Yes, it’s all the rage … reality TV shows like Flip This House, Flip or Flop, and even the one filmed here in Indy, Good Bones … they all make it look so easy, right? And the reality celebs reap incredible profits on all the sales. It’s no wonder I get approached fairly often by new investors who want to be flippers. I mean, what could go wrong????
When asked, I tell people the harsh reality of the flipping world:
- When you estimate repairs/updates, there are always unplanned expenses and repairs that pop up. You should always pad your repair estimate to cover those unexpected surprises.
- What if you can’t sell it immediately? What if it sits six months, or even more? You’re still carrying all your holding expenses, i.e. utilities, taxes, insurance, mortgage — slowly draining your eventual profit.
- In a really tight, strong market, like Indianapolis (and many others), there isn’t a lot of wiggle room between what you can purchase a fixer-upper for, and what you can sell it for on the “flip side.” Bargains have gotten much harder to find.
- Several of the HGTV celebrities have started programs/seminars you can purchase, where they’ll lend you money, teach you, get you set up, etc. How well do you think they know YOUR market? And many of their programs are 30K+ — crazy! I’m attaching an article that addresses the “business” of flipping and the pitfalls. It’s a good read.
Flip, Don’t Flop
My best advice would be to contact an experienced local flipper who might be willing to mentor you if you’re super serious about pursuing this route. Flipping houses isn’t guaranteed, steady income, and it isn’t for the faint of heart!
Are you kidding me? How could “IndiaNOplace” be in the running for Amazon’s coveted second national headquarters? How could this former sleepy “Naptown” even be in the conversation? An article appeared in the New York Times recently addressing that very question.
Well, we’re non-partisan about promoting business, with a favorable tax structure. That, coupled with a reasonable cost of living/housing market enabled us to make the final top 20 list of candidates. Here’s the full article that appeared in the New York Times:
Is Indy Cool Enough?
Our award-winning airport makes travel easy, and our traffic patterns are ridiculously smooth compared to other 2M+ metropolitan areas. Fed Ex, who already has a major presence here, has just announced a 1.5B expansion over the next seven years. And we continue to attract hundreds of national conventions each year.
As a local Realtor/Broker, I get inquires from all over about our city. Our market is strong and very stable, and there’s no end in sight.
We may not be the final choice for Amazon, but we’re definitely — finally! — “on the radar.”
It’s all about the golden rule, whether you own rental properties here in Indianapolis or elsewhere — “Do unto others as you would have them do unto you.” Here’s my recipe for keeping my great tenants happy:
- Thank them for tending to the house and keeping it clean.
- Show appreciation for the fact they pay the rent in a timely manner — give them a gift card to a local grocery store or other popular venue, i.e. Target or Walmart.
- When they call with a repair issue, get back with them immediately, not the next day. This shows you care about them and the apartment.
- When they have an issue, even if it isn’t something within your realm of duty (like “The cable’s acting up” or “Our internet’s down, for some reason”, don’t brush them off. Try to offer some options toward a solution.
- When you exceed expectations, your tenants appreciate it. They’ll also share praise of you with other friends/family, often sending you other potential great tenants.
Remember, your reputation is one of your most prized possessions in this business. Providing clean, updated, well-maintained homes is Step 1. Delighting your great tenants is Step 2. And the result? Happy land lording and a happy bank account, of course!
I had a routine I used prior to purchasing all of my Indianapolis rental properties. And now that I’m a Real Estate Broker, I realize I’m giving that same advice to my clients who are looking at homes to buy for themselves and their families. Here’s what I recommend:
- If you’ve found a home that interests you, drive the area at different times of day — morning, mid-day, evening, weekends. That will tell you a lot about the neighborhood activity.
- If you get the chance, talk with a couple of neighbors. They’re a wealth of information.
- Check for crime stats in the area by stopping by the local police station, or going to http://www.trulia.com/crime.
- Check for what amenities are nearby: groceries, schools, parks, restaurants, other shopping, public transportation.
- Pay attention to how well kept the homes are on that street and nearby.
- And of course, look at what the home itself offers, in comparison to others. Is there value there? Are prices rising in the area? Whether you’re looking to rent or buy, it behooves you to be in an “up-and-coming” neighborhood as opposed to one that’s on the down side.
- And if you’re using a Realtor/Broker, have that person run some “comps” for the area, so you’ll know what other places of equal size/amenities are selling or renting for … make sure you’re getting some “bang for the buck!”
Happy hunting! 😉
When I purchase rental properties, I make a point of meeting neighbors, giving them my business card, and letting them know I’m a good landlord. I care about my tenants, my homes and the community as well. The neighbors see that in action as I work to renovate and improve my properties.
All is well and good, until a less than stellar tenant enters the scene. Rick and Tammy (names changed to protect the guilty) moved into the house in April. They checked out well — but unfortunately, good jobs and salaries don’t tell the whole story.
The first police visit was within a couple months. The couple was fighting and Tammy called 911. I was unaware of this, and also didn’t know about the second incident, a couple months later. But when the third altercation happened, one of the neighbors texted me to inform me what had happened. I spoke with Rick and told him if the police were called again, eviction would be filed. (He down-played the situation, of course.)
So when I got a text in mid-December, from the same neighbor, saying there were five policemen in the front yard, along with my tenants, I filed eviction immediately.
