Anyone have rentals in Indianapolis? How has your experience been?

20 Replies

I'm currently looking at a few cities out-of-state to buy a rental, and one of the cities that looks great and affordable is Indianapolis.

Problem is, since I don't live there (i'm from CA), I don't know which areas to avoid, which areas have good job growth, which areas have good schools/families. etc. This will be my first out-of-state rental, so I'm really hoping it goes well and doesn't cause too many headaches.

I'm currently looking at MFRs and SFHs, and I was wondering if anyone who has bought a rental could let me know:

A) How has your experience has been so far? Anything unexpected?

B) What numbers on the map below should I avoid? Do you have any set of zip codes that you focus on?

C) What kind of cap rates are you seeing? I don't see too many multis listed.. are there still good areas for MFRs?

D) If you know of any investor-friendly real estate agents that are thorough, communicative, and helpful with out-of-state folks, please feel free to send me a PM. Would love to hear from you 

Disclosure: If you are an agent/affiliate of the company you send, please let me know before hand. I'd primarily like to speak with investors who have rentals in Indianapolis- even better if you're out-of-state :)

@Rohan J.   I think the key to your success is a good agent and property manager! I don't know of anyone at this point for Indianapolis. I know of one for Cleveland. If you are interested you can PM me. I wish you the best in finding the location that suits your needs. 

Thank you @Jerry , I will send you a PM.

@Rohan J.  Indianapolis is a great market for rentals for sure. I'd also suggest finding a good property management company since you are out of state. Furthermore, I'd highly suggest you take the time to come out to Indy and visit the city and look around at different areas. Too many times investors get excited about the numbers the see on paper but don't really know what they are getting into with an investment because they didn't come out and do their due diligence

I own 3 rentals in Indy and it has been great so far. You just have to pick the right properties in the right areas and you'll be ok (with the right PM as well).

I cannot tell you which numbers on your map to focus on or what zip codes to focus on. The Indy market doesn't work that way, as there are different pockets in each of those areas that are good and bad. You're better off focusing on certain neighborhoods/streets than a zip code or general area.

You can find 10+ cap rates. MFHs are more difficult in many parts of Indy as there are so many SFHs available that people often don't want to live in a duplex if possible. Of course, there are some investors who have had success with MFHs in Indy too, but I can't really help with that.

I'd be happy to help if you have any other questions as you get started looking in Indy. Feel free to PM me with questions.

@Rohan J.  

  anything outside of the belt way's will generally be pretty nice stuff.. just like any big mid western city inner city areas are block to neighborhood specific... some are to be avoided at all costs others could be regentrifying.  Also I have had pretty good luck up in Kokomo which is just 40 minutes N of Indy and I think personally a sleeper... new Chrysler transmission factory has created a lot of new jobs in the last 20 months.

All the normal caveats apply... find a great seller and and an even better PM.. PM will make or break your investment period.

Hey @Rodney Kuhl   - thanks for the advice and response! Funny.. I actually sent you a message right before you posted this :)

I will be visiting Indianapolis in 2 weeks to look at properties - I definitely agree with your thoughts on coming out and visiting first. Hopefully I can find a great PM company + agent in the process. 

Glad to hear that you are doing well in the market - it gives me a little less fear as an amateur out-of-state guy. Hopefully I can find a nice cash-flowing property in a good neighborhood soon! I'll send you a PM as I learn more about the market/properties I'm interested in. Thanks for taking the time to help out

@Rohan J.  

I second Rodney cautioning you on small MFR in Indy.. I have a client from AU that bought one 3 years ago and its been a nightmare .. can't collect rent.. been broken into and stripped 3 times.. he is finally just going to walk away from it.. probably lost 100k on that one deal...

Originally posted by @Jerry Padilla :

@Rohan J.   I think the key to your success is a good agent and property manager! I don't know of anyone at this point for Indianapolis. I know of one for Cleveland. If you are interested you can PM me. I wish you the best in finding the location that suits your needs. 

 Hi Jerry,

I'm interested in finding a good PM in Cleveland. Please share your recommendation(s).

