You’ve obviously heard the news…
Indianapolis is a great city to invest in.
There are 5 big reasons why Indianapolis is such an attractive place for REI investing:
But, like all new cities where you’ve purchased properties, you have questions:
We’re here to assist you in any way we can.
We can help you purchase homes, provide management, and become a long-term partner in your Central Indiana real estate venture.
Or, we can simply serve as a great resource to learn more about the market.
We take a lot of calls from investors who are interested in the Indianapolis real estate market. Inevitably, one of the first questions they ask is:
“Where Should I Invest in Indianapolis?”
The answer is: “It all depends on your investment goals.”
We have very old neighborhoods and we have newer neighborhoods. Some areas in Indianapolis offer better cash flow than others, some offer better appreciation potential, and some neighborhoods are more speculative in nature.
In general, Indianapolis is a great city and so is the rental market. Finding the perfect investment property can sometimes be tricky and, because it’s so big, you’ll need to do your research to find a property that aligns with your investment goals.
We can help with that. Especially if you're an out of state investor, we can be your boots on the ground and provide you with research and our expert opinion.
Property taxes are important, and if you’re investing in Indianapolis or you plan to invest here, you need to understand our property tax rules.
I can't tell you the number of phone calls we've taken over the past several years from our customers regarding property taxes. And, trust me, they are not fun phone calls.
Me: "Hi Joe Investor. Good to hear from you. How can I help?"
Joe Investor: (very panicked voice) "Jeremy, I just received my tax bill and my property taxes doubled!! What's going on??"
That's followed by a few minutes of Joe discussing how his cash flow is killed, we have to raise rents immediately, being a Landlord is the worst idea ever, etc.
The bottom line is that Joe didn't understand how property taxes work BEFORE buying his investment property. And Joe clearly didn't use us to help buy his home, or Joe would have known exactly what to expect.
So, don't be Joe.
Take a few minutes to understand how our taxes work here in Indiana. They are a little different, and depending on how and what you buy, you may have to adjust your budget and your cash flow expectations to account for taxes.
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.
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:
Indianapolis is a city where many investors have decided to invest because it’s considered a “Cash flow Market.” We’re not a market, like in coastal cities, for example, that sees dramatic increase in property values, but we are considered a stable market that produces cash flow.
So, a common question we receive from investors, is “How Much Cash Flow Can I Expect in Indianapolis?”
Generally, investors that we work with want and expect around $200-$300 per month in cash flow for single family homes.
Calculating cash flow is one of the most important and basic calculations you can use to evaluate rental real estate. It’s basically just understanding two big buckets: Income and Expenses.
Simply put, to calculate cash flow, you use the following:
Cash Flow = Total Income – Total Expenses
Remember, cash flow will not be evenly distributed. When we say that investors here in Indianapolis expect $200-$300 per month in income, we don’t mean that they will receive that amount every single month. Cash flow can vary significantly from month to month and from year to year.
We work with a lot of investors throughout the United States and throughout the world. A question we receive from many new to the Central Indiana market is: What kind of cap rate should I expect in Indianapolis?
As you know, the cap rate simply measures the annual net income of a property divided by the purchase price.
Indianapolis investors can expect anything between 8%-10%. Some investors, especially those who are interested in buying in really nice areas, are settling for smaller cap rates.
Another common question we receive from many new investors to the Central Indiana market is: What type of cash on cash return should I expect in Indianapolis?
As you probably know, cash-on-cash is simply the annual pre-tax cash flow of a property divided by the actual cash invested.
Generally, investors in Indianapolis, are shooting for somewhere between 8%-10% cash-on-cash return. But remember, as with cash flow, your cash on cash return can vary significantly year to year.
Just in case you’re brand new to REI and have no clue what I’m talking about, there’s an informal grading system that investors use to classify properties.
Yes, I mean literal grades such as an “A” property or “C” property.
At its core, the grading system is universally known and is an important factor to consider because each class represents a different level of risk and return.
As a company who manages mostly A/B properties, we are often asked what those types of properties look like.
So, we thought we would take some time to break down each class, provide some real life examples from right here in Indianapolis, and hopefully be able to help you determine which class of property best fits your investment goals.
The Marion County Sheriff Sale is simply a foreclosure auction.
It’s not a tax sale. Marion County has those too, but it’s a completely different sale with its own rules.
Basically, the Sheriff Sale is the final step in a lien-holder's foreclosure process. As part of the foreclosure requirement, the lien-holder, generally a bank, puts the property for sale using the Civil Sheriff’s Department.
For an in-depth look at how the Sheriff Sale works, click the link below.
The Tax Sale is not to be confused with the Sheriff sale. They are each unique and have their own set of rules and guidelines.
The Marion County Sheriff Sale, happens once a month and deals with foreclosures across the city. The Marion County Tax Sale, however, only happens once a year, and deals with properties with unpaid taxes.
The Tax Sale auction can be a great opportunity for investors to purchase properties well below market rate, but it’s not without risk.
For more information on how our Tax sale works, check out the link below!
When it comes to finding and purchasing rental properties, you want to ensure you have a knowledgeable, experienced partner to help you in your search.
Buying investment properties is a whole other ball game compared to simply purchasing a personal residence.
You have to think about the make-ready work, rent rates, cash flow, appreciation, crime rates, school districts, property taxes, etc, and how it will all fit in with your goals and strategy.
You also have to think about management. Are you going to self-manage or have a third-party handle that for you?
If you’re going to hire a Property Manager anyway, why wouldn’t you take advantage of using their brokerage services as well?
It makes sense on so many levels, and we'll tell you why at the link below!
A question that we hear all the time from Buyers is, "Should I have a home inspection?"
We always advise clients to have a home inspection. We recommend having a home inspection regardless if this is your first time buying a home or you are buying the property as an investment home. Without an inspection, you would have no clear way of knowing if everything is working properly and is up to code.
We can get you set up with a great home inspection company as well as a local lender and title company.
Meet Delanie Shembra!
Her role within our company is to help our current Owners buy and sell rental properties, help new Investors
acquire properties, and act as an advisor for all things Indianapolis real estate.
With an impressive 13 years in the industry, she has been devoted to orchestrating transactions and has represented many Landlords and Investors on rentals and flips. As a previous Landlord herself, Delanie understands the needs and pain points of investors.
She is continually expanding her knowledge and network of contacts to keep ahead of the trends enabling her to provide each of her clients with the individualized service that they deserve.