon the tenant vacating.  I was told it was a month to month lease.  and that wouldn't be an issue. 

The fact is if this very same house went to auction and it was vacant and all the big players got to go in and take a look at the condition it would sell for 26 or 27k that day, cash money, no problem.   Honestly 22k or 23 for that house is good deal.  Its going to need like 10 - 12k in work before re-renting it tho.  At least for my liking.  

Here is my general plan for that house...   buy it for 22.  

Sink another 12 or so into it.  - Central air, nice hardwoods / high end laminate, privacy fence, automatic garage door opener, etc.  

Rent to a tenant with a minimum credit score of 650.. leaning closer to that 700 mark.. (other qualifications do apply).  

675 or 695 / month in rent.  same on the deposit.   

^^  That formula would work 100% 

Oxford, Parker and Oakland between 1100 and 1300 blocks are much much nicer than you would expect. and getting better all the time. There are 2 newer magnet / charter schools located right there, one of which is extremely progressive, technology based and is really cool.  Check it out..  http://www.paramountindy.org   It just looks futuristic.  

There are quite a few home owners in the area that really care about the neighborhood. and Brookside park itself is absolutely gorgeous IMO. Plus its geographic location, so close to downtown, good stock of well built houses.. this whole area will eventually by extremely nice one day. It might be 10 - 15 years.. but hey its a buy and hold right...? For now tho there are certain pockets that I target and certain ones that I avoid. This one at 1133 parker happens to fall into a great pocket. Theres an investor / broker that lives on the 1200 block of oxford. She just bought rehabbed and sold 1209 Oxford for 140k. Sold via an FHA loan to homeowner.

I could go on and on.   But I won't.