Mike Klein
Point Freedom Investment Group, LLC

@Jay Hinrichs   Great advice all around. Thank you so much for taking the time to share some of your experience. I was already kind of leaning towards buying a single-family, and you guys have confirmed my choice to stick with a single for now.

I'm having problems finding an investor-friendly real estate agent that's communicative and understands my goals, so if any of you guys know of any in Indianapolis, I'd truly appreciate any advice/contact.

I'll also be visiting family in Cincinnati/Ohio, so if you guys know of any strong agents out there, I'd be open to hearing from them too.

Thank you

Rohan

I'd be happy to help you or just give you my opinions on deals here in Indy. 

I have areas that I like and a lot that I don't.

Tough to really use your map. For example...I live just a bit north of your block 2. There are 7 figure homes in the area, the Governor's mansion included. However block 2 has some of the highest crime areas in the city, and neighborhoods that have a ton of abandoned homes. 10 blocks can be two different world here. 

Agree on the MFHs...they mostly are not wise choices in Indy. Plenty of good SFHs however, and your risk is exponentially lower.

Feel free to contact me here.

@Rohan J.  all good comments above.  For now, I would suggest staying out of sections 1 & 2.  Please keep in mind our market is very "street by street" and can vary greatly in just a few blocks.

IMHO - I like to stay with post 1945 built homes that rent for $700+.

I've also found out [the hard way] that small multi family [2-3 units] don't do well either.  They are typically all in rougher areas and built around the turn of the century.  Again, there are exceptions to this and I'm only stating a general rule of thumb for a new out of State investors.

This seems to cut our a lot of head aches.

Of course a good PM and team on the ground is crucial as well.

CAP Rates vary depending on what formulas one uses to calculate. For the most part, a solid 12%-14% is achievable.

I hope that helps!

Rojan, everyone above has had great comments. I've learned the hard way about downtown MFR properties and they are a pain. Luckily I got out and made some $ and moved outside of the 465 into SFRs.

Property Management - be careful what contract you sign with them.  Are you locked in with them forever or can you fire them if things don't work out?  What about maintenance costs?  I've had previous experiences where PM companies charge way too much.  Labor costs are not as high in Indianapolis compared to California for example.

Curious if you are looking into a regular "ready to go" property or looking into a rehab?

Good luck, would like to hear how things go!

@Michael Klein  I would definitely recommend @James Wise  in the Cleveland area.  I done quite of few transactions with him with our mutual client  and he has been very satisfied with his services.

Also, if anyone knows of any Property Management company (in Indianapolis) that is easy-to-work with, communicative, and thorough with out-of-state folks, I'd be truly grateful for a referral!

Feel free to PM or post, whichever you prefer. Thank you

Rohan,

I agree with Rodney and others as to the use of your map. With the ever changing Indianapolis market, the communities are growing and expanding rapidly. With this comes, pockets in neighborhoods where revitalization and redevelopment hasn't occurred. 

As you have probably heard, you can literally go 2-3 blocks over a few streets down and be in a rough area of a neighborhood. I could explain in great detail the political background and funding philosophy of the city/county after working in government relations for more than 15 years, but its probably not worth it.

I agree you need to find a great property management here locally. A well written legal agreement is key, especially if the relationship isn't working. I have litigated these issues before when the relationship has gone baad.

I would be happy to discuss these issues with you further. Feel fee to PM.

Originally posted by @Rohan J. :

Also, if anyone knows of any Property Management company (in Indianapolis) that is easy-to-work with, communicative, and thorough with out-of-state folks, I'd be truly grateful for a referral!

Feel free to PM or post, whichever you prefer. Thank you

 PM sent

I own 6 SFRs in Indy and am looking for a small duplex. Overall, I've done well with my SFRs but when they go vacant, I have zero income and they are a juicy target for thieves and vandals. A lot of you are saying no to MFRs. I'm curious why. I understand that they attract more transient tenants but having one unit earning when the other is vacant is a huge plus.  It seems to me that if you screen your tenants and stay on top of them, you should be ok. 

@Chuck Bredemus  

  from what I know of Indy the 2 flats tend to be very old and in the worse parts of town.

