Where should I invest Indianapolis IN, or Carmel IN?

Sean K.

Investor · CA · Member since 2023 · 15 posts · 10 votes

I'm thinking to buy a rental property in Indiana not more than $350k.

Where you recommend Indianapolis city or Carmel and why?

Where it's easier to rent?

Where you can generate more income?

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Jaron WallingPro Member

Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes

@Sean K. Carmel and the majority of Indianapolis are polar opposites.

There's a 0% chance you'll find cash-flow in Carmel. Around the greater Indy area you can find, negotiate towards, or create it. This depends on the neighborhood (sometimes street-by-street), strategy (value add?), and ROI you're aiming for.

We have a rental shortage. If it's a nice rental at/or slightly above market you'll find qualified people asap. People want houses over apartments especially if you have a basement or garage.

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Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
2y
@Sean K. Carmel and the majority of Indianapolis are polar opposites.

There's a 0% chance you'll find cash-flow in Carmel. Around the greater Indy area you can find, negotiate towards, or create it. This depends on the neighborhood (sometimes street-by-street), strategy (value add?), and ROI you're aiming for.

We have a rental shortage. If it's a nice rental at/or slightly above market you'll find qualified people asap. People want houses over apartments especially if you have a basement or garage.
6 Reply
Kerry Noble JrPro Member
Investor · Indianapolis, IN · Member since 2018 · 2k+ posts · 1k+ votes
2y
@Jaron Walling hit the nail on the head
3 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Jaron Walling:

@Sean K. Carmel and the majority of Indianapolis are polar opposites.

There's a 0% chance you'll find cash-flow in Carmel. Around the greater Indy area you can find, negotiate towards, or create it. This depends on the neighborhood (sometimes street-by-street), strategy (value add?), and ROI you're aiming for.

We have a rental shortage. If it's a nice rental at/or slightly above market you'll find qualified people asap. People want houses over apartments especially if you have a basement or garage.

Thanks Jaron for your reply!
If lets say I buy this house: 10815 Broadway St, Carmel, IN 46280
Purchase price: 279,000
Interest rate: 8.5%
Down payment: 25%
Monthly payment (including tax and insurance): 1,835
According to Zillow Rent Estimator the house can rent for: 1,995
(Management I will do myself, I will repair everything needed before tenant moves in, to reduce repairs needed for first year).
Monthly cashflow: +$160
Is that realistic or am I missing something?
(I guess first 1-2 years cashflow will be only 160 but after then I can raise the monthly rent another 50-100 then cashflow will be 210-260)?
0 Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
2y
@Sean K. I'm shocked by that price and location. It looks remodeled from the interior photos. Maybe it's a bit cramped based on sqft. but I could see rents being that high.

You're missing additional expenses including vacancy, maintenance, and cap-ex. For the numbers on mostly remodeled properties we use 8%, 4%, 4%, concurrently.

That equals $320 per month for reserves and surprises. Now it's -$160 per month.
5 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y

@Jaron Walling I guess you are right that Carmel will not cashflow that well but do you think Carmel appreciation will be much higher than other parts of Indianapolis? Or appreciation will be similar?
1 Reply
Gloria N GearBusiness Member
Realtor · Indianapolis IN · Member since 2018 · 464 posts · 339 votes
2y
So, there are 134 houses for sale in Carmel right now - average price is over $600K. This one is the lowest on the list. You better offer quickly, because that will not last and I would assume it will go over list price. Also, it is only 1 and half baths, so you may not get $2000 unless you turn it into 2 full baths. But it is a good deal if you want to go for it, those are rare up there. There are a lot more properties that cash flow in Marion County/Indianapolis city.
4 Reply
Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
2y
Everyone above is right. Carmel is great to live in - less great to invest in!

