All Forum Posts by: Ross Denman

 I am working with quite a few OOS investors working in Indianapolis. Let me know if you need anything.

@Isaac Geller I have 2 lenders in my network that will lend to international investors. I'm not sure how it has to be set up or what the terms look like, but I'll PM you with their information.

@Erik W. I have a lot of clients in the B-Class space, so I can give you an idea of what those portfolio's look like.

Currently, they're hard to purchase at the 1% or better in Indianapolis, but as the market softens over the next 3-4 months, there will be plenty. I target homes with rents of 1.25% or better if possible, but look for a minimal rent of $950/mo (about $76k investment.)

Because these homes are usually built 1995 or late, we are looking at 5-25 year old homes. As you mentioned earlier, years 15 and years 30 ish tend to be larger CapEx periods, which is something that you will want to identify up front. Ensure that the roof and HVAC life expectancy is figured in.

If you purchase a $1,050/mo rental for $85k, you'll have $17k in the down payment and a mortgage for the remaining, $68k. You may have another $6k invested in closing costs, getting it market ready, and holding costs while marketing. Total investment $23k. You'll have a $410/mortgage. At the 50% rule, you're NOI will be around $6,300 with a $4,920 mortgage. This leaves $1,380/mo cash flow which is a 6% COC ROI on $23k.

Deals like this usually have $10k-$15k equity built in from the beginning (if you purchased it right.) The equity in this $100k home should grow modestly at $2,500. This means that you're equity growth is 10.8% ROI.

You'll find that you will usually double your investment every 5-6 years on these homes, but this is not a "cash flow" strategy, it's a growth strategy. The biggest advantage is that the headaches are seriously reduced. Short vacancies, newer homes with less maintenance, longer tenancies, less drama, less late payments, etc. If I can make 15%-20% annually with little headaches, it's worth it to me. I've seen too many investment properties get broken in to, trashed by tenants, taken over by squatters, dramatic tenants, evictions, damages, etc.

I can say that I've seen it myself though. I have a local client who has several C- to D properties in his portfolio and does very well... we manage the properties, but he's very involved with them. He knows the tenants, takes care of most repairs, etc. We just handle rents, accounting, legal, and receiving phone calls for home. You can do ok in these areas with a good property management team, but I think it's easier for the locals than it is the out of state investors. Some of these properties need a babysitter and no PM can handle too many of those homes.

@Clay Sellers King Common is a 2020 plan, so I believe that they are wanting some major developments completed over the next 18 months. Tech 16 has started building to Bioscience building, but I do not believe that they have started the development of the apartment or office spaces yet. You can find the latest update here https://www.16tech.com/wp-content/uploads/2019/06/16-Tech-MAY-2019-Community-MeetingFINALWEB.pdf

I believe that the amphitheater is to be built over the next 12 months at Riverside Park, but the entire Riverside plan is 20 or 25 years I believe.

There are some beautiful homes on W 25th St close to Riverside and I can't wait until this becomes a viable area to invest in. I'm excited to see the impact on Burdsdale Parkway.

I can't vouch for other cities, but this demographic has a higher possibility of problematic tenants. It's not just the tenants though. I seen people have to chase out squatters, have their homes broken into and had mechanicals stolen, on top of probably having difficult tenants. I would certainly use a property manager who works in these areas. It's probably not something that my company would be interested in, but you can check with @Derek Gendig above as I know that they are good property managers as well. If he's not, you may check with @Harvey Levin

I grew up in Greenwood and graduated from Center Grove. Greenwood has 2 townships. The biggest part of Greenwood is in Pleasant Township. That what we used to call "old Greenwood." There's a downtown strip with older homes surrounding the area. There's newer construction outside of that. As mentioned above, look at the crime maps as some of the apartments in the area can be a nuisance.

The northwestern township in Johnson County is also Greenwood. White-River Township is much more newly developed with much nicer homes than most of Pleasant County. Center Grove Schools are a very desirable school as well. It's hard to get good rent ratios here though unless you find some older homes in the old Smith Valley area. There is a mobile home park at the northern part of this township and homes in that area are usually a little cheaper. They are good homes built in the late 70's/early 80's but being near the mobile home park keeps the prices a little more reasonable.

Both areas are great places for rentals. Good schools, lower crime, smaller city/suburban feel, etc. Older homes will typically require more maintenance, but that's going to be the case anywhere. I would always take a closer look at an opportunity in Greenwood.

@David Nemrow I guess I was pretty driven from the beginning. My grandfather "hustled" new construction after he retired and moved to Fl. Growing up, my best friends father was a GC for a group of real estate investors and I got to meet some of them and was interested in what they were doing. With a little education and mentorship I started off on a JV deal for a property that I found. I probably could have wholesaled the deal and made more money, but I was eager to understand actual investing.

I was a little scarier when I had enough capital to go out on my own. I had the knowledgebase, but I was preparing to take on all of the risk. As expected, I made every other move poorly, even though I knew better, but I still made a little money on the deal.

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Now to answer @Greg Scott. What do you fear most?

Newbie Investors :)

@Kyle Haney for No 3. you have to understand that you are bound to the contract that the tenant signed. You should be able to make a lease renewal stipulation of more security (this goes for question No 2 as well) but I would rather keep a tenant longer than lose them over $300 more in security. The longer a tenant stays, the more likely that they will get more of their security deposit back because things naturally age and need to be updated over time and we can't charge tenants for "normal wear and tear." We have a 23 year tenant in one of the homes we manage... I don't believe we are going to charge for to replace the carpet if she ever moves.

No 4. We run in to this pretty frequently as we take new homes under management from other PM's or DIY landlords. It's not too difficult to identify damages. Pet scratches, holes in walls, etc. We don't charge unknown tenants for things like ripped screens or scratched/torn linoleum without having verification from the previous landlord/pm. There are tons of rentals that get rented with small to moderate blemishes and it's not worth the hassle of a security deposit dispute in court for a few hundred dollars when you don't have any documentation to defend yourself.

On the other hand... if you purchased a home with a tenant who moved in with scratched trim, holes in the walls, ripped screens and carpets, and torn lino... I'd probably worry more about the tenant than the security deposit, because your likely renting to someone who couldn't get approved for anything better. The only thing as dangerous as a slum-lord is a slum-tenant.

@Bret Winegar the areas around Brookside Park are coming around. I don't think we will really see major upside until Spring 2021 though. I would be selective about the rehab as to not over invest incase the appraisal comes back lower than expected.

As @Jaron Walling said, be very hesitant if investing north of I-70 or anywhere within a few blocks of Sherman Dr as it has become a warzone over the last year. The crime may not look terrible in some parts of Trulia, but there seems to be a shooting or murder within 3 blocks of Sherman every week or two for at least the last 10 months.

CIREIA used to be pretty expensive and felt that it was more revenue oriented than about education and networking. They've changed their pricing and platform over the last year and seem to be providing much more value. I'm thinking of joining again myself. You can also check INREIA as most of their events and meetups are free and there are a handful of Indianapolis Real Estate groups on Facebook that you can use to network.