All Forum Posts by: Matt M.

We have a property under contract in Indy right now, looking to add a second. We are also moving to Indy from New Orleans, where real estate has treated us very well. My wife got a job offer in Indy that prompted the move, Indy was not my first choice, but I’ve warmed up to it. So from an older Millennium perspective, Indy has a lot to offer. The rent is very low relative to other MSA’s, the housing is cheap relative to wages, insurance, taxes, healthcare, costs across the board are lower. Then, factoring the employment conditions, and potential for growth Indy was a good choice, I think in a large part due to the lower cost of living. The biggest surprise was that Indy actually had a little bit of a night life, and restaurant scene that wasn’t disappointing. As others commented above the central location allows for cheap air travel, or travel by car to the exciting places people can’t afford to live in. (Nola, Denver, Etc.) I suppose the biggest negative is the school system, but there are alternatives available. The other area we invest in is Illinois, the taxes are insane, so Indiana is a great choice for retires looking to maximize their retirement. I will say that I have been really disappointed with cash flow opportunities, but I’m not the type of investor that’s ok with $100-200/door. The housing stock is very old, and I have a firm grip on Capex costs that not everyone may be considering.

“Fully renovated” in today’s market means the front door is a trendy color, the cabinets are probably white, subway tile dark floors. At least that is my experience lately. Right before Christmas I toured a bunch of open houses, each was fully renovated/flipped and each needed 5-25k in near term repairs (1-3 years). This included work that was complete, but so poorly completed that it would fail within that time period. I’ve just come to accept that when I purchase a new property I’m going to have 5-10k minimum in I guess what you’d call takeover costs. This could be evictions, repairs that are necessary but covered up, replacement vs “repairs”. Same thing sort of happens when tenants change an unknown issue comes up that was never an issue with the previous tenant. You’ve got to have reserves for this reason. The great news is you’ve replaced the water heaters, the hvac and fixed some electrical issues. So while those are costs, the also increase value, it’s not burnt up money. I’m really interested in your last point, a three year break even. I’m assuming you’re just using gross rent for that calculation, if that is net rent you shouldn’t be complaining at all.

I grew up in that area, and I see this issue in a few other areas. Because the buyer pool for multis is so much smaller there usually a discrepancy in PSF prices for SFR and MFR properties. The issue is that the appraised value is based upon the houses features, age, style. So you have two kitchens, six bedrooms etc, and 75% of the value. Then you have relatively low owner turnover, usually without mortgages that don’t contest the property valuation. There’s a group of five duplex’s right on the edge of Brookfield/Lyons that could be worth 200-275 each at current market prices. I recall about 11k in property taxes on each. We hold a brick 4 plex 1/2 mile away in a better area with $8k annual taxes. Be very Leary of anything that seems to have low taxes. Due to various freezes they could double in a years time. Try to get as accurate as you can on the tax bill, but stress test your numbers with a 10-20-30% property tax increase. Short of the state revamping the entire tax system those bills will only be higher. Also, if you can find some well to do friends the 5+ properties are usually less taxed, and more profitable.

In my area 2-3” C900 pipe with taps would be $45-55 per foot. Probably $300-500 to run a tap to each home. If you have asphalt or concrete directional boring may be a better option. If you already have a leak in the replaced section I️ would use a different contractor.

One of my attorneys does the due diligence and title insurance examination for Civicsource. IIRC civic source is self insuring the title on these properties, but the vetting meets the best practice requirements for ALTA.

All costs considered I don't see much off a gap in multifamily. It's overpriced for me. In the single family arena PSF comparisons do not apply. The newer construction homes, basically anything outside of Orleans Parish and are larger than the average NO home. Developers have spent the last three years playing the appraisal game and finally tapped out of buyers in the 400-500k range. I wouldn't consider 3.5% a correction. But that dip leaves out an important detail. When FEMA finalized maps last year tons of people got their food insurance cut by 50% or more. When factoring in flood insurance many houses are more affordable this year than last (probably wipes out the interest rate increases).

I agree with Mike, probably need 2 tons. Not sure what insulation your using, skip the fiberglass under the house if you're going that route, very easy to create big issues in NOLA.

Adam S. The clock technically starts with the recording of the tax sale. The process was very slow this year, the properties I purchased at the tax auction on 4-13 were not recorded until 5-26. Treasury will calculate from the sale date, so returns are not affected yet, but this could potentially create issues where the redemption period expires.

Brent Causey the city is much more aggressive in collecting past due taxes in the last three years. In the past I've typically seen 2-3 years delinquent go to sale. This year I noticed properties with 1-2 years. I just had a closing delayed 60 days because of the 4/17 sale. Civicsource and the city were very slow to process this year, and in discussing the issue with treasury they noticed a huge uptick in immediate redemptions. Many of the properties on civic source have been involved in previous sales, the assessor office and city treasury have the information available on their websites to see if there were previous sales. It's not clear to me how a previous sale will cloud title, where a purchaser has a significant percentage ownership in the property. My attorneys were unclear as well. These properties are a minefield, but if your diligent and make yourself aware of the laws you can make money.

The alternative question could be what's causing holders of commercial properties to sell, assuming that these are purchase transactions. For sellers: profit taking due to potential market downturn. Most anything purchased 5-7 years ago has experienced terrific gains. Purchasers: lock in low rates, perceived stable income and returns. Potential changes to the tax code, and uncertainty in the economy 12-24 months.