Need help from Indianapolis Investors

[Cheryl P.]

I am interested in a 3 bed/1 bath 2139 sq ft all brick ranch property in the Millersville 46205 area in Indianapolis, it is an REO with an asking price of $52k. Here are my rough estimates as I have not walked the property, this will be fix/flip. It has well/septic. Finding sale comps in Indy that are 1 mile or less away from target in last six months is challenge.

Purchase Price: $52k

Repair Estimate: $40k  

Projected holding time: Max 90 days or less

Comps: 

1. 3/2 sold Feb 2015 for $135,000 (0.4 miles away) 

2. 3/2 sold June 2015 for $199,900 (1.1 miles away)

3. 3/2 sold May 2015 for $189,900 (1.7 miles away)

ARV: $174,993 - $30,000 required profit = $144,933 - $40,000 rehab = $104,933 - $20,880 realtor/holding/points/closing = $84,053 MAO ($32,053 below asking price)

Below is a conservative ARV based on $164k median home values in Millersville:

ARV: $155,000 - $30,000 required profit = $125,000 - $40,000 rehab = $85,000 - $20,880 = $64,120 MAO ($12,120 below asking price)

Any advise/insight would be appreciated.

[Kerry Edwards]

If there aren't recent sales comps closer than a mile away then you're probably looking at a rental area. If it is in fact an investor/rental area you'll want to use a different ARV usually somewhere between 45-55 times rents.

Indianapolis is difficult to navigate investment wise as neighborhoods change dramatically from block to block. If you're talking about Millersville Road south of 46th you want to at least drive the block and drive your comps to confirm your ARV number. There are pockets of really good stuff over there by Cathedral High School and north of 46th off of Binford Parkway

Also Check to see if the property is in IPS or Lawrence Township because for that area being in Lawrence Township should typically command at least $100 more P/M in rents