Why You Should Invest in Indianapolis, IN (Market Spotlight)

But Michael, Hey, welcome back onto the show.

Hey, thank you, Marco. Thank you. It’s been a minute. I, I asked you on the show, you said you’ve been doing this for almost nine years now, so congratulations.

Yeah, 2015 is when we launched the, the podcast. Yeah. It’s been a long time. Yeah. It doesn’t feel like nine years, but it’s been nine years <laugh>. So it’s, it’s all fun. But for those of you who listening to this and don’t know Michael, Michael is, you know, one of our great property providers in the Indianapolis, Indiana metro area. We’ve been working with Michael for, man, how long has it been? 12 years, over

Nine years. <Laugh>.

Yeah. It’s been a long time. And, you know, Indianapolis is one of those markets that, for us, has been a perennial market. We’ve been in Indianapolis, not necessarily having inventory in, in Indianapolis all the time, but we’ve been in and out of Indianapolis for a very, a very long time. And the nice thing about Indianapolis is it seems that the numbers make sense there all the time. And there is inventory there almost always. And that’s great because if you’re a real estate investor looking for a stable market where there is inventory and the numbers make sense, Indianapolis is definitely a choice. Like, it’s definitely one of the markets to look at. So, Michael, today, I think what it would be great to do as a market spotlight is talk about why we should invest in Indianapolis. And I’m gonna drill down into some specifics as we go. Sure. But I always like to start off by asking the question, like, why would you as a real estate investor look at Indianapolis as an option?

Great question. Great question. My background and how I found Indianapolis specifically is I took a position a while ago working at a, a company called Rich Dad Seminars. You’ve some, I think everyone’s heard of Rich Dad, poor Dad, and then some people are like, I’ve never heard of him. But anyway, it was Guy Robert Kiyosaki. He was very big in, you know, teaching people financial intelligence. Right. And it was actually through him, it was one of his favorite markets. And then what happened is that I worked in a company that, one of my coworkers was an executive at UPS. If you don’t know, UPS it was a private company, went public. And, you know, he did very, very well when it went public. So I was very, very interested in it. So with all that in mind, when I started doing my due diligence or why someone would be interested, to your point is it kind of reminds me of if Marco, and if you and I were to invest in a Uber business and we wanna drive Uber cars and we wanna buy a a fleet of them, you would reverse engineer what is the most productive car.

And I did research on this a couple years ago, and I, and I think I found out that the Toyota Camry and the Toyota Prius were the best cars. Not that that may or may not be your dream car or my dream car <laugh>. It’s just, it’s just the best mileage, the cheapest maintenance, you know, biggest bang for the buck, you know, essentially Right. In, in other markets like Miami, sure, you can make money on an Escalade, right? But not for your, your everyday driver. So that’s, that’s kind of what I found here, is I found in Indianapolis that it fit everything that I was looking for. You know, I’ll, I’ll get more in depth there, but the main thing that I was finding were the jobs. The jobs are great. Within 600 miles is two thirds of the American population. So within a one day’s drive, I can go to Chicago if I want for lunch, or if I leave from Indianapolis, I can go to New York for dinner if I want to, you know, or Atlanta, same thing.

So it’s, it’s a very compact area, and a lot of the logistical companies Eli Lilly is based there. So the list goes on and on from employers, landlord friendliness, you know if and when we need to do an eviction, which is less than 1% of the time, it’s about a 30 day process, less than $500, you know, so it just checks all the boxes. And so I started with my own money before I kind of brought investors in to the fold. And over the last 15 years, we’ve done about a thousand houses, and it’s worked out very, very well. Most of my business has repeat or referral business in Indianapolis.

Yeah. Very cool. So, I don’t know if you want to touch on this, but you mentioned a couple of companies and employers, like UPS, for example. Sure. So what makes up the local economy in Indianapolis? Like, what are some of the big drivers? I mean, obviously that doesn’t make up the entire market, but it’s of course a factor to, to bring people in and give them jobs, keep jobs, and, and drive more secondary and tertiary businesses.

Correct. Correct. So, without saying, I could list, you know, a dozen employers, and that’s great. The bottom line though is the cost of living is low. So what was happening is companies are coming in for essentially workforce employment. So what that means, let’s say for example, I underwrote a, a tenant moving in, making about $35 an hour. Okay. And I think he works for one of the logistics companies, I believe FedEx or something like that. So someone can live in one of our rental properties. They can not be laid on rent is, which we’re all interested in. They can make a good income, they can withstand annual or every other year increases in their rent. And it works out very well. Truth be told, are we renting to the executives at Eli Lilly? No, we’re not. A lot of people that make over $200,000 a year are not renting our houses, truth be told.

