All Forum Posts by: Jeremy Johnson

I agree with most everyone here.  Your expenses are based on the age of the systems, the age of the home, and what quality of renovation was done.  We do spend a bit more on more durable systems when we renovate properties, but most go with the cheapest and it shows down the road.  I have actually started a book with discussions from inspectors and property managers about determining the risks levels in a home for cap-ex, keeping tenants etc based on the listing of a property.  The amount held for cap-ex really does depend on a number of factors.  I also agree that once you hold a few you can relax the total amount held per property.  Early on with my first property I took every dollar of "profit" and held it until I had enough in reserve to feel like I could then call it actual profit.  Over estimate costs, under estimate income and hold all money for the first year at a minimum, that would be my advice.

I've been watching the Indy market for about 2 years now and have been in the market for less than 6 months.  However, I have a lot of family here and grew up here.  That being said, I have seen a cautionary trend in the Indianapolis and surrounding markets.  I continue to see what I would classify as an investor property selling for 100-105% of Asking price.  This has happened on numerous properties that I have spoken with an agent about.  

A perfect example was a 4 plex listed as 2br/1 ba units near a bus stop that was "below rent" for the area.  They asked for 275k.  This property was next to a condemned property, the bus stop was for the redline and wasnt completed.  More telling was that the property wasnt a true 2 br/1 ba.  they had converted the kitchenet room into a br.  The room had no closet and now the unit had no kitchenet.  There is no way it could compete against a true 2br/ 1 ba for rent.  Also it was in a very bad neighborhood.  when i called the agent he confirmed my suspicions but said they had a full price offer from someone out of state.  This isnt the only property I've seen this on.  

Many properties are on the market less than 10 days and going for over asking price.  My primary market is Indy, but i've recently started shifting my focus to my secondary markets as Indy is over bought and red hot.  I still work with realtors, wholesalers, and look for off market deals, but otherwise I'm not interested in Indy currently. 

Have other people noticed the market being overly hot recently?  The worry is that rents havent increased at the same rate as property values over the short term.

Hey BP, Finally moved into the Indy area after 20 years away. Ready to start back up the REI game. I have a number of questions for an accountant involving how we had to use money for the house we're in and the fall out for tax purposes. Its a long story involving an old LLC, a new LLC and VA loans. So I need to talk to an accountant soon, for future REI as well. Any recommendations would be great. Thanks!

@Brandon Wells Thanks for the info and I agree with a full team including a Property Manager. I'll be managing the first few myself early on, as I'm going from VA to IN I want to double check and add some language to my rental contract.

@Armond Wright Also good info and I'll look into them!

If anyone else has good references I'd love to hear it as well!

Hello all, Looking to get my REI team detailed and I would like any recommendations for lawyers in the Indy area. Ideally Real Estate specialty lawyers with investments of their own. Syndication, LOI, rental agreements, evictions etc. experience and sub-LLC creation along with S-class and LLC OAs. Either a great individual or a firm as well.

Very excited to go move forward with my new career and thank you in advance to the BP community!

The best resource I found for out of state investors was a great map that @Sterling White posted.  Link below.

https://www.biggerpockets.com/blog/guide-grading-indianapolis-neighborhoods

As for 46218 I wouldn't advise it unless I had my Section 8 skills on point and boots on the ground.  Good luck!

Indy is a great area to invest if you know the areas. As others have said its all about the neighborhood. That being said all of the great suburban areas were already mentioned. If you want consistent rentals and long-term appreciation I'd look at those. Some of the other areas is more speculative IMO. As to finding good MF properties, good luck. In most of the suburban areas the MF properties are coveted and go for a premium. Your best bet may be to work with some boots on the ground people and bring you in as a partner. I'll be looking for other investors myself for small commercial properties and MF units next summer. The good distressed properties are going off market and the ones on the MLS are what most other investors passed over due to crime or other factors. There may be a few gems found on MLS, but honestly you may get better gains by working with others. I'm assuming you plan to either get a turn-key rental and if not then you may be looking to BRRR for your first deal. Either way you're going to have to find people you trust and work closely with them. My first BRRR was local and I always advise that when possible.

I grew up around Indy and graduated HS and attended college there.  If I can be of any assistance I'd be happy to help.  I'd rather work with other investors than compete.  I'd stay away from the East side until you know the area better and also consider some surrounding areas outside of Indy.  Turn key investing is more to the Broadripple area and there are a number of upcoming areas depending on your time frame.  

I'll be incorporating and investing in the Indy area next summer.  There's alot of information available and it's a good area.  I'd suggest looking at 

https://www.biggerpockets.com/blog/guide-grading-indianapolis-neighborhoods

from Sterling White and it's absolutely amazing.  As to what to buy specifically or where that is a much MUCH bigger discussion!  Good luck and welcome to the neighborhood!

-jeremy

I also dont subscribe to the less debt is better for a number of reasons. If a bank is willing to give you thousands of dollars to pay off over years at an APR under 5% while someone else pays it for you, and you can use that capital to purchase or finance more investments which will bring you a better return than 5% its a win. That's not counting the tax benefits. You should be able to make a yearly profit and not be paying much in the way of taxes if done correctly. Intelligent use of leveraged buying will grow your portfolio better than most other options.

I agree with selling your home just for the capital gains exemption.  House hacking is the single best way to make money early on IMO and I wish I had done it years ago.  

Don't fear debt. Fear high APR, unreasonable terms or a number of other options, but cash is king and taking cash out of a home while staying cash flow positive is always my first advice. If you're truly worried about the length of payoff or interest rate try a 15yr, and you dont a high mortgage amount, but at a principle amount that works for you.

Once you're out of the primary residence and seeking a rental. I will always advise buying a multi-plex (du/tri) and renting the other units. Better APR for the loan as its a primary residence and once you move out it will cash flow better. If you sell it no capital gains. It's the best hack out there for newbies.

You're in great shape.  Sit down, do the math and explore your options!!