How to make 47% buying an Indiana investment property from out of state?

Nothing says more about an investing strategy than real life deal examples.  Today we’ll go over a real life “Deal Dissection” on an Indiana rental property and how it is producing 40%+ ROI.  We will go over the purchase price, closing costs and all the numbers so you’ll see everything start to finish and understand exactly how deals look like this in the real world.

First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com. 

How can an Indiana Safehouse make you 47%?

Here are the number on this Safehouse:

Purchase price: $155,000
Seller Paid $5k toward buyer’s closing costs.
Seller paid prorated taxes of $3400

Buyer closed with $151,997.

In this case, it will rent for approximately $1,500 a month

From That Income SUBTRACT…

Taxes – $180 month
Insurance – $50 month
Property Management – $150 month

Total Expenses = $380 per month

That Leaves A Positive Cash Flow Of $1,120/month

$1120 per month X 12 months = $13,440 per year NOI

That is a 8.67% cash on cash return on the $155,000 cash investment.

But remember…

Monthly cashflow isn’t the only income this investment will receive.

Depreciation

We’ve talked about this other videos, it comes out to about 1% increase in annual return.

You will also get APPRECIATION on your investment.

As we’ve said before, over the past 30 years, property values have increased in Indianapolis by over 300% , more than 100% every ten years.

That’s EVEN FIGURING IN THE 2008 CRASH.

That means, historically, the value of your long term investment property…

Doubles about EVERY 7-10 YEARS.

So…

(100% / 10 years = 10%)
This Adds 10% To Your Annual Net Return On Investment

That puts your annual return on an ALL CASH purchase at:

8.67% cash on cash return from rent income
1% IRS Tax depreciation every year
10% per year appreciation in value

And this is if you pay ALL CASH.

That is a total of 19.67% RETURN

(this is if you pay ALL CASH)

If you leverage the deal and only put 20% down, you can buy 4 times as many properties and your returns almost triple. So let’s do that next.

Let’s look at the annual return on investment when you LEVERAGE and make payments on a mortgage.

Here is the formula for calculating the ROI (return on investment) on a LEVERAGED investment.

ROI = Net Profit / Total Investment x 100

A $155,000 house, here are the numbers…

TOTAL CASH INVESTMENT CALCULATED AS FOLLOWS:

$31,000 (20% down payment) + $8500 (closing costs – approx.) =

$39,500 total cash investment

TOTAL NET PROFIT CALCULATED AS FOLLOWS:
$15,500 (10% annual appreciation)
+ $1,500 (depreciation – approx.)
+ $1,200 (annual buy down on the note)
+ $900 (rising annual rent)
+ $900 (positive cashflow after debt service)
= $20,000

NOW LET’S SUBTRACT SOME POSSIBLE COSTS:

$540 (3% annual vacancy rate: $1500 rent x 3% x 12)
+ $900 (5% potential annual repairs needed: $1500 x 5% x 12)

NET ANNUAL PROFIT:
$20,000 Net Annual Profit Before Possible Costs MINUS
($540 vacancy + $900 repairs)
= $18,560 Net Annual Profit

$18,560 Net Annual Profit / $39,500 Total Investment x 100 =

46.99%

RETURN ON INVESTMENT:

46.99%

So that’s insane, right?

Even with NO appreciation:

That would reduce our Net Annual Profit to ($18,560 net annual profit – $15,500 appreciation = $3,060)

That’s a lot less amazing.

$3,060 Net Annual Profit / $39,500 Total Investment x 100 = 7.75%

RETURN ON INVESTMENT = 7.75%

The past 30 years tell us it’s going to appreciate. But if it doesn’t, for whatever terrible reason you want to imagine, you still have a decent return on your cash investment on this one property.

It’s not great compared to what we’re used to in real estate, but compared to stocks, bonds, mutual funds, REITS, virtually EVERY other type of passive investment out there – it’s competitive.

And if the worst DOESN’T happen, you get almost…

47% RETURN ON YOUR CASH INVESTMENT – IN ONE YEAR!

Why Are We Getting These Amazing Returns?

One word – Leverage.

That one thing.

Beautiful, real estate leverage.

You sure can’t do this kind of massive leverage with stocks.

The Power of LEVERAGE

4X leverage

4X your equity

4X your buying power

4X your return on investment

4X your PROFITS!

When you only have to put 20% down to buy a property, you can buy 5 times as much property for the same money. Even if you figure in the cost of the money (closing costs).

You can still buy 4 times as many properties.

THUS – 4X LEVERAGE – you buy 4X the amount of property.

