Buying to Rent in Indiana - worth it?

Question

Hi! I am new to home buying. I've always worked for myself and didn't have a ton of support so I was not able to prove my income for quite some time due to doing my taxes wrong or not understanding how things work. Now I'm getting ready to start investing in property and I host some rental arbitrage properties on Airbnb. Someone with property in South Bend asked me to help with theirs and I noticed there's a ton of property under $100k there. That's super affordable for me and would be amazing! I wouldn't have to wait longer to prove my income on something that price.

However, I'm wondering if it's a good investment or, like someone told me, "if house prices are that low, you'll likely be in a poor area and not have great tenants." Looking for advice from people who have been in the rental business for a while. Looking for ways to create more passive income for myself.

I guess an additional question is how profitable should I expect a short term rental to be in that area? I have resources I use to get an estimated idea of that, but always good to hear from someone whos already in the game. TIA!

Gloria N Gear · Answer

Do you live in South Bend? If so, you should know the areas. Buy close to Notre Dame and the nicer areas for game days, graduations, and families visiting. Find a realtor that knows the transitioning areas, there are a lot of "not-so-nice" areas in South Bend that would not work for short term rentals, but there are also plenty of great neighborhoods.

Jason Wray · Answer

Elizabeth,

I work with a lot of investors who live on the West Coast or other States and buy heavily in Indiana. Over the last (3) years I have seen some extreme cases of expedited equity where an investor buys an older home or "Ugly Inventory" and then bats clean up on the ARV in 12 months.

To give you an example I helped an investor refinance her home in 2023 pull cash out to buy a $65K home all cash. She put $40K into the home and it just appraised in September for $285K just outside of Indianapolis. I also see a lot of good deals on 2-4 unit investment rentals priced in favor of the investor.

All of these seem to have a good price to cash flow ratio when it comes to even long term rentals. STR's can perform even better as you know but its all about location and timing.

Matthew Crivelli · Answer

@Elizabeth Ross

For properties under 100k you will likely need to use the BRRR method as its difficult to get a 30Y loan on a properties valued under 100k. There are plenty of short term rehab loans available that will help with the initial purchase, give you rehab money, and don't have any type of prepayment penalties. Fix the property up to force equity, rent, and refinance with a 30Y loan. This is what the majority of investors are doing.

Stephen DiJulius · Answer

Hi Elizabeth - broker/owner here in South Bend. We work with investors regularly. Happy to help if you want.

Michael S. · Answer

@Elizabeth Ross - make sure you are familiar with South Bend - houses for under 100k in South Bend can typically be in pretty rough neighborhoods, so be sure to do your due diligence. We are closing on our first South Bend rental property next week, as our local market opportunities have become non-existant unfortunately.

Elizabeth Ross · Answer

Thank you so much! I will study this more. This is super helpful insight, I appreciate you!

Elizabeth Ross · Answer

Wow that's definitely a great deal! Do you have an examples of ones that have not done as well? Are you a real estate agent?

Buying to Rent in Indiana - worth it?

Buying to Rent in Indiana - worth it?

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