Due diligence trip out of state for turnkey purchasing

I created this post to document the experience I had when I flew to out of state to visit and do proper research and due diligence on purchasing turnkey rentals.  The info below is specific to the Indianapolis market however you will probably have a similar experience no matter what city you choose to invest in.

After spending countless hours researching Indianapolis and making contact with multiple real estate investors and turnkey sellers I finally decided to fly to Indy and check it out first hand.   This was in November 2014, the month before I closed on my very first turnkey investment property.   This was the final step I needed to do to confirm I wanted to purchase in Indianapolis.   My main goals were to actually meet the turnkey sellers first hand, see their properties in person, see what kinds of neighborhoods and areas they are in and get an overall feel for this city.   I stayed at La Quinta downtown on the east side near fountain square.   Hotel is definitely not the greatest but I wanted to save costs and have a good location so it fit the bill.   No problems for me but I wouldn’t want to stay there with my girlfriend if I ever brought her up there.   She would hate it.   Oh and its crazy cold in Indy, sometimes I forget what real cold is but it was like 40 degrees there and that was too cold for me.   If you visit there, don’t go during winter unless you absolutely have to.   Clearly I’m not from the north so as you can see I’m not too fond of colder temperatures.

First off I must say I was impressed with the city itself and have had a great experience there.  Downtown was clean, the people are super friendly.   I went to a Pacers game which was pretty cool and most neighborhoods I drove through seemed decent enough . I feel confident in buying single family homes in Indy and definitely want to proceed.  Staying away from multifamily though because they aren’t in very good areas and I hear the tenant quality is sub par.   I heard this from multiple local investors there but I also heard one local person saying they were good and that you just need to be super picky on tenant selection.  You can rent houses for just a tad bit more then you can a duplex so it doesn’t make sense to me why someone would choose a duplex over a single family home.  What was weird to me also was that the duplexes aren’t all together.   Where I’m from they are together, like rows of duplexes.   What I saw in Indy is that they are spread out randomly with single family.  So there will be like 3 houses, then 2 duplexes in a row, then like 4 houses.   Anyhow, I even drove through the absolute worst areas here just to see how bad they really were.  Honestly, the worst parts here weren’t even that bad in my opinion.   I mean I would not buy any houses to rent there but it’s definitely not full blown ghetto like I’ve seen in DC and Baltimore.   Plus it was during the day that I drove through these parts.

Prior to going Indianapolis I networked on the internet locating as many local real estate investors, turnkey sellers and even had it timed perfectly to attend an Indianapolis Real Estate Investing club that was having a meeting while I was there.  I lined up two days worth of meeting and touring neighborhoods and houses with two different turnkey providers.  I spent about 4 hours total with one and about 3 hours with another.  During this time, we basically went up and down, left and right all over Indianapolis checking out different areas and neighborhoods. I wanted to get a full picture of what Indianapolis has and what kind of vibe these different areas had.

The first turnkey provider I was scheduled to meet I had already been speaking to the owners for a few weeks through phone and email.   The owners had good personalities and seemed very knowledgeable about Indy.   They are both apparently from Indy and grew up there and have extensive RE background.   The company they started was fairly new but between the two of them they had over 10 years of experience.   They took me on a 4 hour tour throughout all the areas they like to invest in which was inner city, close to downtown and on the east side.   This area didn’t look the greatest but I see the potential that the owners talked about.  Its close to downtown which I like and the gentrification process was starting in this part of town.  This is always a good sign. Hipsters = good!   The turnkey provider showed me a bunch of properties and neighborhoods and there was one particular neighborhood that stood out called Irvington.   They had one available property here that wasn’t listed on their site yet and as it was in the process of being rehabbed.   This was the only house they had that had caught my attention and the numbers fit my criteria. I knew I was interested but did not want to commit to anything knowing I still had another appointment with a different turnkey provider the next day so I held out.

In the evening I went to a local REI club where I met at least a dozen local Indy investors, real estate agents, wholesalers and anyone you can think of related to real estate.  It was a great experience and I was able to learn a lot from these people that evening.   As it turned out, the event was actually hosted by the turnkey provider company I had toured with earlier that day.  From speaking to others that night that were not affiliated with this company I confirmed my suspicions that this company has a solid rep in Indy and are well known in the real estate community here. Another great sign for me!!

The second turnkey provider I had a meeting setup with on day 2 was one in which I had found on the internet researching turnkey properties in Indianapolis.   Their website didn’t have any houses listed on it. I had to originally call them and setup an appointment before they sent me a few examples in email of what they had for sale.  Anyways, on day 2 in Indy I met the owners and they gave me a 3 hour tour of Indy and showed me a bunch of properties.  They mainly stick with properties in the suburbs of Indy we drove north and south west and east outside downtown and the inner city.  Mainly outside the 465 loop.  The rehab on these properties were very good and of high quality.  I was quite impressed with the houses.  They showed me a few mid rehab and one that was completely rehabbed and just not rented out yet.  We also saw a few that were already rented out but we really just saw the outside of the house and the type of neighborhoods they work in. They use the same materials for all their houses so they all looked the same.  Same counters, same floors, same paint, same everything which obviously helps them keep the costs down.  The only problem was that the numbers (my ROI calculations) weren’t all that great for these properties.  I would definitely consider using these guys if I couldn’t put anything under contract while I’m here.

After viewing dozens of actual houses in the two days I was there and driving all through out Indy I decided the house in Irvington from the first turnkey provider I toured with would be my first turnkey rental.

If you are interested in purchasing from a turnkey buyer make sure to check out the 31 Top Questions to ask a turnkey provider.

**The image displayed in the Feautured blog post image of the city of Indianapolis is attributed by Jasssmit at en.wikipedia [Public domain], from Wikimedia Commons**