Urban Renewal in Historic Near East Downtown Indianapolis

[Cherie Johnston]

Investment Info:

Single-family residence other investment.

Purchase price: $30,000
Cash invested: $64,000
Sale price: $116,000

Restoration of Craftsman home, removal of one wall and flip breakfast nook into master walk-in closet.
All plaster walls were beautifully in tact except kitchen ceiling, all original woodwork remained and was refinished. Original wood floors restore. Bathroom and kitchen floors classic tile. New kitchen cabinetry, island and appliances. Half-bath added to basement. Garage saved and painted and electric door added.

What made you interested in investing in this type of deal?

Love historic homes and helping communities build/re-build. Our mission was also to help anyone rebuild their portfolio from the crash by offering double-digit interest rates on their loan, secured by the property.

How did you find this deal and how did you negotiate it?

Purchased from another investor who didn't have time to deal with the narrow margin and keeping tight control of costs to make it work.

How did you finance this deal?

Private investor using Josh Cantwell's "40k Flip" model. Ended up with three investors, all left the deal extremely happy. The cash invested included the interest paid to them on sale when we paid back their principal.

How did you add value to the deal?

Took a deteriorated home that sat vacant for years and years and oversaw the project manager and contractor, made all design and remodel choices, made the analysis of where the ceiling would be for pushing the neighborhood pricing -- and succeeded.

What was the outcome?

Sold at small profit, contributed to the uplift of a transitional neighborhood making a lot of neighbors happy.

Lessons learned? Challenges?

Good first project away from home, a restoration that did not need the extensive work and expense of gutting, learned that reliable labor is the biggest challenge in Indianapolis, communication skills are put to test on a project like this, the beauty of an historic home brought back to life is reward itself.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Photographer was outstanding. Home stager was great. House was sold for $122,000; we worked really, really hard for that. The appraiser, oblivious to upward market trending appraised at $116,000 despite the fact we had 3 offers on the house within two weeks on the market. (See comments in forum about appraisers.)