Right. however, if someone wants to work in our city from the FedExes of the world, or Angie’s List, or this is second home of salesforce.com, or we have a, a predominant and oddly large number of schools in the area, and schools are kind of like a, I don’t wanna say recession proof, it almost sounds arrogant, but during recessionary times, people go back to school. So those are little micro economies from Indiana University, et cetera, et cetera. So what we found is, is that our tenants, if they wanna work, they can, I wanna say the, you know, unemployment id, the exact number escapes me. But it’s, you know, less than, well, less than 5% or 4%. So that works out very, very well for people that wanna work. And, and that’s fantastic. We just had a tenant turn, I believe they lived there for seven years, and the property’s vacant for one month, you know? Wow. And so that’s, that’s what we’re looking for. That’s what we’re looking for. Yeah. I, I, myself, we, although yes, we own the property management company, we’re mainly investors. So we run the business because we own property, just like my sister does, just like my wife does, just like my kids own property, is we run it lean and mean. So people make as much money as possible.

Yeah. That’s awesome. Mm-Hmm. <Affirmative>. And I think you should be, it’s kinda like eating your own dog food, right? <Laugh>. Right. You gotta eat. Right. You’ve got it.

It’s kind of a unique analogy there, but Okay.

It’s, it’s a strange one. I’ve heard that, I’ve heard that said so many times. It’s kind of a crazy saying, I don’t know where it came from. Right. Just like killing two birds with one stone. Why would you want to kill any birds? Right. <Laugh>, let alone two <laugh>.

Exactly. Exactly.

All right. So I’ve been out of touch with what has been going on in the indie market for a little while. Sure. So I’m gonna ask you some pretty basic questions here. No problem. No problem. Is it more of a seller’s market, a buyer’s market? Is it now balanced?

It’s, I would say it’s more on the, on the balance side of things. Of course, you know, our opinion of what the government has done with interest rates doesn’t really matter. They, they’ve done what they’ve done and they’ve slowed down the economy with rising interest rates, which is post pandemic, I think is maybe a good move. We’re running too hot. Right? And now then, that said is the interest rates are, you know, our homes are still appreciating at a very, very solid clip. So what we found is, yes, you know, for example, my, my sister was looking to sell one of her homes. She’s owned it for 10 years. She bought it for $120,000. And I believe we did, we did some preliminary comps. At, at 10 years later, it’s worth $220,000. We get solid appreciation. The rent had kept up with that. We’re looking at seven to, you know, nine and a half percent cap rates, give or take, depending on where we’re at. So the rents have kept up with the purchase prices. So it’s been very solid. We don’t necessarily cater at all to a, a section eight marketplace. We, as a landlords, we don’t have to take section eight. Their coupons are below market value as well. So we’re, we cater to a, you know, a fully employed tenant, which seems to work better for investors.

Usually when you hear about Section eight tenants, the, the section eight payment is higher than market rent. This is kind of interesting that it’s lower in, in Indy. Right.

And we don’t have to take it. So I was talking to a friend of mine in the in Oregon or Washington, one of the, those states up there. And they, they were required to, if they, they kept up with market. And that said, we just have found it over the years. We, at one point we were taking in quite a bit of money with section eight, and it’s just long term, it’s just not where we wanted to be. We want to be with people that, you know, even our lease says if there’s a minor fix under a hundred dollars, we’re gonna ask you to do it. We want people that, you know, take a little bit more responsibility for the care of their property. And because we have a tenant strong rental base, we can afford to be picky when we’re interviewing tenants. And that’s what we do from the financial aspect to the to the previous landlord blessing, to the employment verification, to everything else.

You know, the, all of these properties that we buy, because we have, you know, 15 years experience, everyone knows in town that if I say I’m gonna buy something, I’m gonna buy it. It starts off in our portfolio first. So we buy the home, we rehab the home up to our standards, knowing that we’re likely, you know, 9 99 times out of a hundred, we’re gonna retain management of it. So if we do that, we do a very, very thorough job, and the tenant stays in. Our goal is to have the tenant stay in as long as possible. We did audit our books recently, and I wanna say the average was between four and five years is our goal. You know, of course, it could be longer, could be shorter. We’ve had, have we had tenants for 10 plus years? Sure. And that said, do we have tenants that flake out?

