Indianapolis Investors - Help me analyze this deal

[Tom Campone]

I'm evaluating a duplex in Indianapolis and I need another set of eyes on my numbers. Any advice would be greatly appreciated. 

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[Mike D'Arrigo]

@Tom Campone Putting my feelings about MF in Indianapolis aside for a minute and focusing on just the numbers, a couple of things jump out. One, I don't see any projection for vacancy. I would consider this a low C class area and that might be generous. The rent per unit is about $480/mth which is going to get you a very low income tenant. That means someone would only need to make $1,447/mth to qualify at 3X reent. You're just not going to get a stable tenant. In this asset class, in this area and being only a 1Br per side, you will have a pretty high vacancy rate. The fact that it is only 1Br would be a deal breaker to me. That seriously limits the type of tenant you can attract. Once you factor in a vacancy rate, I think you'll find your projected COC return somewhere around 8.8% and that's if everything goes according to plans. That's not a particularly strong return for this class of property and the higher risk associated with it. I've been active in the Indy market for several years and have yet to see this asset class perform well for an out of state investor. I don't want to rain on your parade but I don't see anything attractive about this deal.