We landlords can’t be at our rentals 24/7, so relying on neighbors to keep us informed is a valuable tool. And I also learned, through this situation, that when there’s violence or drugs involved at a rental, you can file for an emergency eviction and the tenants can be evicted within a few days instead of waiting the usual two-week period for a court date. (Good info, but hope I won’t need to use it!)
Onward and upward ……. 😌
Since the collapse in the housing market almost 10 years ago, we’ve seen a steady increase in the demand for rental properties. Here are some startling facts:
- In this time frame, the number of rental units has soared from 34 million to 43 million, in 2015. By 2025, it’s expected to top 46 million.
- The largest percent of that growth — 80%! — has come from the conversion of single family homes into rental properties.
- Demand has grown in all income ranges, but particularly in households earning less than $100,000/year.
- Because of the rising demand, rents are going up, while incomes are not keeping up. Renters are spending a larger percentage of their take-home pay toward their rent payments than ever before. But even so, we’re expecting continued growth in our rental markets throughout the US.
With no end in sight for the continuing demand on rental properties, investors are diversifying their portfolios and putting their monies in real estate. Indianapolis is a very desirable rental market; our economy is growing, yet our prices are reasonable compared to the rest of the country. We have investors from all over the world who’ve decided this is the place to be … especially in the low/middle income markets, there are still great returns to be made.
Onward and upward!
Many employers today turn to Facebook, Instagram. LinkedIn, and Twitter to get the “inside scoop” on applicants. Those social media sites provide a broader view of a person than the bare facts of job history/performance.
Property managers also go to those sites to learn more about potential renters. Facebook, for example, can verify some of the info contained on the rental application. These sites also can provide insight into they type of renter the applicant might be: are there pets not reported on the application? Is the person into throwing wild parties? Are there other lifestyle concerns?
It’s important to know that if you choose to use these sites to help you in your tenant selection, you must use them equally with all applicants, so that you’re not in violation of Fair Housing laws. And another thought — can you be fair about your opinions after you’ve checked out someone on FB or Instagram? It’s very possible their taste/opinions/political or religious beliefs may be drastically different than yours. That doesn’t mean they wouldn’t be fantastic tenants. You have to remain neutral if you decide to use these extra means of screening. If you can’t, maybe just stick with the written application!
I’m pretty open-minded, so I’m going to start using social media as an additional screening tool, if the applicants’ accounts are public. Better screening can help me find better tenants, and I’m all for that!
Onward and upward … 😌
I came across this Zillow article today and was pleasantly surprised. Yes, we know our rental market is strong and will continue to flourish. But for many would-be homeowner/investors who’d like to rent their homes, they find the costs associated with owning that house aren’t covered by the rental income they receive. This is especially true on the east and west coasts, and in many larger cities. But not so with Indy! Here’s the article:
Return on Rent: In Most Major Markets, Most Homes Can Be Rented Out For A Profit – Zillow Research
As this article shows, more than 98% of homes here can be rented out for more than their monthly expenses, i.e. mortgage payment, insurance, taxes, maintenance, major improvements, etc. So, more and more homeowners are considering jumping into the world of real estate investing. And, what better time than NOW?
Onward and upward …… 🙂
I’ve tried them all … from Kilz to Zinsser. Most of them are too thin, even the oil-based ones. I stumbled upon the best one ever, made by PPG. I have an account there, and I love their Hi-Hide brand of interior paint. I had a major “issue” to take care of at one of my rentals, as seen here: my tenants decided to have a painting extravaganza (unbeknownst to me), with these horrifying results.
(Don’t ask me what that red thing in the corner is — I have no idea.) Anyway, the PPG rep suggested I try their Seal Grip Universal Primer/Sealer. They even tinted it to match the color I was going to use in the rooms. It’s water base and doesn’t have that annoying toxic smell that some do, so I was happy to give it a try. I’M SOLD. It’s nice and thick and only required one coat before moving on to my normal paint color. Here’s what it looks like:
The house is back on track and ready to rent, and I’ve discovered another great product to add to my long list of “faves” I share with my readers!
😎 Onward and upward ….
These two brothers contacted me a few months ago, through a site called Bigger Pockets, which is a huge networkiing site for real estate investors everywhere.
They had searched out several attractive cities here in the US, all of which have strong rental markets. Indianapolis won out. We emailed back and forth quite a bit, they read my book, and then flew over and spent about 10 days here with me, checking out homes and neighborhoods. Both of them hope to purchase up to 20 rental homes here. They’re back home now, and are trusting me to take it from here. I appreciate the trust they’ve placed in me, and I intend to find them some “gems” that will provide steady income and long term investment for years to come.
They’re enjoying some loaded cheese fries at Outback Steakhouse in the picture … LOL! They found most of us to be kind and helpful — thankfully — and they couldn’t believe how green everything here was. One person did ask them what language they speak in Australia. (OMG.)
They’ve bought one property, and lost a few — I’ve continued to look, and have put in offers for them, and the difference in time zones has duped us a couple times. They’re 14 hours ahead and it’s a bit difficult to jump on a great deal if they’re asleep. But considering the fact a 1500 square ft. home over there in Brisbane sells for around 400-500K, they’re pretty thrilled with our prices. The Aussie dollar is a bit weak against the American dollar right now, but they can still make it work.
I love their “buy and hold” strategy, as that was my goal when I started investing 23 years ago. I’m so excited to be part of their journey, and I look forward to growing their investment portfolio. Welcome, “mates!”