Because that happens sometimes, of course. You know. But we do our best job to underwrite those folks and get them in, and get them in for a all the tenants, all most of the, our investors will start out with a freshly rehabbed home with a fresh two year lease, very low capital expenditures or deferred. There won’t be ideally any deferred maintenance. So they have a great experience. And I tell newer investors, my secret plan is to have them have a great experience so they buy more homes. Right. In fact, I was, I told you recently, I wrote a, not recently, I guess I wrote a book called Retire on Rent. That’s why I look like Photoshops. But anyway, <laugh>. But anyway, on the back of the book, but on Retire on Rent, I went over the same numbers. You know, I have to probably update that book a little bit. But yeah, it’s been a great, great experience. And now we have investors, not only are they buying the homes, but you know, they have their children buying homes or their grandparents, or they’re doing a lot of 10 30 ones. We get a lot of California investors, well, 10 31, their appreciated California real estate into a higher cap rate Midwest property. Yeah. That happens a lot.

Yeah. And I talk about that strategy from time to time where people who, like from California, they’re equity rich and cashflow poor, and Right. You know, they can leverage that equity up into a larger portfolio, increase the cashflow, retain the equity, and, and actually build a larger portfolio to gain more equity from, as you know, the years go by, of course. It’s a great strategy that nobody really talks about.

I love that strategy. I, I hope you’re talking about it a lot, because we do in 10, 30 ones every month, every other month maybe. And some people are like, I’ve never done one, but I’ve got X hundred, you know, x six or seven figures tied up and it’s not working for me. You know, and their rents have not kept up with price of the property.

Yeah, for sure. So, just a quick question about inventory. Yeah. There, there was a period of time not that long ago true, and especially during covid, where inventory pretty much around the country was really tight. There just wasn’t a lot of inventory. Right. And some markets suffered more than others with lack of inventory. You know, the demand was there. It some cases demand increased, but there was a lack of supply. What is going on in Indy right now in terms of available inventory a, your access to that inventory and inventory for real estate investors to be investing in, in that market?

Great. Great question. Great question is we have always been able to satisfy the demand of our investors. So when I began this business like I said, about 15 years ago or so, kind of post Lehman Brothers, my mentors said, where you can get in trouble is over leveraging yourself, borrowing too much money, all maxing yourself out, getting lines of credit until you’re blue in the face. So we have grown very organically to not screw up and not get over levered. So to that point is, so for example, right now we have close to 15 or 20 homes that are available. And that’s about the level that we like to keep it at. You know, truth be told, I’m an investor as well. So sometimes I take it off the market and put it in my back pocket because that’s, you know, I’m 50 years old.

I, that’s, I’m gonna retire on rent as well. And so, you know, we’re doing the same thing many times. We have a great relationship with an investor that says, Hey, I wanna do this in Denver or California, San Diego, or Laguna Miguel. And they say, it’s just too expensive. And so they’ll say, put me down for one house a year, third quarter ish. That’s when I get my bonus. And they call me up a month ahead of time, says, Michael, what do you have for me? Hey, thanks so much. You know, Chris, I know your strategy. I know your cap rate you’re looking for. Let me send you my top three choices, you know, and it works out really well. And, and I’m one of those old school guys that actually answers his phone. And, and it’s not like I’m better than others, you know, but, but I just think there’s a lot of value when you have someone’s money and you take care of them. They, you can get a little emotional about it. So just, it’s kinda like when you go to a steak restaurant and it’s steak, you said medium, and it’s, you know, black and blue, or it’s, you know, rare. The guy comes out and he says, Hey, I’m sorry. You know, let me take care of it for you. And that’s what I like to do with folks is you answer your phone, you take care of folks, and it tends to, karma tends to come around in a good way.

So let’s dive into the numbers a little bit. Sure. and we only need to spend like a minute on this. Sure. The numbers in, in the Indianapolis rental market, and, and this is probably more specifically geared towards your product type, because we’re not gonna talk about the market as a whole, right? ’cause We’re focused on investment property. But if you look at the Indianapolis, Indianapolis rental market, what is the range of property prices? And relative to that, what is the range of rental income, like what they rent for? I mean, some people take those numbers and calculate a, a price to rent ratio, right? You know, we don’t need to do that. But giving people a sense of what they’re looking at in terms of where we’re at, of property prices for quality, let’s call ’em, you know, I assume you’re probably mostly in the b bb plus class neighborhoods, right?

The answer is 100% yes. And after kind of auditing our rates of return, those are the highest rates of return. So we, we did a $7 million build project where we built a, not really a plus, but a properties, and that was our lowest rate of return. Yeah. They were, they worked out well. My sister bought one. It’s just the, the BB plus tended to work tend, you know, tend to work out better. And here’s where people don’t really understand this, is that everything might look good on a spreadsheet, but if you don’t incorporate a turn cost in there, where if someone’s leaving every 24 months and you have to repaint it and do this and do this and do this, it cannibalizes your rate of return. And the problem when I went to, as is the people were paying so much in rent, is that I would lose them to first time home buyers.

