HRRE Turnkey Duplex Success

[Bryan Lyde]

Short write up of how I came to meet Shecky and team at HRRE, the process I followed analyzing their deals and the numbers on the one I closed.

As an existing remote investor outside of Texas, I chose Indy as my secondary market which has become my primary market mostly because of the numbers. The economy is strong and fairing well with Covid, rent price ratios are hovering around 1.2. I met with Shecky and toured a few of their properties last year and spoke at length about their processes. They have since outsourced property management to Great Jones but other than that are still producing good product with good returns. Because I already have properties under management with the Wilmoth Group (highly recommed btw), I had the biggest hurdle already out of the way.

I get the normal emails with deals from a variety of sources including HRRE. When they come across I typically run the numbers like this:

Does it meet my criteria (proper size, # of bed/bath, township, age, condition). Next is checking parcel details and current property tax situation (all available publically for free). I then compare comps and rental stats based my existing rentals (rentometer is ok but use the median value and stress test it). I run it through my calculator/xls to determine KPI for me which is COC%, minimum monthly cashflow, and total return excluding apprecation of >=20% annually.

How did this duplex fair?

3/2 duplex on each side, fully renovated, no AC currently

Purchase price = $138K, appraised at $145K

Tenants in place and performing, 900 and 950 = $1850/mo

Taxes ~$1400/yr, Insurance $800/year

I use 10% maintenance, 9% for PM, 5% for Capex, 8% vacancy assumption

30yr loan, 75LTV at 3.75% through chemical (TCF) bank

Closing costs all in just under $40k

KPI: Monthly cashflow of $631, ~$316 per side (greater than my min of 200 per door)

COC of 19% yr1, 22% at yr5 (greater than my min of 10%)

Total return on equity yr1 >40% from equity capture, 24-27% annually through year 5 (ignoring any appreciation)

This one required 2 months to close but the delays were mostly from the bank and coordinating appraisal site visits in the current environment. I can now confidently say having gone through the process with HRRE that they are a company worth investigating if Indy is a market you are active in as "passive" investor looking for turnkey properties.