All Forum Posts by: Becca F.

Thanks for the advice. I asked my property manager for his opinion. He thinks the property's potential rents are overinflated, the $900-$1000 for the main house and $575-$750 for the ADU and that buying in areas with high crime areas will invite lower quality tenants. Higher quality tenants won't want to live in areas with problems. He manages my SFH rental in Hamilton County, great tenants but I bought that house almost 10 years ago. Spending $300,000 or more wasn't in my plan. After doing a crime data search with zip codes (46218, 46201 so far) that pretty much eliminates most of the East side. Isn't it street by street on the East Side as far crime? With Class C properties, thoughts about tenants? Are those landlords having problems vs. landlords of Class A/B properties?

So now I'm widening my search to Lawrence, Washington, Pike and Wayne Townships. I'm seeing several of these homes go pending quickly. If I'm looking at $150,000 to $200,000 is my rent ratio going to be at least 0.7%? This is frustrating.

I'm planning to make an offer on a SFH in Indianapolis, possibly 2 SFHs in Class C areas. Both are move in ready. The first one is $119,000. It's 2 bedroom/1 bath on a quiet street in an area with growth. Great house with built-ins. Potential rent is $1000, could ask $1100. My estimated mortgage payment is $824 (PITI). I asked my realtor about making a cash offer of $118,000 or doing financing at list price and asking for seller's concession of 2%. It's been on the market for 5 days. One lender said if I paid cash I could do a delayed financing 6 months after and cash out about 80% of the appraised value.

The second one is $120,000, main house has 4 bedrooms, 1 bath and ADU/carriage house in the converted garage has 2 bedrooms/1 bath. Potential rent is $900-$1000 for main house and $575-$750 for the ADU. My estimated mortgage is $827 month. My hesitation is it's on a busy street and the dining room in the main house has a sloping floor. It's been on the market for 46 days. The seller's agent said the sloping floor has been the reason that it's been on the market for so long. Their inspection don't reveal any foundation issues but they said I'm free to do my own inspection but property is being sold as is. My realtor did a video tour of both properties and she couldn't see why the floor was sloping. She said a contractor could fix the sloping floor for around $15,000 to $20,000. It was built in 1910.

To add to my choices the investor for property #2 owns a 2 bedroom/1 bath house next door, listed for $100,000. He said he'd give me a deal if I bought both properties for $210,000 so $5000 off each one. Realtor hasn't looked at this one. The investor mentioned this property after my realtor viewed the other one. This would be convenient for my property manager since both properties are right next door. 

My other properties (California and one Indianapolis suburban) are Class A but prices are much higher with Class A and my rent ratio wouldn't be as good if I try to buy Class A in Indy. I'm not sure if I should try to pay cash for the first one and if Property #2 I should consider with sloping floor. It has good income potential with 2 rents. Or try to finance 2 properties? With property #2 and #3 I don't think there's a rush to make an offer since it's been on the market for a while. If you DM me, I can send the listings. Thanks for any advice. 

@Thomas O'Donnell

I'm in the San Francisco Bay Area and have a SFH rental in the Indianapolis area (suburban Class A neighborhood but I bought it almost 10 years ago when prices and interest rates were lower) - that was the best purchase I've ever made. I'm primarily looking at SFH that are move-in ready, mostly Class C, $110,000 to $160,000 and making an offer soon. The prices for a rehab are a great value (under $100,000) but I don't have time or mental energy to do a BRRRR (did a renovation in California and doing a rehab out of state doesn't sound appealing to me). If I was willing to do a major rehab, I did find a duplex, triplex and quadplex for in the $110,000 to $120,000 - I saw three of them so far fewer than SFH. I think that Indianapolis offers great rent ratios. I also have an agent who is investor friendly. I can DM you her information if you'd like.

@Amy Mitchell

Yes, I'm only looking for LTR. I may consider MTR since I could see travel nurses and professionals being a potential market. As far as STRs the subdivision I have my SFH in the Indianapolis area has banned any rentals of 30 days or less. Some cities are putting in restrictions with STRs. I view STRs as more like the hospitality industry and to me it seems like a lot of maintenance although your gross rents would higher than LTR. With my LTR, with proper tenant screening and a property manager, I rarely hear from my tenants, which is a good thing. I paid for a window repair 10 months ago and so far it's been low maintenance. If you find the right market with STR it would work.

@Amy Mitchell

I'm in California (Bay Area) and it's really difficult to buy here at these price points and cash flow positive (more like negative) now so I'm focusing out-of-state. I have a SFH in the Indianapolis metro area (suburb in class A neighborhood) but I bought it almost 10 years ago (used to live there). Depending on what county you're looking at, Hamilton County property tax rates are much higher for investors than primary home owners, 2.771% vs. 1.08%. I really like Carmel, Westfield, Noblesville and Fishers from an appreciation perspective, nice suburbs with good schools, but the prices are high now. My property taxes went up significantly which reduced my cash flow but my tenants are paying down my mortgage and I bought it for low price and low interest rate so I'm keeping the house

I'm looking in Indianapolis (Marion County) but I'm trying to narrow down the areas - I'm communicating with an investor friendly realtor. Being inside the 465 circle and the East side usually has lower priced homes than the West and North sides. I considered the Fountain Square area. I'm looking for SFH or duplexes (which seem to be rare), heavily leaning towards turn key or something with minor rehab (cosmetic work). I have a partial team in place for Indy: property manager, handyman, painter, roofing company in place, no contractor (yet). I'm also looking at Cincinnati.

