[Calc Review] Help me analyze this deal (Indianapolis)

[Jason Howell]

Background: Up front - working numbers daily to get in the routine of analyzing deals. This is part of that. At this stage, I'm not ready to buy. Having said that, I'm trying to approach this using @David Greene's model of finding 2BR units with 1000+ sq ft in an effort to buy low, convert into a 3BR, then ultimately cash out refinance. This unit in Butler Tarkington area of Indianapolis seems to fit the bill (though that square footage seems unbelievably high... are they including the unfinished basement in the calculation?) Keep in mind at this stage I'm guessing on repair cost and ARV (yes I know they are important. It's just playing with numbers at this stage) The attached report is based on the 2BR numbers, as posted to MLS.

Those of you familiar with Indianapolis, any knee jerk reactions to this? Thanks for all you do!

View report

*This link comes directly from our calculators, based on information input by the member who posted.

[Ross Denman]

@Jason Howell there are a few things to consider on this home.

1. Taxes. In Indiana, absentee owner properties are taxed at 2% of the assessed value. Your taxes on this property will be $1,725 annually.

2. I always figure property management at 10%. Sure there are outfits that run for less than 10%, but they make it up elsewhere. Property management fees are too slim to run 20% below everybody else. 

3. From the pictures, this home doesn't appear to be tall enough to do the loft conversion. I believe that finished square footage has to have at least 7' clearance. You will be looking for taller bungalows for this.

4. $15,000 is not much of a rehab budget and certainly could not include the loft conversion (which will likely run $15k-$30k depending on what you are doing.) My preference is to add a master suite in the loft with a 3/4 bathroom. $15k will likely cover everything else though.

I think that's about it. Seems like there may be possibilities with this property though.