And the, and the first time home buyers were catering to those people paying you know, the, the highest market rate. So I as an investor want to kind of cater to my investors who want to say, we’re, we’re replacing the six figure income. We wanna be in that, sorry to use that goofy analogy, that, that Toyota Camry, I don’t need a, I don’t need the BMWI don’t need, I don’t need, I like it better. It’s a, it’s a great car, but I, I need that Camry and that, that b plus area. So to answer your question is the, there’s three major home builders, national being one of them that built a lot of this Midwest area, Indianapolis, all the way up to Chicago. Cleveland was a different builder. They went, Cleveland went two stories, you know, and everything gets older as we go east, you know, in the fifties, sixties, seventies, eighties.

Right. So then a, a, a good national home, which is one of our major providers builds a three, one or a three, one and a half, or maybe even a three, two, you know, depending on the garage. Could be a one, could be a two. So that is our standard home. And then what happened recently, we did a little SurveyMonkey to some of our tenants, and we found out that 66% of them don’t have any children. And so what we did is we said, well, we’re gonna pick up some two bedroom homes and to find out if like a, a truck driver that makes $85,000 a year would wanna live in a two bedroom home. And the answer is yes, he does. He doesn’t have kids. He didn’t want to heat and cool the extra space. So it’s kind of interesting. So we have a, a two bedroom home, to answer your question, that would be about a $1,200 a month in rent that would sell for about $140,000ish, you know, in that range.

We have a three bedrooms that are about 1500 or so a month that are in the 1 61 70 range. We have recently have a three and a four bedroom that are in the 17, 18, $1,900 range for about 200,000, give or take in those ranges. And that give or take, that’s right where we’re gonna be at every now and again, you’ll get some more land every now and again. You’ll get an extra bathroom every now and again. You get some extra garage space or, you know, things like that. But that, that’s our, our workhorse that works real well for us.

Yeah. Which ties in, you know, interestingly enough you know, having a cap rate, capitalization rate on your properties of seven to 9% is very good, is very good when you compare that to a lot of the markets that are on the radar as investment opportunities, like, you know, for investors to be looking at and considering, you know, if you, the further south you go, especially with new construction, you’re looking at four or five, maybe 6% cap rates. Right. You know, it’s just, it’s just not the same kind of a tangent question real quick. Sure. You know, years ago we always used to talk about this 1% rule, like the target of 1%. Like I, I already talk about this on the show, I have my own opinions about it. Mm-Hmm. <Affirmative>. But I just wanna pick your brain for my benefit Of course. And the audience, of course. Do you think this whole 1% rule and, and that being the target, the goal has flown out the window? Like, I mean, is that long gone?

Good. Great question. So if someone calls me up and says, you know, I want a 1%, I think that’s a, I’m, I’m with you. Where you come from. I, I’m, you know, it, it reminds me of this is I think I, I had breakfast with my daughter. I love my daughter. She’s 20 years old. And you know, I had an omelet and a cup of coffee and she had avocado toast, I think, or something like that. And I think she had a, some sort of drink or something. You know, it was $50 <laugh>. It was, it was almost $50 to get out of there. And I remember with my dad you know, it was 5 99, I think for Sunnyside eggs and bacon, you know, for my, for my, yeah. Baby boomer dad and, you know, white toast or something, <laugh>. I dunno.

I just can’t get out. You know, maybe I’m you know, plus or minus 20% of these numbers for wherever your clients live, you know, but it’s just, everything’s just more expensive. And so that’s kind of where it’s at. So if someone says, I want a 1% house, and I, I can get there, but I’d have to go to a C market, I’d have to go a little it’s just not gonna, I could put it on a spreadsheet, it would look good. It just won’t perform as well for you in these rust belty areas, in these kind of Kansas City, in my opinion, in these Kansas City type of Indianapolis type of, you know, southern me, Tennessee area. I, I’ve got to reverse engineer that neighborhood, which has that tenant that’s willing to pay that money, and they’re gonna stay there and they have the jobs to stay there.