YOU GET INCOME & APPRECIATION ON 4 TIMES AS MUCH EQUITY

So in this case…

$155,000 (cost per house) X 4 (houses) =

$620,000 (total value)

REMEMBER: The tenant is paying the mortgage FOR YOU. The property manager watches out for your asset. You pay off your loan and enjoy the appreciation and income.

So… with that said… you have one BIG question…

The big question…

“How Fast Will The Tenant Pay Off My Loan So I Can Start Getting Monthly Income?”

If your mortgage is being paid by the tenant on a 30 year mortgage, how long will it take to pay off that mortgage.

A 30 year mortgage is going to take 30 years to pay off. Right?

If you have an 80% mortgage on a $155k property ($124k) at 9.5% interest, amortized over 30 years, your P&I (principal and interest) payment will be:

P&I = $1,034

Taxes (on this property) – $180 month
Property Management – $150 month
Insurance – $50 month

Total Expenses – $1,414

That leaves you with $86 per month to apply toward principal.

If you don’t add any money to the payment from your pocket except that $86 each month, your 30 year mortgage will pay off in about 20 years. That’s a good start.

It shouldn’t take even take you 20 years to pay off, let me show you why…

If Your property manager will increase rents by 5% every year automatically (assuming you have a good property manager with ‘Safehouse’ policies).

So, $1,500 goes to $1,575 in one year, $1,625 the year after, $1,700 the year after and so on.

If you increase your monthly payment on the loan over time, just from the increase in rent – without taking ANYTHING out of your pocket – you will pay off your loan in about 12 years.

You can do the math yourself, just google “appreciation calculator” and punch in 5% appreciation over 10 years. It jumps the rents from $1500 to $2693 per month over 12 years.

That means when you pay off your loan, you will have a monthly NET income (after expenses) over $2,000/month+.

But we want you to own it even FASTER than 12 years…

(This power is built into our Safehouse Algorithm)

We are going to sell your property to a lease option buyer to make you more money and pay off your loan faster.

Lease option buyers are the best.

Remember like we said earlier: they consider themselves OWNERS rather than RENTERS. .

We will raise the price when we sell the house (so there is a profit to you above what you paid for it) and the lease option buyer will pay a non-refundable lease option fee.

Half in cash, which goes to cover the costs of finding, qualifying and assisting the buyer – and half in payments from the buyer, which goes to you directly, so you can pay down your loan and build equity FASTER.

That should add an additional $200-$300 a month of income that will be paid monthly by the Buyer as “Down Payment Assistance.” This is paid in ADDITION to the rent.

If you add that $200 a month to your payment, your 30 year loan will pay off in about 9 years

Are you starting to see how powerful an investment structured this way can be?

This is our ‘SAFEHOUSE ALGORITHM.”

Another $155k in equity from normal appreciation

Our FIVE proprietary “Safehouse Pillars” accelerate payoffs.

In this case our Hero paid cash for this property for income NOW.

With leverage ROI goes from 19.67% to 46.99% annually.

Mind blowing?

Hard to believe?

How can that be possible?

IT IS JUST MATH

Purchased – $152,000

Sell on Lease Option – $175,000

$1550 per month income immediately

$240 per month Down Payment Assistance

That being said remember the team and who should be on your team:
Realtors, lenders, PM, HML, appraisers, contractors and investors
Title companies, insurance, inspectors, accountants, eviction attorneys…

Make sure they got you connected and you can talk to them ahead of time too.

If you want a list of OUR contacts and every possible person that you will ever need to build your real estate business you can check out our People Page at BigReia.com/People.

The MOST important thing to look for are OUTCOMES.

Indy CAN be a great market for turnkey investing but you need to pick the right team.  Joe and Azam have an obsession of helping folks from around the world create 10-30k/month and far beyond so you can use that as a ruler to measure others against.

Here’s what to do next:

1.) Download a FREE copy of our book “The Book on Indiana Real Estate Investing from Out of State” and see how we help folks turn 200k into 100k/year passive income forever.

2.) Devour are FREE accompanying classes, videos and testimonials and make sure you are qualified and fully ready to apply for us to build you passive income and generational forever wealth.

3.) When you are SURE that the GRS program is for you, you can apply and after your interview (Joe or Azam will speak directly with you in your final interview) if your application is accepted we will begin immediately and start collecting Safehouse FOR you, you don’t have to do anything – you don’t even have to leave your house – everything is DONE FOR YOU.

So that’s how you create passive income with Indianapolis real estate from out of state.

As always remember that you can use our  People Page here for a full list of every contact you’ll ever need to build your real estate business.  Also we have a list of all the paperwork and contracts that we use and we add to this list regularly so you can download anything for free and feel free to send me feedback or requests.

