Sorry if the question's been asked before, but I am a newcomer.
I am evaluating if I should invest in -A- neighborhoods around northern Indianapolis (Mainly Fishers/Carmel). Based on the info I've found most of the areas are occupied by homeowners (around 85%), in this case, is it still advisable to own rental properties or people mostly buy rather than renting?
Thank you in advance.
I will buy in as nice a neighborhood as I can find true cash flow in. It's just rare in A neighborhoods, especially in our current market. Maybe if there is a collapse...one can hope.
Hi Samm, I am a RE agent in the Indy area. A few of my investors have a couple of properties in Carmel/Fishers area, and while it is a highly desirable area, you are going to have a hard time getting close to 1%. Even in those areas, rents are not much more than $1500-$1800 on houses that sell for $200k-$250k. And most people that are renting in that area are short term because they are professionals just moving into the area and are temporary until they find a house to buy. I would suggest west side of Indy -- Brownsburg, Avon, Plainfield or south side - Greenwood -- still B / B+ neighborhoods with great schools but you will get closer to your 1% rule. Or even better is the townships - B/C neighborhoods-- Wayne, Pike, Franklin, Perry are my favorites. Obviously I love talking investments in Indy -- send me a message if you would like to talk more.
@Samm Mero Carmel and Fishers are both affluent, higher priced areas so rentals aren't going to cash flow as well as other parts of Indianapolis. There are some A class neighborhoods within Indianapolis that do much better. My recommendation is to broaden your area. We've been active in Indy for several years and know the market well. Feel free to give me a call if you want some help.
@Samm Mero I live in Carmel and just moved from Fishers. It's very tough to find cash flowing rentals in these areas if you plan to hold a mortgage. You can cash flow, but your COC ROI isn't going to be as high as most investors like. Equity, well that's another story. Carmel is one of the best equity growth areas in central Indiana.
As you can see in this link
Carmel and Fishers are 2 out of the top 5 wealthiest cities in the midwest.
I have a client, who is a local doctor, who purchases high-end condo's in Zionsville and Carmel with 50% down as rentals. This is more exactly opposite of how I was taught to invest, but it is an interesting model.
Personally, I'm not a fan of condo's. HOA's tend to raise faster than rents here, creating less cash flow over time, but this model is more about passive equity building. Basically, the HOA cares for most of the capital expenses over time and allows for a low-maintenance living experience for residents. Because these are more affluent areas, the tenants are stellar and even when we have a vacancy, it is very short... days usually. The residents usually take great care for the home and the areas are very desirable over all... but I wouldn't expect a ton of cash flow. He's probably putting $150k down for $4k-$6k annual cash flow, but they are never vacant, rarely have headaches, and he's building up incredible equity each year from a 2:1 leveraged position. If you are fine with 3-4% COC ROI, it's a fine model as the IRR will still top 10% annually when levered equity growth is figured in, but it's not a cash flow model.