And I just can’t, I wanna do the entire, I wanna do the roof and the HVAC and the carpet and the plumbing. I wanna do everything so that the investor has a great experience. Now, I, I don’t wanna say, okay, well let’s give it to you without the wheels on the car and charge you full market value. That doesn’t, that’s not a win-win. We’ve gotta take care of the investor. We’ve gotta take care of that tenant. And so we’re our, our, and now that said, I just had a gentleman a close on a home in California, and he worked for Google, makes a great salary, great credit, but he was on either sabbatical or he lost his job, something along there. So he lined up with one of our debt service coverage ratio. Lenders DCSR loans flew right through our ratios were fine. You know, he had great credit, did not have a job, and had no problem qualifying for the home.

So before we dive into the properties that you are renovating, making turnkey, and making available, before we kind of deep dive into that. Mm-Hmm, <affirmative>, let me ask you another question. These are the two things in my head that I evaluate every time I look at a market. Okay. I always look at jobs and job growth. Yep. And then I look at population. And if there is population growth, there doesn’t have to be population growth in my mind. Right. I just don’t wanna see strong population decline over a long period of time, like a prolonged year after year after year, correct. Basis, because then that will impact the real estate market. Of course. So do you have any comment or anything you wanna share about the jobs and job growth there and population?

Both are very positive. So we are the 13th to the 15th largest city. Okay. And it depends what report you read from Fortune or Forbes or whatever it may be. And both are positive. Perfect example is we just built a new airport, and I, I say just, but it’s been a, a few years ago. And so what we did because of the growth of the population, we sold our old airport to one of the big FedEx or Airborne Express. And we built a, a, a several billion dollar airport because we had the dirt to do it. There’s subdivisions going up, there’s, and, and in the Midwest, I will say, single families work better than multi-units, because think about this. We can rent a, a, a three bedroom home for $1,500, let’s just say. Right? And someone can live there and it’s a, it’s, it’s a safe, wonderful home to go to a multi-unit.

And, and those would rent for a little bit less, say, eight or $900. We just get a lower demographic of a tenant who’s like, likely stereotypically not married and doesn’t have kids, and they’re not gonna stay as long. So what we’re looking for is that that family member, so to answer your question is the job growth is positive, the population growth is positive. When I drive around the city, we have a, a, a circle around the city, 4 65. And when we do that, all I see is I don’t see cranes building commercial buildings. I see the dirt being cleared out for more subdivisions being built, more things going in all the time. So it’s been a very, very positive growth. Also, I will say this is kind of interesting, is I, everyone knows prices are going up. So our B class rentals, what we used to rent for X is now almost two x.

So you can’t get into a new home if your credit isn’t good. Your debt to income ratio doesn’t qualify even though you’ve got a good job. So the raising interest rates have, in my experience, made the rental market stronger because there’s fewer people that can qualify for some of those loans. So not only do we have job growth, not only do we have population growth, but we have a very, very strong rental base. So I can get the exact numbers for you from one of my offices, but we have, I I will say boots on the ground, meaning our leasing office is, we still have way more tenants than we do properties and qualified tenants. And it’s been a wonderful, wonderful, I don’t wanna say easy, but it’s my leasing department is overwhelmed more than they’re underwhelmed, <laugh>, hands down for any of our vacancies.

Well, that’s a good, good problem to have. I mean, that’s, that’s ideally what you want and a large tenant pool to draw from of qualified tenants. Correct. In a market that has relatively speaking, low property prices and high rental demand and rental numbers that are in line with property prices to generate cash flow and a good cap rate. And that’s exactly what you have going on. At least that’s what I’m hearing. Yeah.

I’m telling you Marco, we’re gonna show some properties to you personally. ’cause I think you need to invest personally here. Okay. Just, I know your credit is not so good. You said it’s four 50 right now. No, I’m kidding. <Laugh>. <laugh>. I’m kidding. One, a couple of the other things, ’cause you nailed them all right? Is the job growth, you know, things like that we’ve already gone over. Also, when you visit a friend, like I’ve done, I have a lot of business of, of California investors, is the nightmares they go through on evictions, so that it’s kinda like we’re playing offense. Gotta gotta play a little defense too. Right? So you look at what they make, you know pay for an eviction, right? We pay le like I said, less than $500. I own a condo with my wife in Florida. Well, the insurance in Florida is not cheap.

Okay. It’s just, there’s factors there that you, it is what it is. It’s beautiful. By the way, I, someday I’ll retire there. Right? But it’s just, it’s same thing. We don’t, we don’t have any of our properties, I think maybe less than 2% of our properties may have an HOA dues and they’re about 200 bucks a year. But a condo would, and that just an HOA would cannibalize your rate of return if you’re spending $400 a month on HOA for them to mow the lawn. Right. You know, so when you add up all these factors, it makes a ton of sense. And I’ll have my, my wife for example, she is a a a very busy, and she says, well, set me up with a couple houses, you know, kind of when we were dating and this and that. And she’s owned ’em for years and has never seen them.

