All Forum Posts by: Ross Denman

I believe that the assessed value is supposed to be similar to market value, but usually it runs a little lower than FMV. Occasionally, it runs higher than FMV and if it does I would appeal the assessment. The assessed value is the assessors opinion of the value of the land and improvements.

I think that BP and local REIA's and meetups are the way to go. I'm the business developer for a property management company, so we mostly deal in rental properties. I get unsolicited emails and online inquiries from various vendors throughout the month and don't usually have enough time to even follow up with them, but as I mentioned above, I do try to have lunch with at least one each month. I do the same thing with realtors, investors, and lenders as well.

The biggest frustration that I have is that investors simply don't want to pay much, even if it's advantageous. Many of my more successful investors have been switching over to LVP flooring and getting rid of carpet for a few years now, but a lot of investors simply don't want to pay for the better flooring even if it lasts a lifetime. We typically have to change carpets every 2-3 tenants so the higher end flooring will pay for itself over time, but the biggest ROI is attracting and keeping higher quality tenants. Less vacancy and faster turns. Hard surface flooring not only doesn't have to be replaced, it's easier to clean and maintenance overall.

If you're doing higher quality work, you will probably want to work with flippers as opposed to buy/hold projects since flippers spend more money and usually place a higher importance on quality. I would recommend trying to get in touch with Dave Short as he's one of the most active flippers in the area. He holds a monthly flipping workshop through CIREIA.

Another thought would be to comb through the active listings for home sales that have been recently rehabbed... especially in the big market neighborhoods. Search the address in the permit database for Marion County https://accela9ca.indy.gov/citizenaccess/ and look up the GC who pulled the permits. I would reach out to them and see if they need flooring subcontractors. I've used the permit database before to find several contractors over the years. By searching there, you can verify that they are licensed, pull permits, and actively working. As mentioned above though, most of them stay pretty busy and may be difficult to get in touch with... especially this time of year.

@Account Closed 

http://maps.indy.gov/AssessorPropertyCards/

You can search for the tax parcel by parcel number, owner, or address. Once you download the tax parcel, the chain of title is on upper right hand side. This doesn't always go all the way back to the construction of the property, but it will usually show ownership for several years.

I try to have lunch with a new GC every month. I have a few in my network that we use frequently, but they do not like to work directly with investors. If I send them out... they will bend over backwards because they know that I am not a tire-kicker and will protect their time. If an unknown investors asks for an estimate, most of them are charging now. People will ask for contractor referrals and I don't give them out unless you have an offer, a home inspection scheduled, and everything is on track to close. These people don't make hourly wages... realtors, GC's, etc. Protect their time and help them be efficient and they will do anything you ask. Run them around and watch them quit answering your calls, texts, or emails.

I've had too many GC's talk about spending 40 hours/week visiting properties and building budgets and on homes that never even close to that investor. They'd rather make money than be run around for free. Like anything else, build relationships.

Personally, I don't like to use "new" contractors most of the time. I see more change orders, slower work, more unanticipated problems, etc. I will pay for value. I've seen too many people get stuck with poor work that took twice as long as it needed to thinking that they were going to save a few dollars. They actually lost it in the inability to sell or rent at the top of the market and extended vacancy time.

Like so many things in this business... building relationships will provide some of the best benefit.

Keep me posted and I might stop by, but there's already a dozen or so meetups and REIA's so it's tough to make every one.

Is there something particular you're planning to set your group apart? There's already wholesaler meetups, landlord meetups, multifamily meetups, investors/realtor meetups, note investing meetups, rehab and flip meetups, newbie real estate investing meetings (I just went to one today,) etc. It may be more beneficial to network with the already established groups. One thing that I haven't seen is a meetup revolving around the BRRRR strategy and since the majority of our clients are using the BRRRR strategy or some kind of variation, networking with professionals and providers who are familiar with the BRRRR strategy may be an interesting addition.

