All Forum Posts by: Matthew McMenamin

@Leo Watts Thanks Leo. That's interesting regarding the lack of market cycles. It seems to make sense that in an area loaded with high paying government jobs and limited supply of homes, prices will probably continue to stay high. You can't really increase the supply of homes to a city with no land left to build them on. Its kind of a bummer for the average buyer. Everything is 100 years old.

As @Russell Brazil mentioned, I think Silver Springs looks like a solid option. 

@Harrison S. I love the risky play! Buy low, sell high! So is Southeast Washington the proverbial "other side of the tracks?" Geographically its right by the epicenter of everything and prices seem pretty reasonable.

@Chris Mills I believe I stayed in one of these English basements in an air bnb in DC. Never heard that term before. That's what I was referring to when I meant house hacking. I'm sure a true duplex is impossible to find in that price range.

DC BP Community,

I'm looking to gain some knowledge of the market here. I am helping somebody else gather info to purchase their first SF home. House hacking is maybe on the table here. Everything I see from the outside looking in appears to be incredibly expensive. I'm not sure right now is the best time to be sinking 100's of thousands of dollars into non-incoming producing RE. The market appears to be at a peak. How cyclical is the DC market? Is it worth it to sit out and wait for better buying opportunities? Hope to get a lively discussion going and see what everyone is thinking.

Haven't heard of this until now. So what was the scam here? Based on that doc @Steve Vaughan posted, he targeted people with substantial equity in their homes who were facing foreclosure, promised to get the house sold to help them avoid losing the house all-together, had them transfer the house to him, then just stole the house essentially? How did this go on so long?? 300 homes?

@Cameron Lam Hey Cam, when you were starting out on those first few properties, did you have to shop around to get favorable financing? Were lenders ok with funding a rental property knowing you had limited work history at $60k/yr? Cosigner? Thanks in advance. Great story.

Edit: Just saw the timeline again. Is that a coincidence that you got your first property after working for 2 years? That seems to be the mark that lenders look for.

I'll offer a pretty salient example of how fast prices have risen.

In 2015 back when the market wasn't so insane, my parents bought a lot for $100,000 to build their house. Lots of the exact same dimension are being sold in the neighborhood for almost $300,000 in 2020. That obviously doesn't represent the whole city, but the fact that is even possible is crazy. 

Buy land I guess. They're not making any more of it. 

@Gil Keren @Lee Ripma is right. Understand the math behind deals that meet your criteria COLD. Once you run the numbers on enough deals you can start to weed things out super quick. That way, when a deal pops up you can confidently say that the numbers work after plugging it into your pre-made excel model. Then send your offer in ASAP! It should take no more than an afternoon (MAX) to know if a deal works. That is assuming your criteria is rock solid (location/neighborhoods, rent, expenses, etc.). Then, if the inspection uncovers an unknown, you can back out or renegotiate. Getting something under contract is basically you saying "Assuming nothing out of the ordinary is going on here, then I will pay X amount for this property." When inspection shows that roof needs replaced and the foundation is cracked (an unknown), then you either walk away or request that amount be taken off the purchase price. You don't need to see a property in person before offering on it. In the current Indy market, you will never win a deal if you have to get on a plane to come see it first. 

I made the mistake of being too concerned with "perfect" offers starting out. You're not signing your life away. If the property is not at all what the seller represented it as, you'll get your EMD back and you'll be back to the drawing board. So get practice and be confident. Also, offering all cash seems to be the norm in Indy these days. Just my 2 cents.

It's also very unlikely to appreciate. There is basically nothing of interest in Lawrence. 

Like others have said, Lawrence is a pretty big area so I'm kind of painting with a broad brush. Unlike other parts of Indianapolis, I think Lawrence has actually gotten worse recently. A lot of shootings. The big problem for investors is that it looks fine. Kind of suburban. I'm sure investments in Lawrence look good on paper. Compare that to Haughville where you know its a rough part of town, I think investors might get duped into jumping into a bad deal in Lawrence. 

@Mike D'Arrigo Mike, I should have added. These are not houses. It's $600/mo (roughly) a door. Probably more like $650. If you're renting houses at $750/ mo for a 3 bed, you're probably in neighborhoods like Haughville, which is considerably worse than the area I'm looking at. I'm familiar with the neighborhoods. I lived there for 18 years.

I agree the deal is tight. With property management the cashflow is slim, but still around 9%. I'm keeping value-add on the table still. I might just buy, renovate (sparingly), and then sell a year later. Doing most of the cosmetic renovations myself. 

Has anyone worked with a reliable flooring guy in Indianapolis? My best quote is currently $1.65 for materials with a solid warranty and $2.00 to install. That's not way too high, but I feel like I could do better. 

The properties will be rented at $600 a month, so I don't want to over-renovate. If anyone has additional insight into this level of rental, please weigh in. What sort of finishes should I be installing? Going really cheap seems like it's not even worth the time to renovate, but putting $15,000 into a unit that will only pull $600 a month also seems foolish.