Want us to build your real estate portfolio for you?

Apply for our Get Rich Slow (GRS) Program and have me and our team build passive income for you.

Apply here now.

In the meantime you can go through the previous Elevators, classes and other FREE training material and use it to grow your impact before you check out.  Use our stuff to both create passive income AND buy small businesses zero down, follow the steps, be kind, help others and you’ll…

Make the Universe Smile.

~ Indy Anna and Rachel and Eve
Love (at) BigReia.com
(YES that’s my actual Direct Line and I really do answer lol, so please text me first Thx!)

Want more (brilliantly) EPIC posts of real estate investing and bidness badasssery...?

There is a great post and class on the 38 Ways to Buy Apartment Buildings Zero Down with Pet Policies, and here are some other helpful and EPIC posts... for starters as a real estate investor if you ever want to build a business that makes you 30 grand a month then you MUST do this...

Wanna Create Generational Passive Income Buying Real Estate and Small Businesses?

Here's a class on exactly how to make $30,000 in passive income as an out of state Indy landlord.  Exactly how many Indiana rental properties do you need to make 30 grand a month.  Anna can you help me invest in Indianapolis turnkey real estate investment properties?

There's also a great class Azam did on how anybody can retire in the next 1-2 years with $30,000 a month in passive income by buying and selling businesses zero down.  What about Micro Flipping?  We have a great class on how to start micro-flipping real estate zero down from your house and make $500/day, speed wholesaling 101.

There’s also another great class on how to buy apartment buildings zero down that you can check out as well.  This relates directly to growing income on rental properties.  Speaking of which make sure to check out our epic page on 14 ways to avoid tenants from hell.  Also we have a great post on how to make build a "six figure a month" real estate wholesaling business.

Also here is a post on how I did this and I flipped a house off Zillow for 30.  Also you can check out the post on five steps to flip a house right off Zillow for 40 grand.  You can also check out our other epic post on 57 ways to make money with vacant land.

Here’s another post on how a Hero flipped a house off Zillow and made 40k in a few weeks while he was learning to read.  Also you want to check our post on the EPIC $25 million letter and the copy writing lessons for real estate investors, you'll love it.  Also you can see how ONE letter is making me $9,000 a month.  Also you can check out the post on 101 FREE places to advertise your houses.

Also check out the "SA" class and your REAL chances of create social mobility and income ascension with your real estate business.  Brilliant stuff.  Also there is a great post on the ONLY way you'll ever make 30 grand a month as a real estate investor and/or business builder.  Another brilliant class with a free downloadable Investor Guide is about 19 Ways to Make $10,000 a Month by Helping Tired Landlords.

Plus make sure you check out Azam's post on how to hire a realtor that makes you $10,000 a month... while you sit back with your shoes kicked up on your desk and fingers folded behind your head.  Also there is a great post on how to make five grand a week from putting out signs.

Also we have some great posts on 30 ways to buy real estate with no money down.  That is a two part series so make sure to watch the second part on the 30 ways to buy real estate zero down and with no loans or credit.  I also get questions about our "Epic Flipping" and how to turn $1 into over $25,000 by flipping ordinary items for exponentially high ROI.

And don’t forget our EPIC page on 100 FREE ways to find motivated sellers, we are making the number one page in the world on FREE ways of finding motivated sellers.  Also check out how I find motivated sellers from code violation properties, and also how I make over $1,500 a week giving investors access to that list

Speaking of lists, for a list of the "Good People" and My Indy Anna Homeys - this is a FREE list of EVERY possible contact that you'll ever need to build a real estate business in the Indianapolis or the Midwest.

You can also get a LONG list of every contract, piece of paperwork and legal document that you'll EVER need for your real estate business all FREE to download.

Also perhaps the most important class Azam has done is on the "Frequency of Thought" and how to use the laws of quantum physics to rewire your brain, attract brilliance like a lightning rod and be the best version of yourself.  Check out this epic 3-hour class on Quantum Real Estate.

When I first go started I thought wouldn't it be great if somebody put together ONE list of every possible contact that I would ever need to build a passive income with Indiana real estate - or any Midwest real estate?  Well that's exaclty what I did with our “People Page” here it is:

A totally FREE list of every possible real estate professional contact you’ll ever need to do unlimited deals, start and scale your real estate business and create generational passive income with real estate anywhere Indiana or the Midwest.

Stay here at BigReia.com and you’ll become allergic to being an LC and addicted to improving the world and creating Income Ascension and Social Mobility for you and yours… 

Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

Free Comic Book Reveals:

100 FREE ways to find motivated sellers.

Free Comic Book Reveals:

100 FREE ways to find motivated sellers.