This Duplex in Indianapolis is a Cash Flow Monster
42sThe combination of a hot market, renovated condition, and strong cash flow numbers makes this an immediately compelling real estate investment example.
▶ Play ClipAI Summary
The video presents a real estate investment analysis of a duplex property in Indianapolis, highlighting its affordability, condition, and potential cash flow. The host walks through the financial calculations, including purchase price, down payment, expenses, and projected monthly cash flow, and emphasizes the importance of negotiating the price down based on market time and prior price reductions.
Chapters
[00:02]
Property Overview
A duplex in Indianapolis listed at $382,000. The property is in good condition, clean, recently renovated, with each side having its own backyard. Major capital expenditures (CapEx) have been completed: new roof, HVAC, plumbing, and electric.
[00:29]
Cash Flow Calculation
With a 25% down payment at 6.5% interest, and accounting for expenses including vacancy, CapEx, repairs, and 8% property management fees, the cash flow is $350 per month. This is considered strong for an on-market renovated duplex in a top market.
[00:58]
Negotiation Opportunity
The listing has been on the market for 42 days and the price has already been reduced by $5,000. The host suggests negotiating a further 5-10% price reduction, potentially bringing the purchase price down to around $352,000.
[01:12]
Improved Cash Flow After Negotiation
If the price is negotiated down to $352,000, the monthly cash flow increases to almost $500. This demonstrates the impact of price negotiation on investment returns.
[01:26]
Conclusion and Recommendation
The host concludes that this type of deal—strong cash flow, on-market, in a great market—is what investors should be buying.
The video demonstrates a practical example of analyzing a duplex investment, emphasizing the importance of negotiating price to boost cash flow. It highlights that even in a hot market, on-market deals with strong fundamentals can be found and improved through negotiation.
Study Flashcards (6)
What is the list price of the duplex in Indianapolis?
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What is the list price of the duplex in Indianapolis?
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$382,000
00:02
What major capital expenditures have been completed on the property?
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What major capital expenditures have been completed on the property?
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New roof, new HVAC, new plumbing, and new electric.
00:16
What is the monthly cash flow with a 25% down payment at 6.5% interest?
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What is the monthly cash flow with a 25% down payment at 6.5% interest?
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$350 per month
00:29
What property management fee percentage is accounted for in the cash flow calculation?
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What property management fee percentage is accounted for in the cash flow calculation?
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8%
00:44
How long has the property been on the market and what price reduction has already occurred?
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How long has the property been on the market and what price reduction has already occurred?
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42 days on market, price reduced by $5,000.
00:58
What is the expected cash flow if the price is negotiated down to $352,000?
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What is the expected cash flow if the price is negotiated down to $352,000?
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Almost $500 per month.
01:12
💡 Key Takeaways
📊
Strong Cash Flow for On-Market Deal
Demonstrates that a renovated duplex in a hot market can still yield $350/month cash flow, which is considered strong.
00:29
🔧
Negotiation Leverage from Days on Market
Highlights the importance of using listing age and price drops to negotiate a better purchase price.
00:58
💡
Price Reduction Boosts Cash Flow
Shows a concrete example of how a 5-10% price reduction can increase monthly cash flow by over 40%.
01:12Full Transcript
[00:02] right now. Let's take a look. This is a nice looking duplex in Indianapolis, so in a great market at a relatively affordable price of just 382. As you can see, this is a nice property in really good shape. It's clean, it's recently
[00:16] good, too. And even though it's small, I love that each side has its own backyard. Plus, on top of that, a lot of the CapEx has been done. There is a new roof, new HVAC, new plumbing, and new electric. So, there's a lot to like, but
[00:29] let's see what the numbers say. Once I plug in my purchase price, my 25% down at 6 and 1/2%, plus all my expenses, including vacancy, CapEx, repairs, and everything, I'm getting 350 bucks a month in cash flow. That is really good
[00:44] for an on-market renovated duplex in one of the hottest, best investing markets mention that I am accounting for 8% property management fees here. So, if going to be way higher. But, there's one more step you should take here. There's
[00:58] an important detail in this listing here. They've already dropped the price $5,000, and it's been sitting on the market for 42 days. So, use your price down. I don't know exactly what you could get this down to, but it is
[01:12] reasonable to expect that you can get this down 5, 10%. This is happening all that you could pick this up for 352, pretty reasonable. Then, your cash flow jumps to almost $500
[01:26] a month for this renovated property. Strong cash flow, on-market, in a great market. This is what you should be buying.