My sister has never seen her houses. We have investors in one of my bigger investors in Ventura has well over 20 homes, never seen them, you know, and he goes, are they, are they, are they very similar to the first 10 you sold me? I said, yeah, they are. You know, I, I’m very proud of my product. I’ve got that Midwest pride, like I’m, I’m proud of it. Right? He’s like, Michael, it’s numbers for me. They work. You send me, you know, if I add up all of our different property management companies that I’ve worked with, my business partner had one that is, is you know, through a divorce, he kinda lost some of those doors. But with all our property management companies, we direct deposit over, you know, I think over a million dollars a month in rent, you know, I have to get the exact number. So we have a lot of experience on what’s working and what’s not working. And the, and the bottom line, that’s why we kind of reverse engineer this. When we buy the home, we buy the home in those subdivisions or in those areas, we know that when it goes up for rent, we know plus or minus five or 10% that demographic of tenant that’s gonna wanna live there. And and it works out very, very well.

Yeah. That’s awesome. Mm-Hmm. <affirmative>. So let’s describe the product type. Sure. You focus primarily on single family homes, correct? We’ve established that they’re in BBB plus neighborhoods. Yes, sir. Okay. So bread and butter communities is probably a combination of white collar and blue collar. Exactly.

Mm-Hmm.

<Affirmative>. Yeah. If I’m missing anything on that, just, you know, add it, add it in. Yeah.

No, no, exactly right.

So I guess, describe, you know, the typical property that you guys are renovating. What does that renovation look like? You know? Sure, sure. I don’t mean down to like the color of the faucet, but just, you know, in general terms, brush to nickel. Yeah. Start with that.

With a brushed nickel, it’s safe brush nickel <laugh>.

It’s, it’s safe, A safe bet. Right?

Right. Right. So the bottom line is 80 to 90% of your service calls when you, when you manage a property, will be on water related challenges. Okay. So when you go into a home and you know that you want to give the, an investor a good experience is we’re, we’re almost always, you know, if the plumbing was done last year, we’re not gonna replace it. Okay. But by and large, we have older homes that we, we will buy and we’ll upgrade all the plumbing, okay. From fixtures and faucets and kitchens and bathrooms, ev everything that has to touch with water, water heaters, et cetera. Then we’ll go to the all your more expensive, expensive areas like your HVAC. Okay? again, same thing. Now tho, an HVAC has a date on it. Again, if it’s a year old or two years old, we’re probably not gonna replace it all right?

But if it’s 10 or 20 years old, you know, we’re gonna replace it. Okay. Roofs also don’t have a sticker on it that says, you know, born on this date, you know. But we always make sure when I when we, when we finish a job, we send through our inspector, the roofs always have to have at least 10 years of useful life left on them. Right? Then on the interiors is we, we do things in a very, very smart fashion. Meaning we know the type of, we basically do a Lowe’s quality rehab. So we’re not doing we’re doing a two-tone rehab on the home. So agreeable gray is our color. And you know, you know, two-tone trim, but the things like garbage disposals, the things like we have a garbage disposal, but we don’t have any dishwashers in our properties.

‘Cause Our market doesn’t care about it. And people think that a dishwasher is a garbage disposal. So then I call, we were calling up investors, charging them money to go ahead and do a maintenance call, but if we don’t have any wash dishwashers, we don’t get any maintenance calls because, you know what I mean? So we reverse engineered all this stuff. We, we put a cabinet in that space instead of a dishwasher. Right? We have all of our tenants by their own appliances on purpose. Okay? We have a secondhand place that we refer to. It’s very inexpensive. They buy their range, they buy the refrigerator. Why is that? We’ve owned properties for years. We don’t, we are, we’re not Maytag. So if it breaks, it’s on you and it doesn’t affect our rental rates whatsoever. So, little tricks of the trade that we’ve done over the years so that we get a good, good rental.

You, you know, good rental amount, right? On top of that, we have a very green area. We have a meaning that, that it’s, it’s very green in our areas, which means that we will, I think one year I spent, you don’t even wanna know, well over 20 or 30,000 I think it, you know, on, on tree trimming. ’cause You don’t want trees over the house. You know, little, little things like this all the way down, you know. So once the property is dialed in with new kitchens and bath and new plumbing and new HVAC and new water heaters we go with a PEX type flooring, you know, of course. Or a luxury vinyl plank type thing. So when all that’s said and done, then we’ll go ahead and do some very minor exterior things like that. You know, we don’t spend a lot, we spend more of our money on the inside.

