Indy little flower - Deal analysis

[Mayank S.]

I am running some numbers on potential property 3/1 on N Grant Ave little flower near Brookside park. Here is what I have:

PP: $29,900 (wholesale)

Rehab: ~10k approx. Rental grade cosmetic rehab- paint, carpet to go, hardwood underneath so polishing ,  install window/central AC and/or fencing depends on the rehab budget.

roof, windows appears new. furnace, hot water heater in good condition, no fencing or central AC, basement and foundation in good condition (little moisture there though) waiting on contractor rehab estimate.

Rent range - $695-750 . $750 if install central AC and fencing. No garage.

PM - 10%

Vacancy - 8%

maintenance - 10%

Tax: $973/annual

Insurance: $550/annum

Overall aim is to get everything within 40k with rent $725.

What do you have to say in terms of neighborhood, ARV based on above rehab items, fair rent range, Cap rate other local savvy investors are getting. Overall trend for area around this part of center township.

Purpose: Long term buy and hold for stable cash flow so please pour in your expert opinions Indy investors. Thanks!

[Lee Smith]

I posted this on the other thread, but will move them over here... I modified a bit since I know the address is in the 1400 block of N Grant..

Couple of things I see:

I see everyone throwing out this 10% number for property management.. Don't you pay like first months rent to place a tenant and then 10% of each additional months rent? So doesn't that make your PM fees more like 18-20% a year? Also they all seem to charge a renewal fee of some sort for later years if the tenant stays... I'm not trying to nitpick, just want to make sure we are looking at true numbers. As you said in the other thread your numbers are actually 18% a year for PM.

Property taxes are actually $1012 a year plus probably $60~ a year for solid waste(trash pickup).  Not a big difference from what you listed. Assessed value is $45,400. Land is valued for $4800(just for depreciation if you do that).

Central Air and Fence? So what, $1500-1800 for central air and 1.5-2k for fence? So 7k for other stuff? Are you looking for other bids on your rehab? I manage multiple rehabbers for people. I can give you a bid as well if you like...

I'm not really sure Central Air is needed in that area, and will take several years to pay for itself ( IF you get $50 increase p/month in rent, it will take 30 months to pay for the AC, if you get it for $1500). Why not make sure all the windows open and have screens, and offer to rent them a portable AC for $25 a month additionally($300 portable unit pays for itself in 1 year).

Fenced yard may get you additional monthly pet fees. We generally charge $15-25 a month per pet.. So hopefully you will get 2 pets to pay for the fence in 30-36 months. Hopefully the additional pets don't trash the house though too.. hehe

If you are comfortable with the numbers, run with it! It seems like a pretty standard deal to me. Just might be some ways to tweak your returns. Your favorite property manager seems to have a 2 bedroom listed a street over for $675. It seems pretty nice. There's another 2 bedroom a bit north of you for $625 also pretty clean.. Another 2 bedroom a bit south(1100 block) of you for 525, and another 2 bedroom for $525...  Go to hotpads.com and plug in your address, you will see what I am seeing... Asking price and renting price are two different things, so keep that in mind as well...

You asked for my rates in the other thread.. Definitely not trying to steal you... My property management company only charges $100 placement/renewal fee, but we do charge 12% of gross rents... As for pets: we just charge pet security deposit of an additional $150, but then $15-25 per pet per month depending on size...