From Zillow to Success: Finding and Analyzing Hidden Real Estate Gems

Repetition is key to success. Recently, I feel like I have fallen away from this statement as I have not been doing a lot of property analysis. Fast and accurate analysis has the power to change your portfolio for the better. Mastering this skill is what sets apart the best as it instills confidence in purchase decisions and property management. I decided I want to get back to my roots and work hard again on property analysis. This is especially true as my partners and I have plans to purchase property in the near future. In this post, I’d like to show an analysis I did on a property in my market.

The property was a duplex with 1 bedroom and 1 bathroom on each side. It was in an area that is probably a C+ area right now but is in the path of progress for lots of development. It was listed for $135,000.

Photos of the duplex:

I liked this property because it had tons of potential, it was a true value add. In its current set up it only had 1 bedroom and 1 bathroom. Rents in the area were $931 for each side which totaled $1,862 for the entire property. It would need updates to the kitchen and bathroom on both sides but other than that I believe the property most definitely could have rented for that amount, successfully meeting the 1% Rule.

At this point, the property would have likely been a decent investment but there was a lot more potential to be uncovered. Each side had a large unfished basement of its own. I would have added egress windows to the spaces and finished it off to create a 2 bedroom 1 and a ½ bathrooms on each side. The ceilings would have likely needed to be left exposed to add more head space but would have definitely been functional for a bedroom and ½ bath. Adding this space greatly improves rents to $1,390 per side. What an improvement! Now I am not yet an expert on estimating rehab costs but with the small space, I estimated these costs about $55k for the entire project. The property is pretty small so I believe I would have met this budget.

Similar comps in the area showed between $185k-200k after rehab, showing that this renovation would have made sense for the area.

Analysis:

Important info:

• I included $55k for improvement costs.

• To be conservative I estimated rents at $1,150

• I will be managing this property so I did not include this in the analysis

Upon analysis, this property would cash flow $1,002 per month with a COCROI of 14.43%

This proves that at long term rental rates, this would be a great investment to add to my portfolio. Where the crazy thing happens is that this property could be used as an Airbnb or a mid term rental. It is located just 1.7 miles away from the Indianapolis Motor Speedway which hosts massive events throughout the summer bringing in people from all across the world. It is also located just 3 miles away from IU Methodist which is a major hospital in Indianapolis currently undertaking massive upgrades. This property has tons of upside and would have been great to add to my portfolio. It is also in the path of progress and is likely to see appreciation gains in the near future.

I’m currently not 100% ready to offer on a property but if I was this one would have been perfect. Had I not hopped on Zillow to check out properties, I would have never found this hidden gem. I encourage anyone reading this to put out the extra time and effort to do some analysis. I know I will be moving forward as it will most definitely pay off in the near future.