If they want to go ahead and put down $500 a mulch, knock your socks off <laugh>. I’d rather give my investor a new HVAC system than, than that, right? All of our tenants will mow their own lawn as well. That’s already in the lease. You know, they take care of that as well. And that’s who we’re looking for. We’re looking for someone to take pride. A little bit of pride in the Midwest. It’s very easy. Most of our tenants have a smartphone, right? So we will, in the underwriting process, we will say, Hey, listen, you know Marco, your you know, application is conditionally approved. 85% of our tenants are on an auto pay system, meaning rent is due on the first, it’s late on the fifth, and you’re evicted on the 15th. Do you foresee any trouble enrolling in our auto pay system?

That shouldn’t be a problem. You should be wanting to pay your rent on time. Right. You know? Yeah. So we take in Zelle auto pay, or you go through our property management software and auto pay because too much of our time or our previous experience was spent in chasing people. That’s no, no fun for anybody. Right? So we go all the way from the construction of the home all the way down to the underwriting of the tenant, all the way down to the direct deposits. Speaking of which, my last investor called me up and says, well, I’m in several different ventures in California, but I have, IRA money that I’m not doing anything with. So it’s not unusual to have two accounts. One that we will kind of 10 99 your social, if you get a mortgage on it, let’s say, or pay cash for it, or 10 31, or you might roll over a 401k or IRA and we’ll send that money straight to your retirement account. We do that every single month and we really enjoy that because now we’re getting to that level where we’re truly replacing their income. You know? And that’s a lot of fun.

Yeah. I don’t see how anybody can’t be set up on automatic payments in today’s day and age. I mean, everything is, you know, digital and online. Why not just get, set it up? I mean, I, I haven’t seen a check in a long time. <Laugh>

So, right. My dentist de demanded that I send a check and I’m like, I’m traveling. I don’t <laugh> I don’t even know how to, you know, I had to set ’em up in my bank as a, as a payee in order to send a, a bank check. You know?

Yeah. I don’t get it. Okay. Well, it sounds like your properties are truly renovated in, in turnkey condition. Absolutely. Like, the expectation I would imagine is that you take possession of the property and there are no deferred maintenance items Correct. On the properties.

Correct. Correct. Absolutely. People say, do they want a warranty? And what you’d usually warranty would be the components that we’ve already replaced. You know, also remember the tenants are buying the appliances.

Yeah.

Right. So, so we don’t really need a warranty because there’s, there’s nothing really to warranty. You know,

What, didn’t I ask you about the properties themselves or the management? Mm-Hmm. <Affirmative>. ’cause Those seem to have gone hand in hand here over the last few minutes. What didn’t I ask you that you wanna share or that I haven’t asked you about?

That’s a great question. What I enjoy, since we’ve done this before, what I enjoy when someone calls me up and says, Hey, I’m gonna give you guys a try or wanna buy one or two, is what I enjoy, is when someone tells me their goals. You know, it’s kind of like I play a lot of pickleball and I lift weights. That’s what I enjoy. Good. All right. Great. Well, what I do at the gym is not right for you. And what you, you might wanna be a triathlon, well, you better not lift a bunch of weight like me or, you know, whatever. So tell me what you’re going for. ’cause I’ve had some, somebody’s come up to me when they’re 50 years old and they’ve said, Hey Michael, here’s the deal. I I need 15 grand a month. I need it as fast as possible.

Can you do the math problem with me? And a lot of that stuff is basically math. I don’t need the, I don’t need any money now until I retire at age 60. And that’s fun for me. So even though it’s not exactly about the property of the yellow or blue, is when you come to me and we say, Hey, listen, what’s the goal? What’s the point? I kind of get excited because then I reverse engineer all this stuff and I pull it from here and pull it from here. And I’m like, well, we’re gonna give you some two bedroom to three bedrooms and four bedroom homes. We’re gonna, we’re gonna be mindful of this appreciation, but your goal is cashflow. Right? Now, if you come to me at 28 or 30, you’re gonna say, well, I only can buy one house every four years. Well, we’re gonna give you a house that has a little bit more appreciation maybe, because you know, your, your money’s gonna work a different way.