Also - if you are just looking at your Income - PITI, you are NOT getting anything near a full picture. You need to take into account repairs, CAPEX, vacancy, etc. In a perfect month, you will see a positive impact on your bank account of $160, but you aren't accounting for the house slowly but surely breaking down, or the time where you inevitably have to re-rent it.
Hit me up if you want to chat!
3 Reply
Tim Ryan
Investor / Mentor / Contractor · Arcadia, CA Buying Out of State · Member since 2015 · 654 posts · 622 votes
2y
That's too high a price out-of-state for a single family. I bought a 4-unit last year for $250k with 25% down that has actual positive cash flow of around $500 per month and that adds all the additional fees that come including a repair budget. My point is maybe your two locations are not the right places? There is always a growing market somewhere. The key is to identify it.
1 Reply
Account Closed
Rental Property Investor · Indianapolis, IN · Member since 2020 · 562 posts · 554 votes
2y
@Sean Keller what does your research tell you?
0 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Tim Ryan:

That's too high a price out-of-state for a single family. I bought a 4-unit last year for $250k with 25% down that has actual positive cash flow of around $500 per month and that adds all the additional fees that come including a repair budget. My point is maybe your two locations are not the right places? There is always a growing market somewhere. The key is to identify it.
The area you ended buying 4 units for $250 I'm assuming it's a multifamily. Do you have someone managing it for you? How are the tenants in that area?
0 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Account Closed:

@Sean Keller what does your research tell you?

Sometimes buying in a better area can let to less headache. I still need to investigate more. What you know about these locations?
0 Reply
Jaron WallingPro Member
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
2y
@Sean K. Appreciation in Carmel has been higher yes but we solely rely on appreciation. Like others said if you're looking for buy and hold rentals on the north side it's probably a waste of time.

It's like shopping at a Porsche dealership for a used Honda civic. You won't find anything affordable.
1 Reply
Tyler LingleBusiness Member
Real Estate Consultant · Indianapolis, IN · Member since 2021 · 440 posts · 292 votes
2y
Hot take - Invest in Carmel (if you can lose money for months to make real money in years). On the real, Carmel has an intense need for more STR's, however, the city is not super friendly to them.
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Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
2y
Quote from @Sean K.:

I'm thinking to buy a rental property in Indiana not more than $350k.
Where you recommend Indianapolis city or Carmel and why?
Where it's easier to rent?
Where you can generate more income?

As a target market for rentals, I recommend Indianapolis over Carmel. Reasons- In general the properties will be much less expensive and the population of potential renters will be larger in Indianapolis than Carmel. If you can purchase a property for less and be able to charge relatively the same rent then the cashflow will be more.

In my opinion, there are other strategies more appropriate for Carmel than purchasing for a straight rental.
312-681-7487
2 Reply
Nick GiulioniPro Member
Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
2y
Quote from @Tyler Lingle:

Hot take - Invest in Carmel (if you can lose money for months to make real money in years). On the real, Carmel has an intense need for more STR's, however, the city is not super friendly to them.
I agree with everything you are saying IF the buyer actually does the math properly and knows what the losses will look like on a monthly basis.
Carmel DESPERATELY needs STR - but they are basically blocked (which exceptions) except for owner occ (to the best of my knowledge).
1 Reply
Josh C.Pro Member
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
2y
We manage some homes in Carmel and they do well. I will say they are all worth more than $279k, more like 350-400k, and they rent for 2500ish. So not great cash flow but solid tenants that take great care of your asset while the owners pay down debt and get tax write offs. If maximizing cash flow today is your only goal then I’d look elsewhere, but Carmel (or really any class A area in Indianapolis) is a safe place to park money for now if other asset classes scare you.
My opinion anyway based on 10 years of property management and investing here.
I’ll add I personally don’t own in areas like this and prefer more downtown areas due to upfront costs, but for a high income investor wanting a safe investment areas like this can make sense.
3 Reply
Pam Brown
Real Estate Agent · Indianapolis IN · Member since 2022 · 144 posts · 65 votes
2y
Quote from @Sean K.:

Quote from @Jaron Walling:

@Sean K. Carmel and the majority of Indianapolis are polar opposites.

There's a 0% chance you'll find cash-flow in Carmel. Around the greater Indy area you can find, negotiate towards, or create it. This depends on the neighborhood (sometimes street-by-street), strategy (value add?), and ROI you're aiming for.

