*Originally published 05/05/2019 and updated 03/07/2021*
For the past several years, we’ve been a go-to Company for many investors around the world, all in search of the great real estate deals Indianapolis has to offer.
Indianapolis is, without question, a hot bed for real estate investment.
Everyone wants a piece of the pie, and what makes it even more difficult, is everyone wants the same piece of the pie.
There are hundreds, probably thousands, of investors with the same criteria looking for the same deals that you are.
Not only that, but when you’re dealing with A/B class properties, you also have to compete against a high volume of owner occupants.
So in essence, you have double the competition as other investors who are looking for homes in the C/D classes.
Changes in the Indianapolis Investment Market
The reality is that our market, due to increased demand, is facing a supply problem.
And with supply problems come price increases.
So, if you are in the market to purchase a rental home in Indianapolis, be forewarned:
- You’re going to pay more today than you did last year.
- There are fewer houses out there to buy.
- You’ll face more competition than ever.
3 Keys to Buying Indianapolis Rental Properties in 2021
We do our best to lock down deals for our investors, but you know what they say - “you can lead a horse to water, but you can’t make them drink.”
We’ve closed quite a few deals so far this year, and have probably lost almost as many.
Throughout the last few months, we’ve noticed several pitfalls that hinder investors from picking up properties.
To keep you from running into the same roadblocks and to help get you in the right mindset, here are 3 things you can do to successfully buy rental properties in Indianapolis.
- Know Your Criteria
The first critical component to any successful investment search is knowing your criteria and sticking to it.
If you only want to spend up to 120K, then only look at properties in that price range.
If you don’t want a property that has an HOA, then don’t look at properties with HOAs.
The more focused your search, the easier it will be to nail one down. If you’re wasting time having your Agent look into properties that you’re just curious about, that’s time they could have spent putting in an offer on a property that actually meets your criteria.
- Lower Your Expectations
When I say lower your expectations, I do NOT mean lower your standards.
There’s a difference.
Basically what I mean is, don't expect a perfect deal.
In this current market, it’s just not happening with quality rentals.
Obviously you want your numbers to make sense and you want it to be a smart investment, but if you’re holding out for that perfect 1:1 ratio or looking for several hundreds of dollars a month in cash flow, you’re not going to find a property.
A few years ago, those numbers may have been attainable, but I can tell you right now that it’s just not the case anymore.
It’s frustrating for both parties when we send property after property after property and each time it’s the same - “it doesn’t meet the 1% rule”- response.
It may not be the most popular opinion, but it’s one that we hold - equity and appreciation are more important than cash flow.
Especially when it comes to A/B properties.
If you go in with that mind-set, you’ll be able to find more appealing properties to pull the trigger on.
- Act Quickly
The third and possibly the most important key to successfully purchasing rental properties is the ability to act quickly.
I am not exaggerating when I tell you that properties are pending within hours of hitting the MLS.
I am also not exaggerating when I tell you that we’ve gone to put in offers for investors only for the listing agent to inform us that there are already 8 other offers.
In once instance, 11 offers had already been submitted in the 2 days it was on the market by the time we came to them with our offer!
You HAVE to be able to pull the trigger when you’re presented with a good property.
If you need 3 days to run numbers and think it over, forget about it. That property was gone yesterday.
I’m not saying you should blindly rush into anything, but you have to be able to analyze and make a decision quickly in order to lock down a deal these days.
Bonus Tips for Investors in 2021
- Choose a reputable, local lender and stick with them
You may not realize it, but if you're utilizing financing, the lender you choose can have a huge impact on getting offers accepted.
Many of the larger, high volume lenders do not have the best reputations for smooth transactions and Listing Agents WILL advise their sellers of this.
I've had Agents tell me point blank that the seller did not choose my Buyer's offer because they were going through a large, national lender that they have had multiple bad experiences with.
So, just keep in mind that a pre-approval letter is only as good as the institution's reputation.
If you're in need of a local lender recommendation, check out the link below.
Who to Hire for Your Indianapolis Investment Dream Team
Build a relationship with a trustworthy, investor-focused Agent
The Agent you choose can make or break your REI experience.
It's critical that your Agent understands not only the real estate market, but the rental market as well. Someone who can educate you on neighborhoods, rent rates, taxes, make-ready work, and all of the other nuances that come with purchasing rental properties.
Don't trust your money with just any licensed Agent.
Make sure they have the knowledge and experience to help guide you to success.
There’s obviously no magic bullet or right or wrong answer when it comes to real estate investing.
At the end of the day, you have to do what works for you.
But with the volume of investors that we work with and our experience in the industry, we have gotten to see first hand how tough it is out there right now to get properties bought.
Hopefully the 3 points we discussed will prepare you for investing in the Indianapolis market and will ultimately lead you to the successful purchase of a solid property for your portfolio.