Right? So come to me if you’re interested and say, Hey, what’s the goal? What are we going after? And that’s a, a fun part for me. So then I’ll put this house in, put this house in, put this other house in, and we’ll make it work. And since we have that experience, we can make that happen for you. So the houses are very similar. That said is, it’s the experience that we have. And like one of my newer clients in Oregon said, it’s your team. You gotta be able to count on your team. In the beginning, I said everything. We used to say that, you know, like a section eight lease is guaranteed, right? It’s a guaranteed lease. We don’t guarantee anything. ’cause It’s people’s behavior. They can leave a section, you know, so you’ve gotta take care of people. And now that we have this experience over the last 15 years, it’s worked out very, very well. Mm-Hmm. <affirmative>. And so what I say is just call us up. Call me up. I still respond to my phone and I enjoy it because it’s in their best interest. And so that’s kind of the, the long and short of it, it it, whether the property’s on you know, 3,900 block or the 4,200 block doesn’t matter as much as kind of what your goals are. Right. And that gets me excited.

Yeah. Love it. Makes sense. Yeah, it makes complete sense. Well, look, our experience with you for which feels like 15 years now has been great. Right? Right. Yeah. It’s been fantastic. Thanks. Indianapolis is a perennial market. It’s, it’s always been there, it’s always worked well. There’s inventory, the numbers make sense, right? The properties truly are turnkey. Right. You know, there’s just so many reasons to consider Indianapolis. Even if you don’t invest in it, you should investigate it.

Absolutely. And so, yeah, definitely.

Yeah, definitely. Yeah. So, so anyway, this has been great.

And what we say to some, sorry to interrupt, but what we say to some investors are, they’re like, the numbers make sense and they’re good to go. Right? It, it appraises out at x. The, the, the inspection items are these three things. We already punched ’em out yesterday. We’re done. I need your bank account routing number for direct deposits. Okay. Other people say, I wanna fly out.

Yeah

Great. We do an investor interview. It takes about three hours, three and a half hours. They fly out on a, whatever it may be. We do ’em usually on Wednesdays and Thursdays. They fly out on a Wednesday, go to, you know, go to sleep, wake up Thursday morning, we do the chamber of commerce tour, right? They, here’s the markets, here’s the houses, here’s the rehabs, here’s three houses that we’re working on. Here’s the five houses that you were interested in. Go from there. You know, and, and, and they fly home that next day. I’m not opposed to that. In fact, as long as I, I’ve said this before, as long as each of us aren’t wasting, you know, each of our time, buy your tick, I’ll reimburse you. I’ll fly out. You know, because it’s just, I’m looking for those longer term relationships.

Yeah. That’s, that’s, that’s a great thing to do. If you’ve got the time and you’re that type of person where you’re touchy feely, hands on, you have to see it with your own eyes, you know, take advantage of that. And, and that can be done in any market. You know, I remember the day when I was talking to investors years ago saying, you know what, just fly out there. Go out there for a day and check it out. Go on a tour, meet the team, shake hands with everybody, look at the properties, the ones that are finished, the ones that are under renovation. And it’ll give you a much better, you know, idea of what’s going on. But, you know, a lot of people are busy and a lot of people, you know, realize that, hey, I can do everything I need to do and all my due diligence remotely. I don’t, you know, as long as I, I’ve got the team and the right people and you know, our investment counselor here as their point of contact, all the things come together.

Of course

Of course. Anyway

We also have FaceTime. So you don’t wanna fly. We can FaceTime. It’s not that hard.

Yeah. Literally you can, you could even do a FaceTime, create a property, <laugh>, just see. Exactly. Right. So anyway, Michael, this has been great. I appreciate you taking the time. You so yes. You know, again, good experience with Michael and his team. Great market. There’s inventory. The numbers make sense. It’s a strong market. You’ve got all the tailwind, no headwind, you know, in this particular market. Amen. Give us a call. Amen to that. So, alright, well just in wrap. Thanks again, Michael. So in wrapping up, yep. If you have further interest or questions or anything about what we’ve talked about today, you know, go to our website, get in touch with your investment counselor, whatever the case is, and we will you know, get you connected with Michael. We’ll give you some more information, answer your questions strategically, tactically the available inventory in the pipeline.

Michael has told me that he’s got more inventory coming down the pipeline here soon. Timing is good. So take advantage of a free strategy session if you haven’t already connected with my team. They’re there to help you answer questions, make sure that your compass is pointed in the right direction and that you’re doing the right thing. And other than that, if you haven’t subscribed to the show, remember to do so. It takes you three seconds to click that button. I know some people listen to the show regularly but have not subscribed ’cause I can see it on the stats. Just click the button, subscribe and spread the word. Share this with your friends and family. Give us a rating and review on iTunes. I read all of them and I greatly appreciate it.

That is it for today. Thank you for listening and we’ll see you all on our next episode.

—————————————-