@Saba Motakef

I'm in the San Francisco Bay Area and I'm also having a difficult time finding properties that meet the 1% rule. I have 2 properties here but I'm not buying in California anytime in the near future. Even 2 hours out of the Bay Area it's high $400,000 range.I looked at a house just east of S.F., listed for $649,000 sold for $680,000 back in late September - the realtor told me it had all cash offers, which is crazy. It's listed on Zillow Rents and the investor has lowered the rent twice from $3900 to now $3600 for 3 bedroom 1 bath. So this investor just put up $680,000 cash and the cost of the renovation and now is having trouble renting it out. If you put a larger down payment, aren't you tying up more cash? 

I have a SFH in Indiana that is meeting above the 1% rule but I bought it almost 10 years ago. I'm not using the 1% rule since I wouldn't find anything now. I'm looking mostly in the Midwest: Indianapolis area and Ohio. Memphis is a possibility. I'm looking in the $120,000 to $170,000 range (ready to move in). If I want to do a BRRRR I could find something under $100,000. I don't know that much about SoCal but I would recommend looking out of state. Good luck!

@Felix Piper

I have most of my investments in real estate but I have some stocks. I've thought to myself that I should diversify my portfolio but my real estate has held its value but my stocks and IRAs haven't in the past year. I agree with the above comments that buying stocks doesn't require as much planning and thought as REI.

The thing I like about REI is you can force appreciation by renovating a property, add an ADU, etc. Land is finite and property holds its value over time and it's a great way to pass on generational wealth to my kids. I can also pull out equity of my rentals to use them to buy more rentals by doing cash out refi or HELOC. The tax benefits of rental property are great - it reduces my taxable income a great deal, can't really do that with stocks. I'm paying taxes on every dollar of stock dividend.

You can do both - it's not one or the other. 

@Brice Perry

I did a cash out refi of a California rental property around Thanksgiving, conventional 30 year fixed, 6.5% (0.27% points). It was initially 6.75% but the lender had to adjust it so the monthly payment was a little lower, since my DTI ratio was getting up there, at 50% and they had to get it under 50%. I cashed out about 25% of the equity. They let me count the rental income even though the lease only started a few weeks before I applied for the loan. I worked with a mortgage broker. I talked to 5 lenders and received loan estimates from all of them - some of them were really terrible, one tried to charge me $23,000 worth of points to get the rate down to 5.625% on an investment property. I'm taking some of the money to finish renovations (landscaping) and the rest to put down on a future rental.

@Garrett Ayers

I did a refinance on a paid off California property to do renovations and have some extra cash left for a downpayment on a future rental. I'm not a big fan of HELOCs but I can see how some people like them, can draw money as needed. 

I'm not sure what your goals are but I'm buying out-of-state, mostly looking at SFH or duplexes (very few of these) in the Midwest and Tennessee. Florida Panhandle area is a possibility. The Midwest price points are much lower out-of-state and I can cash flow immediately. I'm looking at SFH from $120,000 to $230,000 (this being on the high side) that are ready to move in. I could buy 2 to 3 houses for the same price as buying one SFH out in the Central Valley with negative cash flow for now (vs. the Bay Area where I am).

If I go with a turnkey company, a tenant would be in place. If I buy something that needs work, I could find something for under $100,000. The one thing about California is historically it's appreciated a lot over the years so there are some investors still buying here. I have a SFH in Indiana. It went up significantly in value, about 70% from 2013 to 2019/2020 but percentage wise I think that's still lower than a Bay Area property in 6 to 7 years time. I'm trying to find that balance of cash flow and appreciation. Good luck!

@Clinton Bolton

I'm a beginning investor (3 properties) and reached that analysis paralysis stage of where should I buy and what (turnkey or a property that needs work). I attended one of Kris' free webinars and even got on a call with one of his reps. It's exactly how you described. The course/mentorship programs range from $18,000 to $35,000. They push heavily that buying with properties through them get you a 25% Return On Investment and on some of their properties they can get 34% ROI and that most people get 9 to 12% ROI investing on their own. The guy said to hold onto a rental for 3 to 5 years then if the ROI decreases they sell it and find a new market. This is when you split the profits 50/50 with Kris. That did not sit well with me at all, I'm putting 100% of my money into the purchase and I thought with rentals you hold onto a property longer than 3 to 5 years.

And I would also get access to their team of financial experts on how to build additional income streams such as franchising. The rep also pushed that anyone in the program would be invited to Kris' personal residence in Utah and talk to him in person in a real estate meet up. Very gimmicky. I told him $18,000 is a lot of money then he brings up the $10,000 mentorship program where I could buy one property with them. After listening to him talk for close to 45 minutes, I finally said that if I have an extra $18,000 to $35,000 wouldn't I just invest that in my own property and get all of the rental income and if I sold the property 100% of the proceeds, not 50% of it. 

As the others have commented, I would look into a U.S. real estate syndication. Good luck.