All Forum Posts by: Lee Smith

@Derek Luttrell

As

@Mike Knowles

stated(Hi Mike!), 

You don't need an attorney in Indiana.. Title company will handle everything. 
Things to watch out for:

1. Who pays closing fee($300~)
2. Who pays title insurance($400~)
3. Who pays taxes.. Make sure you get this prorated to date of closing. In Indiana we pay property taxes a year in arrears.. SO November 2017 tax bill is paying for latter half of 2016.. So if you don't prorate to closing date you could be paying almost a year and a half of his taxes.

@Suzanne P. - Flips are harder to come by in Indy currently. You REALLY have to be on your game and ready to buy.  Check out the investor section on my website(I can't link for fear of PO'ing off the admins). We offer a couple of services that might be useful to you!

Let me know when in town, and maybe we can meet for lunch or coffee/tea..

Yep, let me know.. If I can get approval from the boss(wife), I will try to make an appearance..

@Derek Luttrell MOST lenders want to loan 50k or more. There are some lenders who will lend less than this. I have a list, so shoot me a PM with your email and I will share it.

@Gustavo Munoz Castro Duplexes are a mixed bag in Indy. Most of them are 1900's-1950's and have been neglected pretty heavily. 

I would factor $50-75 per unit for water/sewer. A lot of times they only have the one water meter running into the property so you can't force the residents to pay it outside of your lease. Best way is just to increase the rent and you be responsible for it. 

We just took over management of a property where the previous PM worked a deal with the tenant in one unit. They gave her a discounted rate, but she had to pay the water bill.. Guess what? She couldn't afford the water bill. She pays her rent, but not the water..... So we either evict, or hope she will agree to a raised rent... Because we had to turn the water on in our name.

In Indianapolis: When dealing with most multifams, you need to be aware of a couple of different things.

Higher vacancy rates, instead of 2-4 weeks to fill a single fam, you are looking at 4-8 weeks to fill a multifam. It’s not for lack of applicants, but lack of GOOD applicants.

Higher turnover rates.. While my single fam renters generally rent for 4+ years on average, my multifams only rent for 1-2 years on average. The premium for single family houses is not that much more, and most residents will gladly pay that amount to not have neighbors.

Watch out for owner paid utilities. These can break the deal. While water/sewer is easy to deal with, anytime you are paying for heat you are looking for trouble. Residents crank the heat up in the winter and then open a window to cool off...

I am not trying to scare you off, just you need to budget for them.

(SNIP)Especially for out of state investors who don't have a big portfolio yet, is there ever buyer's remorse about having a property management company? Are there months that go by where there are zero maintenance call/issues/expenses, and you're just paying to have the PM company on retainer?
(/SNIP)

Getting a good property manager is CRUCIAL!!! I own a property management company here in Indy, and I can't tell you how many cleanups I have to do because of horrible property managers. Investors pay too much for the property, pay too much in rehab, and then get crap tenants in place who trash it out and the vicious cycle begins... 

I became a Realtor because I hated dealing with Realtors, and a property manager because I hate dealing with property managers... 

(SNIP)
Do people have luck with having a relationship with a local handyman who can just invoice you hourly/per job, or do unexpected maintenance calls really happen that frequently?
(/SNIP)

Last weekend we had a water heater go out at one of our rentals.. Both of my normal guys were doing family things.. It normally doesn't happen, but it does occasionally.. Then what do you do? Do you hire the big plumbing company and they ream you? A good property manager has a third or fourth backup in place for these situations..

(SNIP)
In my limited experience of being a renter, the only time I ever texted my landlord was during Chicago's 2014 polar vortex and my heating needed a swift kick in the pants.
(/SNIP)
You are the tenant we try to find.. My company does credit and background/criminal checks.. We have set policies in place for what is and isn't acceptable. We know the laws on how to handle criminal convictions. We know how to make sure that the landlord they put on their application truly IS their landlord, and not bubba their buddy from the bar who can sound pretty professional on the phone when he needs too..


You were also talking about what charges are yours and tenants, etc.. You need to make sure you have a solid lease agreement in place with your tenants, and you need a PM that will hold the residents accountable.. My lease is over 20 pages long. They get to initial and sign 2-3 times per page(Digitally so it's not a huge hassle) but it helps alleviate the tenant disputes. I can't tell you how many lease agreements I have seen in the past month that were 1-2 pages... YUK..  We had a breakin at one rental.. They busted down the front door.. I sent someone over and we fixed it ASAP, but we also billed the tenant for the repair. It was spelled out in the lease, we made sure it was repaired correctly, and it was pretty inexpensive for the tenant($60~).. The tenant still cried foul, but again, it was in the lease..

It's nice to have a PM who works for you, but they have to walk a fine line between you and the tenant as well.. I hate turnovers, so I try very hard to keep good tenants.. Sometimes I have discussions with my owners where I am like "Dude, eat the $100 for a ceiling fan to get them to renew this Non-AC house for another year."

Sorry this is long.. But here's a bit more to digest..

In Indiana: When dealing with multifams, you need to be aware of a couple of different things.

Higher vacancy rates, instead of 2-4 weeks to fill a single fam, you are looking at 4-8 weeks to fill a multifam. It's not for lack of applicants, but lack of GOOD applicants. Most multifams in Indy are in lower income areas, and were built in the early 1900's. The good resident pool is VERY low.. 

Higher turnover rates.. While my single fam renters generally rent for 3-4 years on average, my multifams only rent for 1 year on average. There isn't that much of a difference in price between a single fam, and a multi fam, so most tenants decide to pay the premium and not have neighbors.

Watch out for owner paid utilities. These can break the deal. While water/sewer is easy to deal with, anytime you are paying for heat you are looking for trouble. Residents crank the heat up in the winter and then open a window to cool off...

I am not trying to scare you off, just you need to budget for them.

I have rambled enough.. My last piece of advice is to consider Indy over Anderson.. As Ed already pointed out, his rural applicant choices were a lot lower, and Anderson is MUCH smaller than Indy.

In Indiana: When dealing with multifams, you need to be aware of a couple of different things.

Higher vacancy rates, instead of 2-4 weeks to fill a single fam, you are looking at 4-8 weeks to fill a multifam. Not for lack of applications, but lack of good tenants.

Higher turnover rates.. While my single fam renters generally rent for 4+ years on average, my multifams only rent for 1-2 years on average. There is more Single fams, and the price difference isn't that drastic. So people prefer no neighbors.

Watch out for owner paid utilities. These can break the deal. While water/sewer is easy to deal with, anytime you are paying for heat you are looking for trouble. Residents crank the heat up in the winter and then open a window to cool off...

I am not trying to scare you off, just you need to budget for them.

As others have stated you need to plan for abuse, but I would say that in any low income rental. We no longer use carpets in any of our rentals. We are using vinyl plank systems, refinishing existing hardwood floors, and or tile throughout. We also do tile surrounds for bathrooms because the cheapie vinyl surrounds just NEVER last...

@Mark S. If your LLC is doing business in Indiana, you need to register with the state of Indiana.. It's a very simple process that you can do online...

Is 1% still doable in Indy? Definitely yes.  Depends on your goals, but in lower income stuff we are seeing 2%.  

I own a property management company here in Indy, we specialize in low income rentals, but we rent houses from $450 to over $1800 a month. Single family rentals our tenants stay, on average,  4+ years.  

Give me a call or shoot me a PM and I will be happy to talk to you.

if it leaks: Can't remember if they need to remove the tank or can just backfill it. They can quote it pretty quickly. Just request an extension on your inspection response timeframe.