There are also several Facebook and other social media groups where there are opportunities to not only network with local investors but also to network with OOS investors. I haven't been as active recently, but you should certainly take a look at the Indianapolis Out of State Investor Facebook group. It's my favorite online, niche group. It stays pretty active and it's a decent group to network, learn, and contribute... just don't do the wholesaler thing and ask for everyone's emails for your buyers list... it'll get you banned :)

 There is some debate amongst locals regarding Haughville. While there are some pockets of areas with cute home on cute streets, the area as a whole still has a bad reputation, which means we aren't getting an expanding tenant pool to choose from. Until the area becomes more appealing to an outside source of prospective tenants, you're choosing from the already resident pool, which is on the lower end (income, education, criminal history, lifestyle, etc.) It's still a pretty heavy crime area with a lot of low-income residents. Some of the initiatives gearing up on the west side of Indianapolis will likely change this over time, but I wouldn't get in too early as it will probably be an inconsistent experience for a few more years to come. Initiatives to check in to that will have an impact on this and other west side neighborhoods area:

• 16 Tech
• Riverside Park renovations (amphitheater is underworks right now.)
• Waterside
• King Common

It will come around with time, I just don't like to tie my money up for years without seeing the upside in the near future. I barely have enough money to get in to the established areas, much less tie it up for years to get beat up with bad tenants and maintenance heavy homes that don't carry enough value for major renovations. :) Just my take for now... but wait a minute and it'll change.

Yes, the lender will only finance what is on the HUD so not only renovation costs, but also property taxes and insurance costs can be written in to the closing. This is the way our lender teaches our clients to do it. So far, delayed financing appears to be a more efficient route for most situations.

@Jessica Griffin I don't recommend taking on a ton of risk or making speculative moves if you are just starting out. I try to steer most of my clients away from the "up and coming" areas unless they are more experienced and capitalized.

Currently, the MLS market is very competitive and the wholesale market can be predatory, but the MLS should be softening over the next month or two and we should see some price drops or more opportunities for better negotiations.

Over half of our clients right now are BRRRR'ing properties or doing some variation of it. Right now, many of our clients are using delayed financing as it's a little faster than the traditional refinance and doesn't require seasoning. This means that you can do more deals each year since you don't have to hold for 6 months before recycling your money.

BRRRR can be a great strategy, just make sure that you understand the impact of the leverage on the cash flow and have reasonable expectations on the overhead of owning investment properties. I've seen a lot of investors over-finance a BRRRR deal and then have to come out of pocket every time something needs addressed at a property. BRRRR is not a cash-flow strategy... it's a growth strategy. You certainly should cash flow with a good BRRRR, but you may not be able to refinance all of your money out. The biggest part of the value in a BRRRR is going to be the underlying asset appreciation from a leveraged position. We frequently see 15%-25% annual COC ROI on the equity growth, but equity is not liquid and can only be accessed by selling or refinancing. Successfully building a portfolio with the BRRRR strategy can be a balancing act, but allowing the investment property to churn over time will usually provide great returns if you hold the property for at least 5+ years.

I can't speak for every market, but tenants are responsible for all utilities and lawn care for over 95% of our SFR's. There may be some areas in Indianapolis where the sewer bill has to be paid by the owner, but other than that... it's typically going to be the tenants.

As far as overhead goes, I find the 50% rule to be pretty accurate if you look at a 5 year snapshot. Basically, your NOI will average to about 50% of the net on a property over a period of time, but be sure to understand that NOI doesn't account for your debt service. The biggest variance will be your vacancy rate. If you are turning tenants every year, it will likely be lower... if you keep your tenants for a while, it will be higher.

When your doing your research, write down the addresses that come across your comps. Zillow keeps old listing descriptions, pictures, and even pricing history (taxes and pricing history tab.) This can be great data to look over. I can give you an idea of the size, condition, and trim of the comparable home and the listing descriptions will usually mention if a utility is included in the rent as well.

I also like to look a currently listed homes in that area to gauge the current market, but until a home is leased, it's speculative. Homes that are over-priced typically have to have the price reduced to rent, so the data can be misleading. Just try to make sure that you're comparing apples to apples.

Indianapolis checks all of the above boxes @Subbie Kaur mentioned. I'm an investor and business developer at a local property management company and we've had a lot of investors in Colorado start investing here over the last couple of years. We're actually in the middle of a 1031 exchange with a client who's selling some Denver investment properties and rolling the profits in to Indy. She's looking at purchasing 4-5 rentals with her 2 Denver property sales.

I like what @Taylor L. said about cost of travel and I can fly round trip between Denver and Indy for around $150 if I'm flexible on timing. Kansas City may be a good option as it's about an 8 hour drive or Oklahoma City for a 10 hour trip.

I think the most important thing is building the right team. The right team in an OK market will likely outperform a poor team in a great market. It's like people getting rich in stocks during the tech boom and losing it all when the market shifts. Markets always change, but teams should be consistent.