We have a rental shortage. If it's a nice rental at/or slightly above market you'll find qualified people asap. People want houses over apartments especially if you have a basement or garage.

Thanks Jaron for your reply!
If lets say I buy this house: 10815 Broadway St, Carmel, IN 46280
Purchase price: 279,000
Interest rate: 8.5%
Down payment: 25%
Monthly payment (including tax and insurance): 1,835
According to Zillow Rent Estimator the house can rent for: 1,995
(Management I will do myself, I will repair everything needed before tenant moves in, to reduce repairs needed for first year).
Monthly cashflow: +$160
Is that realistic or am I missing something?
(I guess first 1-2 years cashflow will be only 160 but after then I can raise the monthly rent another 50-100 then cashflow will be 210-260)?

Hello! Yes, this ship has sailed! I looked it up to view the pics and it is now pending. It will be interesting to see what they got out of it once it closes. (Friendly suggestion-- I wouldn't give exact details on here if it's a hot deal! That just gives others the chance to pounce on your deal!)
I've sold a couple of duplexes right near this SFH in Carmel. Those don't come around often though.
Agreed with what the majority say on this thread. It's hard to attain cash flow in Carmel. Much more opportunity in the Indianapolis and surrounding areas.
1 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Pam Brown:

Quote from @Sean K.:

Quote from @Jaron Walling:

@Sean K. Carmel and the majority of Indianapolis are polar opposites.

There's a 0% chance you'll find cash-flow in Carmel. Around the greater Indy area you can find, negotiate towards, or create it. This depends on the neighborhood (sometimes street-by-street), strategy (value add?), and ROI you're aiming for.

We have a rental shortage. If it's a nice rental at/or slightly above market you'll find qualified people asap. People want houses over apartments especially if you have a basement or garage.

Thanks Jaron for your reply!
If lets say I buy this house: 10815 Broadway St, Carmel, IN 46280
Purchase price: 279,000
Interest rate: 8.5%
Down payment: 25%
Monthly payment (including tax and insurance): 1,835
According to Zillow Rent Estimator the house can rent for: 1,995
(Management I will do myself, I will repair everything needed before tenant moves in, to reduce repairs needed for first year).
Monthly cashflow: +$160
Is that realistic or am I missing something?
(I guess first 1-2 years cashflow will be only 160 but after then I can raise the monthly rent another 50-100 then cashflow will be 210-260)?

Hello! Yes, this ship has sailed! I looked it up to view the pics and it is now pending. It will be interesting to see what they got out of it once it closes. (Friendly suggestion-- I wouldn't give exact details on here if it's a hot deal! That just gives others the chance to pounce on your deal!)
I've sold a couple of duplexes right near this SFH in Carmel. Those don't come around often though.
Agreed with what the majority say on this thread. It's hard to attain cash flow in Carmel. Much more opportunity in the Indianapolis and surrounding areas.

Pam Thanks for your reply!
You are right! The address I provided was an example property. I will never share a hot deal here that I want to put an offer since most likely I will lose the hot deal.
2 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
@Jaron Walling @Gloria N Gear @Nick Giulioni @Tim Ryan @Account Closed,
I ran some numbers and this is what I found:
Carmel vs Indianapolis:
Parameters:
Growth:
Indianapolis IRR (5 and 10 years):
Carmel IRR(5 and 10 years):
As you can see they both have almost the same IRR.
If you are going to invest like $60k you can buy one house in Carmel or 2-3 Indianapolis.
2-3 in Indianapolis will be more headache and more doors to deal with for wear and tear and maintenance.
That's true the cashflow in Indianapolis will be a bit better +$96 vs -$136 for 10 years but the difference is not much.
In Carmel most likely you will get a higher quality tenants with more stable jobs. I guess less headache?
What do you think?
Do you see anything wrong with my assumptions or calculations?

