Where Should I Invest in Indianapolis?
We receive a significant amount of inquiries from investors who are interested in the Indianapolis real estate market.
Inevitably, one of the first questions they ask is:
The answer is: “It all depends on your investment goals.”
Related article: The Definitive Guide to Investing in Indianapolis
Like most larger cities, Indianapolis is very diverse.
We have very old neighborhoods, and we have brand new neighborhoods. Some areas in Indianapolis offer better cashflow 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 our city is so big and diverse, you’ll need to do your research to find a property that aligns with your investment goals.
Having said that, there are definitely some key factors that you should consider when you’re searching for an investment home in Indianapolis.
Considerations When Purchasing an Indianapolis Rental Property
1. Townships: At a basic level, you’ll need to understand how Indianapolis is laid out.
There are nine townships that are surrounded by Interstate 465 (loop). Most of the older built homes are “inside the loop.” If you are searching for a newer home and possibly in a subdivision, you will more than likely need to search around and outside of the loop.
2. Schools: As you probably already know, schools are a massive factor in where a Tenant chooses to live. Each township has different schools with some more popular than others.
You will want to do some digging yourself or speak with a real estate agent, or an Indianapolis Property Manager, who may have knowledge with what school districts are most popular. Tenants will usually pick a rental property because of what school district it is in.
3. Safety and Crime Rates: I am sure when you pick a home to live in for yourself, you look for a home that is in a safe location.
Tenants will pick out a home the same way. When you are looking at a specific location, I would advise you to look at the crime rating and see what’s goin on. If you notice a lot of theft or stolen A/C and furnaces, this probably isn’t the best location for you. To me, this would indicate that people are targeting vacant homes. This type of crime and theft can cost you a lot of money.
Related article: The Top 5 Mistakes First-Time Real Estate Investors Make
Let me show you a quick example of what the breakdown looks like for an older home vs. a newer home.
Indianapolis Rental Property Analysis
House #1 – Inside the loop: 3 Bedrooms, 1.5 Bath. Built in 1979. 1,000-1,200 square feet. Sells for $75,000-$90,000. Rents for $850-$925/month. This home would more than likely make a good investment property. Depending on the neighborhood, the appreciation values may not go up as quickly as a home outside of the loop.
House #2 Outside of the loop: 4 Bedrooms, 2.5 Baths Built in 2002. 1,800-2,400 Square feet. Sells for $120,000-$140,000. Rents between $1,200/month-$1,350/month. This home would also make a good investment property. This home is newer than House #1 and probably is in a growing area. You may or may not hit your monthly cash flow goals each month, but the appreciation/resale value will more than likely be higher than House #1.
After you have done your homework and you feel that you know what type of home and location you are looking for, it’s now time to put your words into actions.
What is your next step?
Steps to Purchase Your Indianapolis Rental Home
1. Contact a Realtor or Property Manager: Contact a local Realtor or an Indianapolis Property Management company and share with them your goals and your questions. Not everyone you contact will be set-up to work with investors. Speak with a specialist who understands your goals and will be able to help determine which locations best fit your investment profile.
2. Get your “Boots on the ground”: Pick out some properties that you like, come into town and check out each neighborhood. Betting your “boots on the ground” is one of the better ways to get more familiar with Indianapolis and the surrounding neighborhoods.
At the end of the day, I can’t tell you where your next investment home should be. Each neighborhood can change for good or for the worse within a matter of years.
Doing the proper research of Indianapolis and reaching out to a real estate professional who has knowledge of popular locations will really help you out in the long run.
If you have any questions about the Indianapolis real estate market, please don’t hesitate to contact us.