When investing for cash flow, Indianapolis is an attractive market. Due to the affordability, diverse economy, and abundant inventory, more investors are buying up properties from out-of-state to maximize returns.
Before taking the plunge, though, be sure to do your research and familiarize yourself with the market. This goes for locals, too.
- DARK GREEN: A neighborhood
- LIGHT GREEN: B neighborhood
- YELLOW: C neighborhood
- ORANGE: C/D neighborhood
- RED: D neighborhood
Here’s my perspective on Indianapolis neighborhood grades from my years investing in the market along with being native to the city. Click here to take a closer look at the interactive map.
A-class neighborhoods are primarily owner-occupied single family homes. The school systems are top notch. These single family homes start at $200k and up. They are expected to achieve lower returns compared to B, C and D neighborhoods, but this is offset by higher quality tenants, along with less management involvement.
- Carmel—Median income: $106,456 (zip: 46032, 46033, 46082)
- Fishers—Median income: $97,100 (zip: 46037, 46038, 46085)
- Zionsville—Median income: $118,190 (zip: 46077)
- Meridian Hills—Median income: $141,563 (zip: 46220, 46240, 46260)
- Westfield—Median income: $90,048 (zip: 46074)
- Noblesville—Median income: $70,276 (zip: 46060, 46061, 46062)
- Avon—Median income: $93,116 (zip: 46123)
- Greenwood—Median income: $52,621 (zip: 46142, 46184)
B-class neighborhoods are going to be made up of a variety of both rentals and owner-occupied homes. Here you still see more owner-occupied homes overall. You will be able to find single family homes that need little work and get solid rental rates. Residents will include some education beyond high school and some blue collar workers. A very solid tenant base will live here. Rents will be around $800-$1,050.
- Brownsburg—Median income: $68,647 (zip: 46112)
- New Palestine—Median income: $66,711 (zip: 46163)
- Plainfield—Median income: $61,140 (zip: 46168)
- Southport—Median income: $51,762 (zip: 46227)
- Whiteland—Median income: $56,944 (zip: 46184)
- Clermont—Median income: $58,846 (zip: 46234)
- Irvington—Median income: $60,231 (zip: 46219)
- Bates Hendricks**
- Fountain Square**—Median income: $38,366 (zip: 46203)
- Broad Ripple**—Median income: $90,753 (zip: 46220)
**In recent years, Fountain Square has been experiencing gentrification driven by Millennials and has become a very hot part of town. You can find homes valued at $50k right next to $350k new construction. Bates Hendricks, just blocks away, is going through this phase as well, although it is a couple years behind.
**Broad Ripple can be considered an A neighborhood as much as a B. Very mature setting.
C-class neighborhoods are going to be made up of about half and half renters and owner-occupants. Rents will run between $600-$800. The residents will be mostly comprised of blue collar workers. These, along with neighborhoods in B-class areas, are by far my favorite to acquire property in.
- Speedway—Median income: $40,499 (zip: 46224)
- Mooresville—Median income: $52,768 (zip: 46158)
- Lawrence—Median income: $48,731 (zip: 46216, 46218, 46220, 46226, 46235, 46236, 46250, 46256)
- Beech Grove—Median income: $37,624 (zip: 46107)
- Martinsville—Median income: $36,379 (zip: 46151)
- Eagledale—Median income: $26,233 (zip: 46222)
- Little Flower—Median income: $39,298 (zip: 46201)
D-class neighborhoods are going to consist of more rental homes. There won’t be many owner-occupied single family homes. Abandoned homes in these neighborhoods are more likely to get broken into when sitting vacant. These areas are generally not very safe and are highly management-intensive due to tenant volatility. Investors beware: Having local boots on the ground to manage is recommended. Money can be made here, but the risk increases. Rents run between $450-$700.
- Haughville—Median income: $17,321 (zip: 46222)
- Martindale Brightwood—Median income: $25,865 (zip: 46202, 46218, 46205)
- Brookside Park—Median income: $38,039 (zip: 46201)
- Grace Tuxedo—Median income: $29,114 (zip: 46201)
- Willard Park—Median income: $29,114 (zip: 46201)
- Mars Hill—Median income: $32,254 (zip: 46241)
I would enjoy hearing others’ insights as well.
*All median household figures were pulled from multiple reputable sources such as bestplaces.net and city-data.com.
How would you rate these neighborhoods? How is your experience investing in them?
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.