2 Reply
Josh C.Pro Member
Property Manager · Indianapolis, IN · Member since 2010 · 1k+ posts · 1k+ votes
2y
@Sean Keller
I can tell from experience your maintenance and turnover costs will be higher on 30th and east side Indy than Carmel.
This is a decent example, but there are nicer areas in Indy than this that would stack up better than Carmel (especially when you factor duplexes are plentiful in Indy) with only slightly more headache than Carmel vs the property you suggested which would be much greater headache.
2 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Josh C.:

@Sean Keller
I can tell from experience your maintenance and turnover costs will be higher on 30th and east side Indy than Carmel.
This is a decent example, but there are nicer areas in Indy than this that would stack up better than Carmel (especially when you factor duplexes are plentiful in Indy) with only slightly more headache than Carmel vs the property you suggested which would be much greater headache.
What area in Indy you recommend?
0 Reply
Evan HoppleBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2023 · 284 posts · 420 votes
2y
@Sean K.
I invest in Columbus RE, huge growth to come from recent additions to the tech sector (google, intel, amazon, honda, and many start ups). Plans to were announced last month to invest $2B into the cities airport in anticipation of the population/business travel growth. It's still early to get in, plenty of deals that would meet your criteria
[email protected]614-924-8151
Reafco Real Estate
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4 Reply
Crystal SmithPro Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes
2y
Quote from @Sean K.:

@Jaron Walling @Gloria N Gear @Nick Giulioni @Tim Ryan @Account Closed
I ran some numbers and this is what I found:
Carmel vs Indianapolis:
Parameters:
Growth:
Indianapolis IRR (5 and 10 years):
Carmel IRR(5 and 10 years):
As you can see they both have almost the same IRR.
If you are going to invest like $60k you can buy one house in Carmel or 2-3 Indianapolis.
2-3 in Indianapolis will be more headache and more doors to deal with for wear and tear and maintenance.
That's true the cashflow in Indianapolis will be a bit better +$96 vs -$136 for 10 years but the difference is not much.
In Carmel most likely you will get a higher quality tenants with more stable jobs. I guess less headache?
What do you think?
Do you see anything wrong with my assumptions or calculations?

Your analysis comparison is probably spot on for that specific home in Carmel but..... when comparing Carmel to Indianapolis as a rental market you will probably find that finding a home for only $279K will be few and far between. The average price of a home in Carmel is $600K.
Should you ignore Carmel as a market? No. But given your original question
"Where should I invest Indianpolis or Carmel" I'm thinking to buy a rental property in Indiana not more than $350k." In my opinion your target market for finding homes that are $350K or less is Indianapolis, not Carmel. Again don't ignore Carmel but you may grow frustrated trying to find another sweet deal like this $279K home. And if one comes up you must jump on it right away.
312-681-7487
2 Reply
Sean K.
OP
Investor · CA · Member since 2023 · 15 posts · 10 votes
2y
Quote from @Evan Hopple:

@Sean K.
I invest in Columbus RE, huge growth to come from recent additions to the tech sector (google, intel, amazon, honda, and many start ups). Plans to were announced last month to invest $2B into the cities airport in anticipation of the population/business travel growth. It's still early to get in, plenty of deals that would meet your criteria

You are talking about Columbus, OH? What areas in the city you recommend ?
1 Reply
Pam Brown
Real Estate Agent · Indianapolis IN · Member since 2022 · 144 posts · 65 votes
2y
Quote from @Sean K.:

Quote from @Josh C.:

@Sean Keller
I can tell from experience your maintenance and turnover costs will be higher on 30th and east side Indy than Carmel.
This is a decent example, but there are nicer areas in Indy than this that would stack up better than Carmel (especially when you factor duplexes are plentiful in Indy) with only slightly more headache than Carmel vs the property you suggested which would be much greater headache.
What area in Indy you recommend?
The Indianapolis area (except for a few strong zip codes) can change within a few blocks. So you just need an experienced boots on the ground team that can help you out. Yes, most of my buyers are willing to pay more to get in at least a C+/B area to avoid the aforementioned headaches that come with lesser properties :-)
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