I personally have a partner of mine who bought before he knew what he was doing and before he allowed me to guide his US investments.. Anyway he bought a duplex there in Indy for about 70k... its been a nightmare even with one unit rented the vacant one got stripped ( many times its the immediate neighbors that do the thieving) then the other side went vacant and stripped this happen again so if he was to rehab them he would be on his 3 full rehab of both units in 30 months.. That's why folks recommend not buying 2 flats in Indy.. My investor can never recover I have recommended he sell take his loss's B/C he is making bank with me and will earn it back over time  !!!

When speaking about duplexes in Indianapolis, it depends where they are located.  I own a couple of them in the Castleton area (NE indy) and they are great producers with little problems.  I agree that if you purchase the lower priced duplexes in some areas, you will have problems.  Buying the right properties in the right area is key - location is everything.  I was lucky with timing as I purchased them in the low of the market when some investors were deeply under water.  Duplexes in the Castleton area sell within a few days of hitting the market due to the high-demand in the area.  Both of my properties are almost 2% producers whereas at current purchase pricing they are a little over 1%.

Originally posted by @Jay Hinrichs:

@Rohan J. 

I second Rodney cautioning you on small MFR in Indy.. I have a client from AU that bought one 3 years ago and its been a nightmare .. can't collect rent.. been broken into and stripped 3 times.. he is finally just going to walk away from it.. probably lost 100k on that one deal...

Have your buddy send me the info on his duplex if he wants to get rid of it. I may be interested! I love me some smaller MFH's... 

I actually have pretty good luck with duplexes and triplexes in Indy.. The key is good property management. We are pretty picky about who we put in our properties, and while it can take a bit longer to get tenants for duplexes and triplexes they can be great income producers. Most of mine are 15-18 cap rates, and that's after property taxes, insurance, and 30-35% deductions for management, vacancy rates, and annual repairs...


As far as robberies. Get a simplisafe system and put yourself on the $25 a month plan. You get texts whenever someone disarms the system, and you can log in and arm the system if someone forgot... All remotely.. I have started to do this for the owners I manage properties for.

Hi @Rohan J.

I'm a late to this thread but I found yours while looking for some info of my own.

Like you, I'm from SoCal, this was my first out-of-state property, and I was attracted to the low cost-of-entry in Indy. Plus the fact the numbers around here are terribad.

Around the end of 2013, I picked up a 4/2 SFH through a turn-key provider. My experience has been ok. As far as numbers, I got about 11.4% of the purchase price back in rents (after expenses, before taxes), which, I think, is not too bad. However, the PM (also the seller) has my red flags going off like crazy; especially lately.

The property is Section 8 and the most recent incident involved the PMs getting me a vague list of needed repairs from the annual Section 8 inspection with less than a week to act on it (later, I got the exact list of the needed repairs and most of them were tenant-caused). They wanted $810 for their "in-house" contractors to do the work. Leaving out a lot of the back and forth, I decided to go ahead. Fast forward 3 months, I get an invoice from them for well over $1,600 for those repairs. I'm still working with them and all, but I'm not exactly stoked as of right now. What bugs me the most is that they don't seem willing to provide legitimate documentation of the wok they bill me for. My understanding is that they work mainly with out-of-state investors, and cater to that clientele, so I would think they could do it if they wanted to.

As far as the area, mine is a fair bit east of your zone #5. One thing I don't like about Indy is the high crime rate - but I knew about that going in - and I haven't run into any issues yet. As others have said, a matter of a few blocks can make all the difference.

I would recommend going to see it first-hand. Having been there, I was able to get a much better feel for the neighborhood compared to the Google street view. It really is a nice looking little neighborhood.

Feel free to PM if you have more questions, Rohan.

Also, since I very well may need to replace my PMs in the near future, could I get some recommendations from those earlier in thisthread?

@Rodney Kuhl @Shawn Holsapple @Jynell Berkshire @Lee Smith @AnyonelseImissed

If you have PMs you recommend (or are a PM yourself), could you please send me a message? I'm very interested in lining up some good options. The place currently has a reasonably nice Section 8 tenant in place and I'm open to continuing that or going another direction when this tenant moves out.

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